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object(Timber\Post)#3742 (44) { ["ImageClass"]=> string(12) "Timber\Image" ["PostClass"]=> string(11) "Timber\Post" ["TermClass"]=> string(11) "Timber\Term" ["object_type"]=> string(4) "post" ["custom"]=> array(5) { ["_wp_attached_file"]=> string(13) "R_0317KCR.pdf" ["wpmf_size"]=> string(6) "246535" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(48874) "March 2017 Kevin CookTalib Jabbar Patrick Murphy Measuring Institutional Costs at California’s Public Universities Supported with funding from the Sutton Family Fund Summary California has recently increased its investment in higher education after many years of reducing state support. At the same time, the state’s four-year public systems, the University of California (UC) and California State University (CSU), are currently poised to raise tuition for the first time in several years. If the past is any indication, intense discussions lie ahead about the need for additional higher education resources. We offer a constructive starting point for those discussions by introducing a straightforward and objective assessment of institutional costs. We rely on a measure that connects institutional costs to the number of degrees UC and CSU produce. This measure provides a clear understanding of trends in California’s institutional costs and allows comparisons with colleges and universities in other states. It also offers higher education institutions the opportunity to demonstrate progress toward their goals in an accessible, transparent way. Applying this measure to California’s public four-year institutions, we find that: Institutional costs per degree across UC and CSU fell significantly —17 percent—from 1987 to 2013. This is an important savings in a state that will need to amp up its number of college graduates to meet future economic demand. At UC, the cost per degree fell 6 percent over the period —from $116,000 to $109,000. UC’s institutional costs in 2013 were lower than a comparison group that included both public and private institutions across the nation. But UC’s costs were higher than a national comparison group of public schools only. At CSU, the cost fell 33 percent —from $67,000 to $45,000. CSU’s 2013 costs were lower than both types of comparison groups—one that included public schools only and one that included both public and private institutions. We recommend that policymakers and higher education leaders use the cost per degree measure as a way to frame higher education finance discussions. It provides a consistent, reliable, and objective measure of institutional costs and performance. For the measure to be most effective, accurate data reporting will be essential. We also recommend the reintroduction of a state-level higher education authority to add validity to the process of gauging institutional performance. Using the measure within a larger framework of agreed-upon goals would go a long way toward improving higher education finance policy in California. I n tr o d uctio n P PIC r e se arc h h as f o und t h at if c u rre nt t r e nd s p ers is t, C alif o rn ia w ill f a ll 1 .1 m illio n c o lle g e g ra d uate s s h o rt o f m eetin g e co no m ic d em an d b y 2 0 30 . T o c lo se t h is g ap , w e e xp ect t h at b oth t h e s ta te a n d i t s s tu d ents w ill b e a sk e d t o c o ntr ib ute m ore t o h ig he r e d uca tio n in c o m in g y e ars . H ow f a r w ill a d dit io nal in stit u tio nal r e so urc e s g o t o w ard t h is e ffo rt w ill b e d ete rm in e d b y h o w m uch it c o sts t o p ro d uce a d eg re e. H ow eve r, r e ce nt d is c u ssio ns a b out h ig he r e d uca tio n c o sts h ave f e atu re d p olic ym ake rs a n d h ig he r e d uca tio n a d m in is tr a to rs e ng ag ed in a d eb ate t h at a p pears t o le ave a ll p artie s d is sa tis fie d . A s h as b een n o te d b y t h e C olle g e F u tu re s F o und atio n, t h e e le m ents o f t h is f r u str a tio n a re m ult if a ce te d a n d h ave b een b uild in g o ve r s e ve ra l d eca d es; t o a d dre ss t h is p ro b le m , t h e ir r e p ort r e co m mend s t h e d eve lo pm ent o f a c o m mon g ro up o f m easu re s t o a sse ss p ast p erfo rm an ce a s w ell a s t o g uid e f u tu re f in an ce d ecis io ns (C olle g e F u tu re s F o und atio n 2 0 17 ; W ellm an 2 0 16 ). O ur p ro je ct t a ke s a f ir s t s te p in t h at d ir e ctio n. W e p ro pose a m easu re — in stit u tio nal c o sts p er d eg re e— th at c o nne cts r e so urc e s t o o utc o m es in a w ay t h at is c o nsis te nt, c o m para b le , a n d b ro ad ly a cce ssib le . T o b e s u re , h ig he r e d uca tio n is a n d w ill r e m ain a c o m ple x, e xp ensiv e e nd eavo r— an d r e so urc e s a re lik e ly t o r e m ain s c a rc e . B ut, b y e sta b lis h in g a c o m mon m easu re o f c o sts , w e a im t o p ro vid e p olic ym ake rs a n d t h e p ub lic w it h a n im pro ve d , in tu it