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FULL INTERVIEW: Mark Yudof, Mark Yudof, President of the University of California.

Mark Yudof, President of the University of California.

TEXT OF FULL INTERVIEW

Jeremy Hobson: Mark Yudof is the President of California's system and he joins us now. Mark Yudof, welcome to Marketplace.

Mark Yudof: Well thank you. Thank you for inviting me.

Hobson: The University of California, which you are the President of is known around the world for some of its' top schools like Berkeley and UCLA, but the state which funds you is facing a twenty-five billion dollar budget shortfall. What kind of risk does the University of California face as a result of that?

Yudof: I think it's a substantial risk. We need to be competitive for the best faculty and staff. We need to be competitive in our medical centers. We get about three billion dollars from the state for our core operations but there's six or seven billion in medical services; five billion dollars in research. This is a fabulous public university and we have half as much money to spend per student as we did in 1990 once you adjust for enrollment and inflation. So the risk is very significant if you face further reductions.

Hobson: Well obviously states face their ups and downs in terms of budgets. Give us perspective; is this the worst ever faced?

Yudof: Well, I can't really go back to the 1930's, I don't know but we had a roughly 20% reduction over eighteen months and that's the most precipitous decline I've ever seen in higher education and no one around here could remember anything on that scale. We're doing everything we can think of. We have a five hundred million dollar efficiencies initiative. We furloughed people up to ten percent of their salary for a year. We're fixing our pension plan which is twenty billion or more with unfunded liabilities. So we are proceeding along a lot of fronts. We have a commission in the future report that recommends more on-line education, more enrollment if not residence; so there's no once-over bullet but we are looking at multiple things.

Hobson: Obviously the tough spot for a public university is that the mission is to offer an education of top quality for students at an affordable cost; students who live in that state and at the same time you want to make sure that you have the money to spend on faculty to remain competitive with private institutions. How do you that? How do you fulfill both of those goals without either making drastic cuts or raising tuition?

Yudof: It's a tough problem. We have raised our fees, tuition to other people to roughly twelve thousand dollars. We are still below a number of other prominent universities. But the really important thing is not just what you charge but who you teach, and four out of ten of our students are Pell eligible. They are in families making less than fifty thousand, or half are in families where the language spoken in the home is not English. Over a third are the first to go to college. So what we've done is we've tried to modulate the system to make sure that if you are making under eighty thousand dollars, you are not paying anything. You don't pay the increase if you are making between eighty and one hundred and twenty thousand. We're focusing in a way that Ivy League institutions have not gone as far as we have in terms of making sure that we are serving the low-income and middle-income students.

Hobson: But still, the cost has gone up. We checked from two thousand dollars a year back in 1990 to as you say, twelve thousand now. That's got to be still pretty hard for a poorer student or their family to afford.

Yudof: Well, with all due respect, you don't pay a penny of tuition if you make under eighty thousand dollars; none. We more or less guarantee that. We're actually in pretty good shape until you get over one hundred thousand dollars. But even there, there are tax credits and so forth. It's not ideal, I mean I'm not trying to say that it is but the point is what we have done is preserve our public character in terms of the services we provide. Forty percent of our patients are not insured. In terms of who we teach; we are teaching the low income, the first to go to college and the like. And so I think we are doing a pretty good job. Would I rather the tuition be lower? Sure, but if that's not in the cards because of the cuts in state funding, then what I want to do is guarantee access to a broad spectrum of Californians. Two-thirds of Californians are in families of under eighty thousand dollars a year.

Hobson: It's not just California; obviously, there are major institutions in Michigan and Illinois and Virginia; all across the country that have traditionally been on the same level of some of the best private universities in the country. Do you think that the public institutions are going to have a hard time staying competitive since they have to deal with state budget cuts while private institutions don't?

