Honey, I Shrunk the Kids!

I taught marketing at the University of California, Berkeley (Haas School of Business) over three years. As I walked from parking lot or lunch spot to the business school (fortunately, heavily privately endowed), I often passed engineering, science and social science buildings. Berkeley is and may be (?) one of America’s leading universities, and with a presence near the Silicon Valley, has had a material impact on the quality of the engineering and innovation for which the Valley is so famous. But I watched as year by year, those neighboring structures showed their age, wear and tear, with no maintenance in sight. I was told that the massive dollars needed for “deferred maintenance” and technology upgrades just weren’t forthcoming by a stingy legislature seeking to balance a bloated California budget, filled with very high fringe benefit, retirement and medical costs negotiated by state workers.

But that was before the recession. Lawmakers, dealing with the same entitlements and collapsed revenues, began to cut the University of California system to the bone. In one strange turn of events, as the legislature’s cuts forced the closure of Berkeley’s varsity baseball program – the Bears were competitive! – arch rival Stanford University came to the rescue with a $9 million bailout of Berkeley’s team, a level of support that will keep that baseball rivalry around for years.

But the latest budget cuts are deep (among the deepest in the entire state), will have long term effects for the state which had one of the finest state university systems in the United States and may cause irreversible damage to local industry’s that literally grew and thrived because of the excellent research in their midst. The impact on job growth is horrific. “The state’s two systems [Universities of California and California State Universities] were each cut by $650 million, and they each could lose $100 million more if the state’s optimistic revenue expectations do not materialize. For both systems, the $650 million is roughly a 20 percent cut of operating money from the stat e… This fall, for the first time, the University of California will take in more money from student tuition than from state finances.” New York Times, July 8^th. Among states imposing budget cuts to their state colleges and universities, California is one of the most extreme.

Tuition increases, averaging 20% this year and 26% at the UC system last year, as well as cuts to scholarships have pushed many super-qualified students from middle income families (there are still scholarships for lower income family students) out the door and saddled others with debt that probably cannot be earned out in the impaired job market. But what’s worse, the essential values that these university systems have supported spectacularly for decades are being decimated: “Programs all over the state are being shuttered, star professors are leaving for colleges in other states, faculty positions are being left unfilled and class sizes are continuing to grow. While the state’s spending on the system is down to a level not seen since the late-1990s, the campuses enroll tens of thousands more students… Schools, meanwhile, are stepping up their efforts to recruit students from other states, using their higher tuition payments to help fill the coffers at the expense of California applicants.” NY Times.

And where more immediate jobs could be created in technical schools, the fed is cutting back aid in that space rather dramatically: “The administration has proposed a 20 percent reduction in its fiscal 2012 budget for career and technical education, to a little more than $1 billion, even as it seeks to increase overall education funding by 11 percent. The only real alternative to public schools for career training is profit-making colleges and trade schools, many of which have been harshly criticized for sending students deeply into debt without improving their job prospects… In European countries like Germany, Denmark and Switzerland, vocational programs have long been viable choices for a significant portion of teenagers. Yet in the United States, technical courses have often been viewed as the ugly stepchildren of education, backwaters for underachieving or difficult students.” New York Times, July 9^th. Unfortunately, states are following the federal lead in these cutbacks.

We are acutely aware of the massive investment being made in places like India and China in education, most particularly at the university level. They are even recruiting professors out of U.S. universities, even as many private American institutions of higher learning (including the Ivies) open branches of their universities in Asia and the Middle East. As we speak about deficit ceiling and even reduction, I wonder where Americans are going to have sufficient education and skills in the future to generate enough revenues to pay down that deficit.

I’m Peter Dekom, and if we think the damage imposed on us by the global economy is bad, what we are doing to ourselves is unforgivable.