iv e s e nse o f w hat t h e ir in ve stm ent in h ig he r e d uca tio n p ro d uce s, b ase d o n a cce p te d n um bers . H ig he r e d uca tio n s y ste m s c a n , in t u rn , d em onstr a te w he th e r o r n o t t h e y a re m akin g p ro g re ss t o w ard t h e ir g oals in a c o st- e ffe ctiv e m an ne r. T R A C KIN G T H E C O ST O F H IG HER E D UCATIO N T he d eb ate s u rro und in g h ig he r e d uca tio n f in an ce is o ft e n o b sc u re d b y t h e p erv a siv e v ie w t h at c o lle g e c o sts a re o ut o f c o ntr o l. T his v ie w t y p ic a lly s te m s f r o m c o nce rn s a b out t u it io n in cre ase s, a n d , in d eed , t u it io n t o d ay is t r ip le w hat it w as t w enty y e ars a g o a t U C a n d d oub le a t C SU . B ut t h is p erc e p tio n is a ls o r e la te d t o a w id esp re ad b elie f t h at a d m in is tr a tiv e c o sts , f a cu lt y s a la rie s, e xe cu tiv e c o m pensa tio n, a n d f a cilit ie s a n d m ain te nan ce e xp ense s a re t o o h ig h— as w ell a s t o a g ene ra l s e nse o f g ro w in g in e ffic ie ncy in t h e h ig he r e d uca tio n b usin e ss m od el. T his n o tio n is n o t n e w a n d it s te m s f r o m t h e c o m ple x, o paq ue n atu re o f h ig he r e d uca tio n f in an ce (J o hnso n e t a l. 2 0 14 ). T ra ck in g d olla rs a s t h e y f lo w t h ro ug h h ig he r e d uca tio n s y ste m s is in h e re ntly c h alle ng in g . P ub lic u niv e rs it ie s t y p ic a lly h ave m ult ip le f u n d in g s o urc e s a n d t h e y p urs u e s e ve ra l m is sio ns a n d a ctiv it ie s — all o f w hic h c o m bin e t o c re ate a n in tr ic a te w eb o f c ro ss s u b sid iz a tio n, w it h r e ve nue s a sso cia te d w it h s o m e a ctiv it ie s b ein g u se d t o o ffs e t h ig he r c o st a ctiv it ie s. C onse q ue ntly , a ssig nin g c o sts t o s p ecif ic o utc o m es is d if fic u lt . T ra ck in g a s in g le d olla r f r o m s o urc e t o e xp end it u re is e ve n h ard er. F o r e xa m ple , it m ay c o st a u niv e rs it y m ore t o p ro d uce a c h e m is tr y m ajo r t h an a s o cio lo g y m ajo r b eca u se o f t h e n e ed f o r e xp ensiv e la b ora to rie s a n d e q uip m ent a s p art o f a c h e m is tr y m ajo r’s i n str u ctio n. S im ila rly , s m alle r c la sse s c o st m ore t h an la rg er o ne s; a s a r e su lt , g ra d uate c o urs e s c o st m ore t o p ro vid e t h an u nd erg ra d uate c o urs e s, a n d u p per d iv is io n u nd erg ra d uate c o urs e s g ene ra lly c o st m ore t h an lo w er d iv is io n u nd erg ra d uate c o urs e s. B ut u niv e rs it ie s d o n o t a cco unt f o r s p end in g b y m ajo r o r c o urs e le ve l, le t a lo ne b y in d iv id ual s tu d ents . In ste ad , t h e y t r a ck t h e d olla rs t h e y s p end o n f a cu lt y s a la rie s, s tu d ent s e rv ic e s, m ain te nan ce , a n d o th e r b ro ad -b ase d c a te g orie s. C om plic a tin g t h e p ic tu re is t h e f a ct t h at h ig he r e d uca tio n is s u p porte d b y m ult ip le r e ve nue s o urc e s, a n d t h o se f u nd s a re n o t a llo ca te d in t h e s a m e m an ne r f o r e ach s tu d ent. F o r e xa m ple , r e so urc e s f r o m t h e s ta te ’s G ene ra l F u nd a re u se d t o s u p port m ost s tu d ents , b ut u niv e rs it ie s d o n o t c h arg e a ll s tu d ents t h e s a m e a m ount o f t u it io n. It is v e ry p ossib le t h at d if fe re nt s tr e am s o f r e ve nue s u p port t w o s tu d ents in t h e s a m e p ro g ra m , w it h o ne s tu d ent p ayin g f u ll t u it io n w hile t h e o th e r is a tte nd in g w it h t h e s u p port o f C alG ra n ts a n d in stit u tio nal a id . T his w eb o f c ro ss s u b sid iz a tio n is n e ce ssa ry t o a ch ie ve t h e m ult ip le m is sio ns o f a h ig he r e d uca tio n i n stit u tio n. H ow eve r, it m ake s it v e ry d if fic u lt t o c o nne ct a n in stit u tio n’s p ro d uctio n c o sts w it h it s t u it io n p ric e a n d w it h t h e s ta te ’s c o ntr ib utio ns. It is h ard ly s u rp ris in g , t h e n, t h at t h e d eb ate s u rro und in g h ig he r e d uca tio n c o sts s tr u g gle s t o f in d c o m mon g ro und . 1 2 3 T H E C O ST P ER D EG REE M EA SU RE T o b ette r u nd ers ta n d c o lle g e c o sts it is h e lp fu l t o s e p ara te t h e “ c o st s h arin g ” a sp ect o f h ig he r e d uca tio n— in w hic h t h e s tu d ent, in stit u tio n, a n d g ove rn m ent b ear d if fe re nt p ortio ns o f t h e c o st o f h ig he r e d uca tio n— an d t h e “ p ro d uctio n c o st” o f h ig he r e d uca tio n, w hic h is t h e a ctu al c o st t o t h e i n stit u tio ns t h e m se lv e s. It is c le ar t h at t h e c o st o f h ig he r e d uca tio n h as in cre ase d f o r s tu d ents , in t h e f o rm o f h ig he r t u it io n a n d liv in g e xp ense s, w hile t h e c o st t o t h e s ta te h as d ecre ase d , g iv e n t h e r e d uce d s h are o f G ene ra l F u nd s p end in g o n h ig he r e