Yudof: Well at least the best of the privates do not have the massive budget cuts that we've had and that's the Stanfords and Chicagos and Columbias of the world with whom we compete. I would say a number of things. First, when you come to a public university, you are dedicated to public service and you could look around and say, "Why does anyone become a teacher or a social worker or a librarian?" Well, obviously they are motivated by public service and we have thousands and thousands of those people. Second, it's an opportunity to teach to those low-income and middle income students; and that's very good. Then I would say on the public service side; if you look at our record in terms of our poverty centers, if you look virtually any type of service activity...agriculture and so forth, we really are a direct service roll to the public and that really does appeal to a lot of people. So you are appealing to people's good side but we really don't want that gap to get too big. We really do need to do something about faculty salaries in particular. But what I would say to some extent is that we are recruiting someone who has a different mindset than the person who may go to a well-heeled liberal arts college.

Hobson: You think faculty salaries are too high?

Yudof: I don't! I mean, I don't know what to say. I'm a believer in markets and if you have a Chemistry professor or physicist or you have an English professor or Spanish professor...I mean the markets are different but if you want the best people, you need to pay for it and you're paying for people who not only transmit knowledge but create knowledge. And they are relatively rare individuals. They write books, they write articles, they push the envelope on knowledge and simultaneously they are responsible for teaching those classes. If you are a community college on the whole, you don't worry about the knowledge creation. You just worry about how effective they are in the classroom and educating young people.

Hobson: Do the politicians at the state level, the one's who are controlling the purse Strings, do they get that? Do they get that? Do they understand how important it is to stay competitive with the big private institutions?

Yudof: I think some of them do understand but I would say most of them don't. There's always the danger that you will be treated as just one more state agency and we are different. What we do is different and our place in bringing California back is critically important. I mean, we will create the jobs and the new products. I just listened to a talk the other day by a New York Times journalist. It's a different world, this great recession if you are a college graduate than if you are not a college graduate. It just is in terms of unemployment compensation. And we're responsible in part, obviously for Silicon Valley, for the agricultural revolution, even our schools that do film-making and the like. That side that an educated populace going out and doing their thing, curiosity-driven research...it seems to me those are the types of things that will bring California back. We are not going to be the low-tax state. We are not going to be the low-regulatory state. We have to be smarter; we just have to be smarter and being smarter involves higher education.

Hobson: Well you sound pretty optimistic about this I mean, do you think that something will be able to be worked out to keep the standards at the University of California as high as they can be and to keep it as affordable for low-income people as possible?

Yudof: Well I am optimistic. Now I don't know what's around the corner in the legislature in the short run may not be good but we haven't seen a mass exodus of our faculty; they're sticking with us. Our applications are at record levels. If I had my way, in the next ten years we would take another forty or fifty thousand students to help meet President Obama's goals for an educated population. I am very optimistic. Also, I hang around with very bright people and I know that people are working on alternative energy. I know that they are working on an artificial retina. I read this stuff every day and I just need to do a better job of explaining to the people and the Legislature and other leaders exactly how important California is; the University of California, even if you don't have a son or daughter here.

Hobson: I saw one plan from the University of Oregon to create a fund that is not tied to the ups and downs of a state budget so that the University doesn't suffer the woes of the state. Do you think something like that could be the answer for certain states?

Yudof: It might be; I can't see how it would work for California. We get about three billion dollars a year; that's down from about 3.4 billion out of a twenty billion dollar budget, by the way. If you take three billion dollars and you have an endowment with a five percent rate of return, you're talking about a sixty billion dollar endowment. To me, that's not practical in this environment.

Hobson: Do you think that it makes sense for any parts of a University to go private, to get away from the woes of the state?

Yudof: I don't think it makes sense. We're a consummately California institution. The people of this state have paid for it over a hundred years. They've sent their children and their grandchildren. Now I can't guarantee that the tuition doesn't go up but I think that in your question you got it right. We have to preserve the access and preserve the quality and we need to figure out formulas to do that. We are not going to throw in the towel and say, "We're a private institution." I don't think that works for this university.

Hobson: Mark Yudof, President of the University of California. Thank you so much for your time this morning.

Yudof: Thank you sir.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.
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