Saturday, March 03, 2012

Raising Revenue at Elite Public Universities

As a professor at a leading public university, I have a strong stake in helping UCLA identify new sources of revenue.  While we can chant "China, China, China", I believe in a diversified revenue stream.   Due to political pressure, public universities will not be able to continue to sharply increase tuition.  Federal grant dollars from NSF and NIH will soon start to decline.  How will $ continue to flow to Universities?

THIS POST has been updated and edited on March 7th 2012

Schools such as Harvard and Stanford have figured out that if you offer young people an excellent education that some of them will be successful and in later life will give back large amounts of $ because they remember the role that the university played in shaping their life.  Other Alumni will give big bucks because they want their kids to have a shot at "legacy admissions".  Regardless of the motivation for giving,  a school's stock of past graduates represents an excellent source of donations.

Public universities such as UCLA have been slow to tap into their graduates to make "the ask".   Many of these graduates took for granted that the Great California would provide them with a "free, high quality education" and they are aware that their children will not receive extra consideration for admissions even if they make a big gift.

The main point of this blog post is to ask a "what if".  Could UCLA's endowment grow more quickly if we enroll more 4 year students? If I'm reading this table correctly,  UCLA admits roughly 3,000 transfer students a year.  Many of these students will stay at UCLA for 2 years and earn a degree and leave.

Suppose that these same students spend all 4 undergraduate years in Westwood enrolled at UCLA.  I think that future donations to UCLA would be much higher. Loyalty takes time to build. If you spend 4 years in wonderful Westwood, learning and being part of the social network -- you will have stronger roots to the community.  Given the strength of UCLA's education, the same students would also learn more at UCLA than if they spend 2 years at one college and then transfer here. I realize that there are always exceptions to the rule.

I also recognize that UCLA has had terrific transfer students and will continue to have excellent transfer students.   The economic decision here is what is the "optimal number" of transfer students?

I have received some angry emails from students concerning my original posting. I would like to apologize to them.   It was not my intent to be offensive or rude.  My goal was to stimulate a debate.

But, returning to fund raising consider the following facts;   In 2011, UCLA's endowment stands at 1.3 billion dollars or at 2.6 billion depending on how you count.  USC charges a higher tuition and has an endowment of roughly 3.5 billion but is in the middle of an ambitious capital campaign that will increase its endowment to roughly 7 to 8 billion dollars.  For those who are members of the UCLA Bruin community, what is your solution for how to maintain and produce excellence?

UPDATE:   I was not aware that the California Master Plan requires that the UCs reserve a significant number of places for Community College students.    This Master Plan has costs and benefits and it should be debated.


Morgan Price said...

"The typical student who transfers to UCLA  is unlikely to be as prepared for the classroom as the 4 year UCLA students." -- do you have any evidence for this claim? Also, I do not see that UCLA has any competitive advantage in teaching introductory classes. So I would instead suggest that UCLA cut costs by admitting more transfer students and fewer in-state 4-year students so as to lose less money per in-state student.

elyse (: said...

You are a professor and you couldn't type out the word money or percent in your article. Maybe that is why UCLA education system is becoming watered down.

Lydia C. said...

There are so many things wrong with this article it is hard to decide where to begin. First, is there any proof or evidence of transfers lacking loyalty for the school? Actually, is there any proof for any of the claims made in this? The argument falls completely flat if there is no evidence to back up a claim. As a university professor, you should know that in order for an argument to have a valid claim, there needs to be evidence. Also, a lot of transfer students could have gone to UCLA from the beginning, but chose to go to a community college to save money. Is saving money not an elitist thing to do? Or do elitists prefer to throw money anywhere and everywhere?

Lydia C. said...

In response to your update, I'd like to ask if it is fair to me to ask how you are a professor at such a great school if you can't even put a decent argument together on a blog?

The Hosts said...

The argument assumes too much about transfer students and four year. There are so many reasons why someone isn't going to donate money to their school, like trying to pay off their student loans or loosing their job. Second of all you assume that most of the Four year students are born with silver spoons. The bottom line is that people can't afford to go strait to four year. Lastly, Morgan made a good point up there, it's ludicrous to think that transfer students are any less prepared than four year students, if anything it's the opposite. Are you even aware that a number of 4 year students drop out because they couldn't take pressure. I'm willing to wager that transfer students are more prepared than those fresh out of high school.

Just Living said...