d uca tio n. W hat is le ss c le ar is w he th e r t h e in stit u tio nal c o sts o f c o nd uctin g h ig he r e d uca tio n h ave in cre ase d o ve r t im e (J o hnso n e t a l. 2 0 14 ). P olic ym ake rs a n d t h e p ub lic a lik e o ft e n a ssu m e t h at t h e t r e nd in t h e se c o sts f o llo w s a s te ad y u p w ard c u rv e . B ut o ur in ve stig atio n in to t h e a va ila b le d ata s h o w s a m uch m ore c o m ple x p ic tu re , a s t h e c o st p er d eg re e m easu re w ill s h o w . W e b elie ve t h at t h is m easu re , f r o m a s ta te p olic y p ers p ectiv e , b est c o nne cts f u nd in g w it h in cre ase d d eg re e p ro d uctio n. T he c o st p er d eg re e m easu re is b ase d o n e sta b lis h e d s c h o la rs h ip a n d a llo w s in stit u tio nal c o sts t o b e m easu re d a n d e va lu ate d a cro ss in stit u tio ns, s ta te s, a n d t im e u sin g c u rre nt p ub lic ly a va ila b le d ata . T his m easu re p ro vid es a d dit io nal c la rit y t o t h o se s e ekin g t o b ette r u nd ers ta n d t r e nd s in i n stit u tio nal c o sts a n d e va lu ate t h e se t r e nd s r e la tiv e t o t h e n um ber o f d eg re es t h e se in stit u tio ns p ro d uce . T ho ug h n o s in g le m easu re c a n a d eq uate ly c a p tu re t h e p ro d uctiv it y o r e ffic ie ncy o f a c o m ple x s y ste m lik e a u niv e rs it y , t h e c o st p er d eg re e m easu re o ffe rs a r e lia b le , c o nsis te nt, a n d o b je ctiv e w ay t o u nd ers ta n d a c rit ic a l a sp ect o f h ig he r e d uca tio n f in an ce . T his r e p ort b eg in s b y e xa m in in g c o sts p er d eg re e a cro ss b oth o f C alif o rn ia ’s f o ur-y e ar h ig he r e d uca tio n s y ste m s a n d c o m parin g t h o se c o sts t o s im ila r p ub lic in stit u tio ns n atio nw id e. W e t h e n l o ok a t t h e U C a n d C SU s y ste m s s e p ara te ly , t r a ck in g t h e ir c o sts p er d eg re e a n d c o m parin g t h e m t o s im ila r in stit u tio ns o ve r t im e. N ext, w e t a ke a c lo se lo ok a t t h e k e y e le m ents t h at c a n a ffe ct a n i n stit u tio n’s c o st p er d eg re e a n d c o nsid er h o w t h o se e le m ents w ork t o g eth e r t o in flu e nce c o sts . F in ally , w e m ake t h e c a se f o r in cre asin g t h e p ro file o f t h e c o st p er d eg re e m easu re a n d o ffe r r e co m mend atio ns t o h e lp p olic ym ake rs a n d h ig he r e d uca tio n le ad ers b ette r u nd ers ta n d t h e c o nne ctio n b etw een d olla rs in ve ste d a n d o utc o m es r e aliz e d in C alif o rn ia ’s h ig he r e d uca tio n s y ste m s. D ata a n d M eth o d s T hro ug ho ut t h is r e p ort, w e u se d ata f r o m t h e D elt a C ost P ro je ct, c re ate d b y t h e A m eric a n I n stit u te s f o r R ese arc h . T he ir d ata c o m es f r o m t h e U S D ep artm ent o f E d uca tio n’s In te g ra te d P osts e co nd ary E d uca tio n D ata S yste m (IP ED S) b ut m ake s s o m e a d ju stm ents t o f a cilit a te a n aly sis . T he c o st p er d eg re e m easu re it s e lf (s o m etim es k n o w n a s “ e d uca tio n a n d r e la te d c o st p er d eg re e”) is d esig ne d t o c a p tu re c o sts d ir e ctly a sso cia te d w it h in str u ctio n a s w ell a s t h e i n d ir e ct e xp end it u re s a sso cia te d w it h m ovin g a s tu d ent t o w ard c o m ple tio n— in clu d in g a d m in is tr a tio n, a d vis in g a n d t u to rin g , a n d o pera tio ns a n d m ain te nan ce . D esp it e t h e m an y t y p es o f c o sts in clu d ed in t h e m easu re , it s a ctu al c a lc u la tio n is q uit e s tr a ig htfo rw ard . It e stim ate s t h e a g gre g ate c o st o f p ro d ucin g a d eg re e b y d iv id in g t h e t o ta l c o st o f e d uca tio n b y t h e t o ta l n um ber o f d eg re es p ro d uce d — in clu d in g b ach e lo r’s , m aste r’s , p ro fe ssio nal, a n d P hD . F o r m ore d eta ils , p le ase s e e t h e t e ch nic a l a p pend ix . 4 5 C osts p er D eg re e a t U C a n d C SU C ontr a ry t o p opula r b elie f, in stit u tio nal c o sts p er d eg re e a t C alif o rn ia ’s p ub lic u niv e rs it ie s (U C a n d C SU c o m bin e d ) h ave d eclin e d s u b sta n tia lly o ve r t im e. F ro m 1 9 87 u ntil 2 0 13 — th e y e ar o f t h e m ost r e ce nt d ata — in stit u tio nal c o sts p er d eg re e f e ll f r o m $ 85 ,0 00 t o $ 71,0 00, a d eclin e o f 1 7 p erc e nt. R ela tiv e t o o th e r s ta te s, h o w eve r, C alif o rn ia ’s s to ry b eco m es m ore c o m plic a te d (F ig ure 1 ). F ro m 1 9 87 t o 2 0 03, in stit u tio nal c o sts in C alif o rn ia w ere s ig nif ic a n tly h ig he r t h an t h o se a t c o m para b le p ub lic u niv e rs it ie s— sc h o ols o f s im ila r s iz e a n d m is sio n— in t h e r e st o f t h e c o untr y . A t t h e s a m e t im e, C alif o rn ia ’s c o sts f e ll s te ad ily in t h is p erio d w hile in stit u tio nal c o sts a t c o m para b le s c h o ols r o se s lig htly . F ro m 2 