US: Huge university 'doing more with less'

When you meet California State University Chancellor Charles B Reed for the first time, you think you've met him before. It takes a few minutes to realise that Reed bears a striking resemblance to English actor Bob Hoskins. He has the same round appearance, direct gaze and pugilistic stance, as if he's ready to do battle. And it has been a battle over the past two years, as Reed has slashed costs at the university and deflected criticism and outcry as he tried to absorb a US$600 million blow in the form of state budget cuts.

"It actually wasn't as bad as people wrote about or said," Reed told University World News in Paris last month, at the start of the OECD's Institutional Management in Higher Education conference.

"We had to set goals, and this is what political leadership is supposed to do," he added.

Addressing the conference's theme, Higher Education in a World Changed Utterly: Doing more with less, Reed said this was exactly what California State University (CSU) had tried to achieve. But accomplishing 'more with less' had not been pain-free.

"I asked our employees to take a 10% pay reduction, we cut back on travel and we did not hire replacements for people who left or retired," said Reed, outlining some of the stiff measures.

CSU also raised tuition fees by 32%, reduced enrolment by 20,000 students and "cut back on computing and servers, which saved electricity," Reed said.

"Denying students access to higher education is just about one of the worst things a university can do in a recession," Reed told conference participants. "But with such a dire fiscal situation, we were left with little choice."

The actions resulted in complaints by students who felt shut out of the university system, and debates about whether this was the right policy.

The procedures were doubly sensitive because CSU itself had been censured for 'improper and wasteful expenditure' caused by failure to follow reimbursement policies, according to a 2009 California State Auditor's report.

Investigations had revealed that a CSU senior official "received at least $152,441 in improper expense reimbursements from July 2005 to July 2008". The official left the university and the Chancellor's Office agreed with the recommendations of the state auditor that it should "re-examine its reimbursement procedures for high-level employees".

In its fight to stay upright in the face of budget cuts, one thing that CSU did not do was try to gain extra funds by increasing the number of out-of-state or foreign students who would pay more. This has been the path taken by many universities in the United States as well as in other countries.

"I couldn't do that," Reed told University World News with a wry laugh. "I'd get killed if I did. But I also think it's wrong. Universities need to provide as many seats as possible to students in the state."

With nearly 450,000 students, the 23-campus CSU is the largest system of higher education in the United Sates. It is also "one of the most diverse and most affordable university systems in the country," said Reed, who has been chancellor for the past 13 years.

The university says it charges 'fees' rather than 'tuition' to California residents. "Only non-resident students are charged non-resident 'tuition' as well as other campus-based fees."

The current undergraduate fees range from around $2,000 to $4,000 per year, but more than half of CSU students receive some form of financial aid.

Reed said that some 54% of CSU's students were 'students of colour' who needed additional services. "It costs money, but it's a good investment," he said.

At its height, budget-wise, CSU had state funds of almost $3 billion. This was in the 2007-08 academic year, before cuts reduced the budget to $2.35 billion.

For the current academic year, Reed expects the budget to increase by about $300 million, if the California state legislature adopts a proposal by Governor Arnold Schwarzenegger. The state is also considering a $60 million allocation to boost enrolment.

But the demand for places already outstrips supply. "There are simply too many people trying to get in the door," Reed said. "That forces us to make some difficult strategic decisions. How do we find the resources to serve more students? Do we cut back on what we offer? Do we raise tuition?"

The problem with the last option is that "tuition increases are extremely unpopular" with the public, according to the chancellor.

"To the outside observer, these price increases reflect careless spending rather than need," he said. "You have to be very sensitive about fees and increases."

California has a $20 billion budget deficit, and is undergoing what Reed calls a "budget meltdown", which has made things "extremely difficult". But Reed believes that state investment in the higher education system brings its own rewards.

"We recently showcased a study that credits CSU and its graduates with producing $70 billion in economic activity and supporting more than 485,000 jobs - or one in every 32 jobs in California today," he told the OECD conference.

"The study found that every dollar that the state invests in the CSU generates $5.43 for the state economy in total spending impact alone."