Wow. As a transfer student that has consistently been an excellent student throughout my entire academic career, I am extremely offended by your article. In a time where education is becoming increasingly difficult to afford, when the prospects of employment after graduation with a bachelor's degree are becoming dimmer and dimmer, I do not think that it reflects poorly on a student to make the wise decision of attending community college to cut down on the cost of their undergraduate education. First of all, after being at UCLA now for two years, I can say with one hundred percent certainty that my best professors, the ones who have taught and inspired me the most, were at my community college. Maybe the reason universities have trouble with loyalty is that people feel they get a lesser quality of education at a four year institution for literally one hundred times the cost of community college tuition. Instead of focusing time and attention on student learning, money, time and attention is tied up in the huge bureaucracy that has become the UC system. As for the readiness of transfer students for upper division classes, I can assure you that I was completely underwhelmed by the caliber of the curriculum and of the caliber of the students around me when I entered into my first quarter at UCLA. Not only did I feel that UCLA classes had been overly hyped, my motivation to go above and beyond in my studies was diminished when I realized that my classmates (yes, even those geniuses that were at UCLA since their freshman years) had little to no interest in our field of study beyond what little, yes, LITTLE, they had to do to receive a stellar grade. So, when I graduate from UCLA and continue onto law school, and hopefully become successful in the field of law, which school will I feel loyalty towards for inspiring me and encouraging me to be successful? UCLA where I don't know my professors and none of them know me? Or my community college, which held for me some of the most inspirational, talented group of TEACHERS that I was lucky enough to encounter in my life? Maybe the problem lies not with the number of transfer students accepted, but instead with the cold, uninterested, alienating tone with which the UC system treats their students.

LeoSDesigns said...

As a transfer student who joined UCLA for engineering, I agree with all of the comments above regarding the lack of sources and the elitist, discriminatory tone of the article. As a community leader on campus, I disagree with all points you've made regarding our loyalty, transience, and performance, and I am shocked that you would make such bold sweeping statements without supporting data.

But above all, I am most offended by how you have completely forgotten the aims and goals of a public university; The students who come to this fine institution are NOT cash cows to be milked! Your article treats the students like a resource, optimizing admittance for the best expected return in the future. Who are you to judge the potential success of individuals, especially this early in their lives?

sheelahpete said...

Students are not small seeds to be planted in hopes of becoming mighty money trees that will shed great wads of money on their former alma maters in blissful gratitude.The sad insistance on the commodification of education misses a salient point- it's not all about economics.Socrates lays in his dirt nap silently weeping for you sir.

Sirinya said...

Hi Professor Kahn,
My name is Sirinya and I am a UCLA graduate. You may know me and my husband, a researcher in the Luskin School and the IoES. We own your books - all of them. Anyway, I also work in development at UCLA. I left you a voice mail - I'd love to chat (as I understand you did not consult with any of us before writing your blog entry.) Generally, alumni and students who matriculate as transfers support UCLA at roughly the same rate. We also have a student giving committee comprised of 17 students, 5 of whom are transfers. (We love them.) The reasons why students and alums support UCLA vary, and I'd rather see this dialogue be about how faculty, staff, and alums can support and enhance the experience of current students. Also, you brought up some points about giving and campaigns at UCLA. I can comment on that off-line. Feel free to reach out to me - I have left you a voice mail and I'm really easy to find on the internet.

D. Stratton said...
This comment has been removed by the author.
D. Stratton said...

My name is Danielle Stratton and I just read the revised post from Professor Kahn along with the comments above. As a transfer student who created a program within the Bruin Resource Center (BRC) specifically for transfer and returning students over the age of 25, I was very offended by the post AND validated at the same time; Professor Kahn's lack of understanding in regard to who transfer students are as people and as students, just goes to show why student groups and programs catering to transfer students are absolutely necessary at UCLA. However, I feel as though Professor Kahn spoke out on a topic in which he was ill-informed. I think everyone has done that before in one situation or another, and when you may have meant one thing, it can quickly become twisted into something you did not intend.

To be honest, the biggest problem with what Professor Kahn said, is that it was all so very elitest and seemed to undercut the actual purpose of a top-notch education. Do universities educate young adults in order to gain revenue from them in the future? I would argue that the answer is no. Many of the students who will graduate from UCLA will go on to have wonderful careers in various fields and at all different levels and incomes - many of those alumni will simply not be in a position over their lifetime to donate large sums of money to an elite institution like UCLA - no matter how much they loved and appreciated their experience here. It's simple economics. With the world the way it is today and the ever unstable economy, people with great careers have trouble paying for just the necessities in life, especially once they have a family. The alumni who make large amounts of money and have expendable income WILL donate money, and the alumni who do not, will not donate, regardless of being a transfer student or 4 year student. It is a very simple equation. I do not believe it is a matter of how long you spent in Westwood or on campus.

I believe the point of education is to produce productive, enlightened, compassionate, solution-oriented people, NOT money-makers who will dontate big bucks to the school as a show of appreciation. Of course, that will happen organically, when certain alumni make a lot of money they will remember their alma mater. UCLA will produce civil servants, people working in the non-profit sector, professionals in public service and education and so on... Not all of those careers produce six-figure incomes, yet they are worthy, much needed professions, professions that are about making a difference more than making millions. That is the legacy UCLA should be proud of - not a legacy of getting the most money in endowments.

I truly hope my fellow transfer students will forgive Professor Kahn for his mistep, I feel that this is a good opportunity to show him that we are students with integrity, grace and compassion. We cannot blame someone for their ignorance, what we CAN do is educate them. That is what I propose we do in this situation instead of berating him for his uninfomred stance on this matter.

ZombieHero said...

"For those who are members of the UCLA Bruin community, what is your solution for how to maintain and produce excellence?"

Fire guys like you and beg to get a real Economics professor to teach in the mold of Sowell and Alchian.