0 04 t o 2 0 11, C alif o rn ia ’s c o st p er d eg re e h o ve re d w it h in 4 p erc e nt o f c o m para b le s c h o ols in t h e r e st o f t h e c o untr y . M ore r e ce ntly , in 2 0 12 a n d 2 0 13 , c o sts in C alif o rn ia h ave r is e n s o m ew hat w hile t h o se in o th e r s ta te s f e ll s lig htly , c re atin g a n 1 1 p erc e nt g ap . F ig ure 1 . C alif o rn ia ’s c o st p er d eg re e h as f a lle n o ve r t im e S O URC E: D elt a C ost P ro je ct. N O TE: F o r a d esc rip tio n o f s c h o ols in clu d ed in t h e a n aly sis a s w ell a s t h e c o m posit io n o f t h e n atio nal c o m paris o n g ro up s, p le ase s e e t h e t e ch nic a l a p pend ix . C osts a d ju ste d f o r in fla tio n. H ow d o w e s e le ct c o m paris o n s c h o o ls ? R ath e r t h an c re ate o ur o w n c a te g orie s, w e r e ly o n e sta b lis h e d g ro up in g s. In t h e e xa m ple a b ove , w e r e ly o n t h e C arn e g ie H ig he r E d uca tio n C la ssif ic a tio n a n d in clu d e p ub lic d octo ra l- g ra n tin g in stit u tio ns a s w ell a s m ed iu m a n d la rg e u niv e rs it ie s t h at g ra n t m aste r’s d eg re es. W hile F ig ure 1 lo oks a t C alif o rn ia ’s p ub lic f o ur-y e ar i n stit u tio ns a s a w ho le , in t h e d is c u ssio n b elo w w e e xa m in e U C a n d C SU s e p ara te ly , d iv id in g t h e ir c o m paris o n g ro up s a cco rd in g ly . F o r in sta n ce , a ll t h e s c h o ols in t h e U C c o m paris o n g ro up h ave a v e ry h ig h le ve l o f r e se arc h a ctiv it y a n d g ra n t P hD d eg re es— th e U niv e rs it y o f M ic h ig an , U niv e rs it y o f V ir g in ia , a n d U niv e rs it y o f T exa s a t A ustin a re p art o f t h is g ro up . F o r t h e C SU c o m paris o n g ro up , m ost s c h o ols h ave a m id -le ve l r a n g e o f r e se arc h a ctiv it y , g ra n t m aste r’s a n d p ro fe ssio nal d eg re es, a n d m ay c o nfe r a s m all n um ber o f d octo ra te s. B elo w , w e c a ll t h e se g ro up in g s t h e “ n atio nal c o m paris o n g ro up .” I n t h e f o llo w in g s e ctio ns, w e a ls o in tr o d uce a s e co nd s e t o f c o m paris o n g ro up s f o r U C a n d C SU . T he se g ro up s w ere in it ia lly c re ate d b y C alif o rn ia P ostS eco nd ary E d uca tio n C om mis sio n (in c o nsu lt a tio n w it h t h e s ta te le g is la tu re a n d t h e s y ste m s t h e m se lv e s) f o r t h e p urp ose o f m akin g s a la ry c o m paris o ns. T o s o m e d eg re e, t h e y m ay b e c o nsid ere d “ a sp ir a tio nal” c o m paris o n s c h o ols , w it h f a cu lt y s a la rie s b ein g v ie w ed a s a p ro xy f o r t h e q ualit y o f t h e in stit u tio n. A s s u ch , t h e se c o m paris o n g ro up s in clu d e a m ix o f p ub lic a n d p riv a te in stit u tio ns f r o m a ro und t h e c o untr y . W e c a ll t h e se g ro up in g s t h e “ c o m mis sio n c o m paris o n g ro up .” (S ee t h e t e ch nic a l a p pend ix f o r f u ll lis ts o f t h e se s c h o ols a n d m ore d eta il a b out o ur m eth o d s.) 6 7 8 9 C ost p er D eg re e a t U C S in ce 1 9 87, t h e c o st o f p ro d ucin g a d eg re e a t t h e U niv e rs it y o f C alif o rn ia h as f a lle n b y 6 p erc e nt— t h at’s $ 7,0 00 in c o nsta n t d olla rs o ve r t h e p erio d — fr o m m ore t h an $ 116 ,0 00 t o $ 10 9,0 00 (F ig ure 2 ). C osts a m ong t h e n atio nal c o m paris o n g ro up r o se m ore t h an 6 p erc e nt, o r a b out $ 4,0 00. F o r t h e c o m mis sio n c o m paris o n s c h o ols — in clu d in g S ta n fo rd a n d Y ale — co sts r o se m ore t h an 6 9 p erc e nt, o r n e arly $ 69,0 00. I n t h e m ost r e ce nt y e ars f o r w hic h d ata a re a va ila b le , U C’s c o st p er d eg re e h as i n cre ase d s lig htly (5 p erc e nt). F ig ure 2 . U C’s c o st p er d eg re e h as f a lle n o ve r t im e S O URC E: D elt a C ost P ro je ct. N O TE: F o r t h e lis t o f s c h o ols in clu d ed in t h e n atio nal a n d c o m mis sio n c o m paris o n g ro up s, p le ase s e e t h e t e ch nic a l a p pend ix . C osts a d ju ste d f o r in fla tio n. U C’s c o st p er d eg re e t r a je cto ry f a lls s q uare ly b etw een t h e t w o c o m paris o n g ro up s. In f a ct, s in ce t h e e arly 2 0 00s c o sts a t t h e c o m paris o n g ro up h ave in cre ase d m ark e d ly — by 2 0 13 , t h e c o st p er d eg re e i n t h is g ro up w as 6 0 p erc e nt h ig he r t h an a t U C. T his la rg e, s u sta in e d in cre ase is d riv e n p rim arily b y r is in g c o sts a m ong t h e f o ur p riv a te u niv e rs it ie s in t h e g ro up (H arv a rd , Y ale , M IT , a n d S ta n fo rd ). T he c o st p er d eg re e f o r t h e n atio nal c o m paris o n g ro up h as a ls o in cre ase d o ve r t h e p ast 2 0 y e ars , t h o ug h s lo w ly — an d it r e m ain s b elo w t h e U C s y ste m . T he f a ct t h at U C’s a ve ra g e c o st p er d eg re e h as b een c o nsis te ntly a b ove t h at o f s im ila r in stit u tio ns n atio nally r e fle cts , in p art, p ub lic s a la rie s t h at t r y t o k e ep p ace w it h h ig he r c o st o f liv in g in a n e xp ensiv e s ta te (G ord on e t a l. 2 0 07). C ost p er d eg re e a t C SU T he d ow nw ard t r e nd in in stit u tio nal c o sts is e ve n m ore d ra m atic a t C SU . In a s p an o f 2 5 y e ars , C SU l o w ere d t h e ir c o st p er d eg re e b y m ore t h an 3 3 p erc e nt— fr o m $ 67,0 00 t o $ 45 ,0 00 (F ig ure 3 ). B y c o m paris o n, c o sts f o r t h e n atio nal c o m paris o n g ro up r e m ain e d r e la tiv e ly c o nsta n t o ve r t h e p erio d . A nd c o sts f o r t h e c o m mis sio n c o m paris o n g ro up c o sts r o se s ig nif ic a n tly — by m ore t h an 1 3 p erc e nt, o r $ 9,0 00. 1 0 F ig ure 3 . C SU ’s c o st p er d eg re e is n o w lo w er t h an m an y s im il a r s c h o ols S O URC E: D elt a C ost P ro je ct. N O TE: F o r t h e lis t o f s c h o ols in clu d ed in t h e n atio nal a n d c o m mis sio n c o m paris o n g ro up s, p le ase s e e t h e t e ch nic a l a p pend ix . C osts a d ju ste d f o r in fla tio n. C SU ’s im pre ssiv e r e d uctio n in in stit u tio nal c o sts is m ost lik e ly r e la te d t o im pro ve m ents in g ra d uatio n r a te s. S in ce 2 0 00, C SU h as d oub le d it s f o ur-y e ar g ra d uatio n r a te a n d im pro ve d it s s ix - y e ar g ra d uatio n r a te b y a lm ost 2 0 p erc e nta g e p oin ts (J a ck so n a n d C ook 2 0 16 ). F u rth e rm ore , t h e se i m pro ve m ents o ccu rre d d urin g a p erio d o f s ig nif ic a n t f u nd in g c u ts . In 2 0 00, C SU r e ce iv e d n e arly $ 9,4 0 0 p er f u ll- tim e s tu d ent— by 2 0 13 , t h is a m ount h ad d ro pped t o a b out $ 6,5 0 0, a lt h o ug h C SU m ad e u p s o m e o f t h is r e ve nue lo ss w it h t u it io n in cre ase s. T he c o st p er d eg re e m easu re , w hic h r e ve als t h is s u sta in e d d ow nw ard t r e nd , d em onstr a te s t h e s ig nif ic a n t g ain s m ad e in g ra d uatin g m ore s tu d ents . A s w e’v e s e en, t h e t r e nd s in c o st p er d eg re e a t b oth U C a n d C SU c h alle ng e t h e c o m monly h e ld b elie f t h at t h e in stit u tio nal c o st o f p ro vid in g h ig he r e d uca tio n is r is in g r a p id ly a m ong p ub lic u niv e rs it ie s in C alif o rn ia . In f a ct, a cco rd in g t o o ur m easu re , t h e c o st o f p ro d ucin g a d eg re e a t t h e se s y ste m s h as d ecre ase d o ve r t im e. N eve rth e le ss, d esp it e t h is d ow nw ard t r e nd , in stit u tio nal c o sts a t U C r e la tiv e t o s o m e o th e r in stit u tio ns a p pear t o b e h ig he r. H ow eve r, a s w e d is c u ss in t h e n e xt s e ctio n, m an y f a cto rs a ffe ct c o sts p er d eg re e. It is im porta n t t o u se t h is m easu re a s a n in d ic a to r o f t h e im pact o f h ig he r e d uca tio n in ve stm ents r a th e r t h an a s a n a ll- e nco m passin g p ro xy f o r e va lu atin g i n stit u tio nal e ffic ie ncy a n d p ro d uctiv it y . C osts p er D eg re e in P ers p ectiv e T he s im plic it y o f t h e c o st p er d eg re e m easu re is p art o f it s a p peal. B ut u nd ers ta n d in g t h e im pact o f t h e u nd erly in g c o st d riv e rs is n o t s o s tr a ig htfo rw ard . S eve ra l in d ep end ent f a cto rs c a n a ffe ct c o st p er d eg re e c a lc u la tio ns (T ab le 1 ). 1 1 T ab le 1 . C osts p er d eg re e c a n b e a ffe cte d b y m an y e le m en ts N O TE: T he p ro je cte d im pact o n t h e c o st p er d eg re e m easu re a ssu m es a ll o th e r f a cto rs a re h e ld c o nsta n t. O f c o urs e , t h e t r a d e-o ffs s h o w n in T ab le 1 a re b ase d o n t h e a ssu m ptio n t h at a ll o th e r p arts o f t h e s y ste m r e m ain u nch an g ed . T his is a u se fu l a ssu m ptio n in t h e a b str a ct, b ut o ne t h at is u nlik e ly t o h o ld in p ra ctic e . F o r e xa m ple , in ve stin g m ore r e so urc e s in s tu d ent s e rv ic e s a n d a d vis in g w ill c o st m ore m one y, a n d a ll o th e r t h in g s b ein g e q ual, t h is w ill in cre ase t h e c o st p er d eg re e. B ut it is a ls o q uit e p ossib le t h at t h is in ve stm ent w ould im pro ve t h e c h an ce t h at m ore s tu d ents g ra d uate in a t im ely m an ne r— in cre asin g g ra d uatio n r a te s a n d d ecre asin g t h e c o st p er d eg re e. In o th e r w ord s, b eca u se t h e m easu re d is tills s e ve ra l in te rre la te d p olic y c h o ic e s in to a s in g le n um ber, it is im porta n t t o b e c a re fu l n o t t o o ve rs im ply c o sts . I n te rp re tin g c h an g es in c o sts p er d eg re e, p artic u la rly o n a y e ar-to -y e ar b asis , is e sp ecia lly c h alle ng in g . F o r e xa m ple , a s c h o ol c o uld c h o ose t o p ut o ff m ain te nan ce a n d ig no re r e p air s t o it s p hysic a l p la n t t o s a ve m one y— re d ucin g it s c o st p er d eg re e in a p artic u la r y e ar, b ut le ad in g t o g re ate r c o sts d ow n t h e r o ad . O r a s c h o ol m ay d ecid e t o e xp an d it s h e alt h s c ie nce s a n d e ng in e erin g p ro g ra m s in r e sp onse t o a n in cre ase in d em an d f o r S TEM g ra d uate s. T he se p ro g ra m s t y p ic a lly c o st m ore o n a p er s tu d ent b asis b eca u se o f e xp ensiv e in str u ctio nal e q uip m ent a n d h ig he r f a cu lt y s a la rie s. T his s c h o ol c o uld b e m akin g a n im porta n t c o ntr ib utio n t o t h e s ta te ’s w ork fo rc e n e ed s, b ut i t is lik e ly t o in cu r a h ig he r c o st p er d eg re e in b oth t h e s h o rt a n d lo ng t e rm s. T he f a ct t h at in t h is c a se t h e c o st p er d eg re e g oes u p d oes n o t s u g gest t h at t h e s c h o ol h as s o m eho w b eco m e le ss e ffic ie nt. It is s im ply a r e fle ctio n o f t h e r e alit ie s o f in ve stin g in p ro g ra m s w it h h ig he r c o st s tr u ctu re s. O th e r e le m ents a ls o h ave a d efin in g im pact o n a n in stit u tio n’s c o st p er d eg re e— fr o m it s m ix o f s tu d ents t o it s o ve ra ll m is sio n. A s c h o ol t h at h as a g re ate r s h are o f c o m munit y c o lle g e t r a n sfe r s tu d ents is lik e ly t o h ave a lo w er c o st p er d eg re e, s in ce t h o se s tu d ents w ill b e a b le t o c o m ple te t h e ir p ro g ra m q uic k e r. S im ila rly , a s c h o ol w it h in t h e C SU s y ste m , w it h it s f o cu s o n u nd erg ra d uate i n str u ctio n, w ill h ave a f u nd am enta ll y d if fe re nt c o st p er d eg re e t h an o ne in t h e U C s y ste m , w hic h h as a s tr o ng er e m phasis o n g ra d uate a n d p ro fe ssio nal in str u ctio n, a s w ell a s r e se arc h . In f a ct, t h e c o st p er d eg re e n atio nw id e a t s c h o ols w it h v e ry h ig h r e se arc h a ctiv it y a ve ra g es 2 0 p erc e nt h ig he r t h an a t s c h o ols w it h a le ss in te nse f o cu s o n r e se arc h . (F o r m ore d eta ils o n t h e se f a cto rs a n d o th e rs , s e e t h e t e ch nic a l a p pend ix . ) F in ally , t h e o ne c rit ic a l f a cto r n o t c a p tu re d b y t h e c o st p er d eg re e m etr ic is e d uca tio nal q ualit y ( N atio nal R ese arc h C ouncil 2 0 12 ). A rtic u la tin g a s in g le d efin it io n o f w hat c o nstit u te s a q ualit y e d uca tio n is e lu siv e , a n d n atio nal r a n kin g s o f h ig he r e d uca tio n in stit u tio ns a re b oth c e le b ra te d a n d c rit ic iz e d . N eve rth e le ss, C alif o rn ia ’s h ig he r e d uca tio n s y ste m is h e ld in h ig h r e g ard , a n d a m yo pic f o cu s o n a s in g le p erfo rm an ce m etr ic c o uld p ote ntia lly t h re ate n t h at q ualit y . F o r e xa m ple , a n i n stit u tio n c o uld d ecre ase it s c o st p er d eg re e b y t a kin g s te p s t h at h arm t h e q ualit y o f e d uca tio n t h at i t p ro vid es— in cre asin g c la ss s iz e s, d ecre asin g c o nta ct h o urs w it h s tu d ents , a n d lo w erin g g ra d uatio n r e q uir e m ents . H ow eve r, t h e re a re a n um ber o f c h e ck s t h at w ould m ake s u ch a w ho le sa le d im in is h m ent u nlik e ly . F ir s t, in te rn ally , t h e f ie rc e st p ro te cto rs o f t h e in te g rit y o f e d uca tio nal o ffe rin g s a re a n in stit u tio n’s f a cu lt y a n d s ta ff. S eco nd , e xte rn ally , a ll o f t h e U Cs a n d C SU s a re s u b je ct t o r e g io nal a ccre d it a tio n b od ie s, w ho se jo b it is t o e nsu re t h at in stit u tio ns m eet s p ecif ie d s ta n d ard s. A nd f in ally , m ark e t f o rc e s w ould d is c o ura g e s c h o ols f r o m lo w erin g t h e q ualit y o f i n str u ctio n. If t h e p ub lic p erc e iv e s a n in stit u tio n’s q ualit y t o h ave d eclin e d , f e w er s tu d ents w ill s e ek a d m is sio n a n d f e w er e m plo ye rs w ill lo ok t o h ir e it s g ra d uate s. L o okin g A head C le arly , m an y f a cto rs a ffe ct a n in stit u tio n’s c o st p er d eg re e. N eve rth e le ss, a p ply in g t h e c o st p er d eg re e m easu re a t a s ta te o r s y ste m le ve l p ro vid es p olic ym ake rs a n d o th e rs w it h a c o nsis te nt, r e lia b le , a n d o b je ctiv e m eth o d f o r e xa m in in g h ig he r e d uca tio n r e so urc e s a n d d ete rm in in g w he th e r t h e y a re p ro d ucin g t h e d esir e d e ffe cts . If a p plie d c a re fu lly , t h e m easu re c a n in fo rm a n d im pro ve p olic ym ake rs ’ u nd ers ta n d in g o f t h e b ro ad c o lle ctio n o f in stit u tio ns t h at m ake u p C alif o rn ia ’s p ub lic s y ste m o f h ig he r e d uca tio n. T he c e ntr a l a im o f t h is r e p ort is t o e nco ura g e C alif o rn ia ’s p olic ym ake rs a n d it s h ig he r e d uca tio n s y ste m s t o u se t h e c o st p er d eg re e m easu re t o h e lp f r a m e h ig he r e d uca tio n f in an ce d is c u ssio ns. F o r t h e se d is c u ssio ns t o b e m ost e ffe ctiv e , t h e r o le s a n d g oals a sso cia te d w it h p ro vid in g h ig he r e d uca tio n n e ed t o b e b ette r d efin e d . S ta te e le cte d o ffic ia ls a re b est p osit io ne d t o f o cu s o n i d entif y in g o ve ra ll g oals f o r t h e s y ste m s, e m bra cin g a r e la tiv e ly s m all s e t o f m etr ic s t o h o ld t h e m a cco unta b le . S yste m o ffic e s c o uld t h e n t r a n sla te t h o se g oals in to a ctio ns, d efin in g o b je ctiv e s a n d r e p ortin g p ro g re ss t o w ard g oals . In d iv id ual in stit u tio ns c o uld , in t u rn , f o cu s t h e ir d ata a n d a cco untin g s y ste m s t o b ette r u nd ers ta n d r e so urc e t r a d eo ffs in p urs u it s y ste m o b je ctiv e s. W it h t h is s tr u ctu re in m in d , w e o ffe r t h re e r e co m mend atio ns t o e nsu re t h at t h e c o st p er d eg re e m easu re b eco m es a n a cce p te d a n d r e lia b le m etr ic . F ir s t, it is im porta n t t h at t h e s y ste m s e nsu re c o nsis te nt r e p ortin g . T he D elt a C ost P ro je ct’s a b ilit y t o p ro d uce c o nsis te nt, c o m para b le d ata m ad e o ur a n aly sis p ossib le . R ais in g t h e p ro file o f t h e c o st p er d eg re e m easu re w ould m ake d ata c o lle ctio n m ore im porta n t t h an e ve r. C urre ntly , b oth t h e U C a n d C SU s y ste m s t a ke s te p s t o e nsu re t h at t h e ir r e sp onse s t o f e d era l f in an ce s u rv e ys p ro vid e a n a ccu ra te r e fle ctio n o f a ctiv it y o n t h e ir c a m puse s, a n d t h e se e ffo rts s h o uld b e s u p porte d . A t a m in im um , s y ste m o ve rs ig ht o f d ata c o lle ctio n s h o uld c o ntin ue , t o e nsu re t h e in te g rit y o f t h e c o st p er d eg re e m easu re a s t h e b asis f o r d is c u ssin g f in an ce d ecis io ns. S eco nd , f o r e ve n g re ate r q ualit y a ssu ra n ce w e r e co m mend t h e r e su rre ctio n o f a c e ntr a l s ta te w id e h ig he r e d uca tio n a u th o rit y . T he s tr u ctu ra l a rg um ent f o r a c e ntr a l a u th o rit y c a n b e t r a ce d t o C alif o rn ia ’s M aste r P la n f o r H ig he r E d uca tio n, w hic h s till d efin e s m uch o f t h e h ig he r e d uca tio n u niv e rs e in C alif o rn ia . F ro m a p ra ctic a l s ta n d poin t, e sta b lis h in g a c e ntr a l a u th o rit y t o t r a ck p ro g re ss t o w ard h ig he r e d uca tio n g oals w ould p ro vid e a g re ate r d eg re e o f t r a n sp are ncy, c o nsis te ncy, a n d i m partia lit y a ro und m easu rin g t h e p erfo rm an ce o f t h e s ta te ’s h ig he r e d uca tio n s y ste m . T hir d , w hile s y ste m -w id e r e p ortin g is u se fu l, it w ould a ls o b e v a lu ab le t o b re ak o ut c a m pus-le ve l c o sts . D oin g s o w ould r e ve al s o m e o f t h e d if fe re nce s in t h e m is sio ns p urs u e d b y in d iv id ual s c h o ols a n d c o ntr ib ute t o a m ore n uan ce d u nd ers ta n d in g o f t h e r e la tio nsh ip b etw een r e so urc e s a n d o utc o m es. It w ould a ls o e nab le s y ste m a d m in is tr a to rs t o e ng ag e w it h c a m pus le ad ers in d is c u ssio ns r e g ard in g t h e p ote ntia l f o r a d dit io nal r e so urc e s t o p ro d uce m ore g ra d uate s. T he id ea o f u sin g t h e c o st p er d eg re e m easu re a s t h e s ta rtin g p oin t f o r in stit u tio nal c o st a n aly se s is m ore t h an a n a ca d em ic t a lk in g p oin t. In f a ct, t h e U niv e rs it y o f C alif o rn ia , R iv e rs id e, h as a p plie d a s im ila r m eth o d t o g re at e ffe ct w it h it s a ctiv it y b ase d c o stin g (A BC ) a cco untin g t o ol (A ng uia n o e t a l 2 0 17 ). O ur m easu re a g gre g ate s c o st a n d d eg re e d ata f r o m b ro ad c a te g orie s. U CR’s t o ol c a p tu re s m uch m ore d eta ile d c o st d ata u sin g a c a m pus-w id e in te g ra te d d ata s y ste m a n d s o phis tic a te d a n aly tic a l s o ft w are . B y m erg in g in fo rm atio n o n s tu d ents , h um an r e so urc e s, f a cilit ie s, f a cu lt y w ork lo ad , a n d f in an cia l d ata s y ste m s, t h e A BC t o ol a llo w s f o r v e ry s p ecif ic d is c u ssio ns r e g ard in g r e so urc e a llo ca tio n. F u rth e rm ore , t h e c o lle g e n o w h as t h e a b ilit y t o q uan tif y t h e le ve l o f c ro ss- s u b sid iz a tio n t h at t a ke s p la ce t h ro ug ho ut t h e c a m pus a n d c a n id entif y t h e o ptim al m ix f o r a ch ie vin g t h e h ig he st le ve l o f s tu d ent s u cce ss g iv e n in stit u tio nal p rio rit ie s a n d a c o nstr a in e d b ud get. W e w ould e nco ura g e t h e e xp an sio n o f s u ch e ffo rts t o o th e r w illin g in stit u tio ns. F in ally , w e p ro pose t h is m easu re a s a s ta rtin g p oin t. It is a g no stic a b out k e y p arts o f h ig he r e d uca tio n f in an ce d is c u ssio ns— partic u la rly p olic y g oals a n d t h e m ix o f r e ve nue s o urc e s. F o r t h e m easu re t o b e m ost e ffe ctiv e , p olic ym ake rs a n d le ad ers in t h e s ta te ’s h ig he r e d uca tio n s y ste m s w ould n e ed f ir s t t o id entif y t h e ir p olic y g oals a n d t h e n d is c u ss h o w t h e s u cce ssfu l p urs u it o f t h o se g oals c o uld a ffe ct c o sts p er d eg re e. T he c o st p er d eg re e m easu re w ould t h e n p ro vid e a c o nsis te nt, r e lia b le , a n d o b je ctiv e w ay t o t r a ck p ro g re ss a n d a sse ss c o st e ffe ctiv e ne ss a cro ss a n a rr a y o f o ptio ns a n d s tr a te g ie s. N O TES 1 . G ove rn o r B ro w n n o te d h is c o nce rn w it h t h e h ig he r e d uca tio n c o sts in t h e 2 0 13 – 14 s ta te b ud get s ta tin g t h at h ig he r e d uca tio n c o sts “ c o ntin ually in cre ase w it h o ut n e ce ssa rily a d din g p ro d uctiv it y o r v a lu e .” T he L A O a n aly sis o f t h is b ud get s u p porte d t h is a rg um ent (L A O 2 0 13 ). T his v ie w t h at c o lle g e c o sts a re in cre asin g f a r t o o f a st h as a ls o b een w ell d ocu m ente d in t h e n e w s m ed ia b y in stit u tio ns lik e t h e N ew Y ork T im es (M artin 2 0 12 ), t h e W ash in g to n P ost (C ho 2 0 09), a n d t h e W all S tr e et J o urn a l (B elk in a n d S co tt 2 0 12 ). 2 . T uit io n is o ft e n d is c o unte d b ase d o n a s tu d ent’s a b ilit y t o p ay g iv e n t h e ir f a m ily in co m e a n d a sse ts . T uit io n r e ve nue g ene ra te d f r o m h ig he r in co m e s tu d ents is u se d t o s u b sid iz e t h e c o st o f e d uca tio n f o r lo w er in co m e s tu d ents . It is i m porta n t t o n o te t h at m ost s tu d ents a t U C a n d C SU p ay n o t u it io n b eca u se o f g ene ro us s ta te a n d in stit u tio nal a id p ro g ra m s. 3 . C ro ss-s u b sid iz a tio n is p erv a siv e in a ll s e cto rs o f h ig he r e d uca tio n. R eve nue s g ene ra te d f r o m u nd erg ra d uate s tu d ents w ho e nro ll in lo w er c o st s u b je cts s u ch a s h is to ry a n d s o cio lo g y h e lp t o p ay f o r h ig h c o st s u b je cts lik e e ng in e erin g a n d c h e m is tr y w hic h d em an d s m alle r c la ss s iz e s a n d e xp ensiv e la b e q uip m ent. S im ila rly , lo w er d iv is io n c la sse s (f ir s t a n d s e co nd y e ar c o urs e s a n d g ene ra l e d uca tio n c o urs e s) a re le ss e xp ensiv e t h an u p per d iv is io n c o urs e s. S in ce s tu d ents i n e ach d is c ip lin e a n d d iv is io n p ay t h e s a m e t u it io n a m ount (n e t o f f in an cia l a id ) t h e “ e xc e ss” r e ve nue g ene ra te d h e lp s u nd erw rit e t h e c o st o f t h e h ig he r c o st c o urs e s. F u rth e rm ore , a sid e f r o m p ro fe ssio nal s c h o o ls , g ra d uate e d uca tio n is s u b sid iz e d in p art b y u nd erg ra d uate r e ve nue s. 4 . W hile c o st p er d eg re e is a g ood m easu re , it is s o m eth in g o f a b lu nt in str u m ent. F o r e xa m ple , w e a re m ost c o nce rn e d w it h t h e g ap in t h e p ro d uctio n o f b ach e lo r’s d eg re es, b ut w e in clu d e g ra d uate d eg re es in t h e c o st p er d eg re e m easu re . T his is f o r t w o im porta n t r e aso ns. F ir s t, t h o ug h s ta te p olic y u nd ers ta n d ab ly t e nd s t o f o cu s o n u nd erg ra d uate e d uca tio n, g ra d uate d eg re es r e m ain a n e sse ntia l o utp ut o f b oth t h e U C a n d C SU s y ste m s a n d c e rta in ly m ake a c o ntr ib utio n t o t h e s ta te ’s e co no m y. A ddit io nally , t h e p oolin g o f f u nd in g r e so urc e s c o up le d w it h t h e c ro ss s u b sid iz a tio n a cro ss le ve ls o f in str u ctio n m ake s it d if fic u lt t o s e p ara te u nd erg ra d uate a n d g ra d uate in str u ctio n a n d s u p port e xp ense s. W e d id e xp erim ent w it h d if fe re nt w eig htin g s c h e m es t o c a p tu re d if fe re nt m ix e s o f u nd erg ra d uate a n d g ra d uate d eg re es. W e f o und lit tle r e la tiv e im pact w he n c o m parin g o ve r t im e o r d if fe re nt g ro up s o f s c h o ols . P le ase s e e t h e t e ch nic a l a p pend ix f o r m ore d eta il. 5 . F o r e xa m ple , t h e c o st p er d eg re e m easu re h as b een u se d b y t h e N atio nal A ca d em y o f S cie nce s in t h e ir m eta -a n aly sis i n ve stig atin g h o w b est t o m easu re h ig he r e d uca tio n p ro d uctiv it y . T his m eth o d olo g y is d eriv e d f r o m t h e e arly w ork o f W illia m B ow en in t h e m id 1 9 60 s w ho b eg an t o d eve lo p t h e e d uca tio n a n d r e la te d c o st m easu re f o r t h e n C hair m an o f t h e C arn e g ie C om mis sio n o n t h e F u tu re o f H ig he r E d uca tio n, C la rk K err. 6 . W e c o m bin e t h e f o ur-y e ar u niv e rs it ie s h e re b eca u se b oth c o ntr ib ute t o t h e p olic y o utc o m e o f d eg re e p ro d uctio n. T ho ug h t h e s ta te f u nd s t h e s y ste m s s e p ara te ly , it is t h e t o ta l d eg re e p ro d uctio n t h at is u se d t o m easu re t h e s k ills g ap . T he c o m bin e d f ig ure s a ls o f a cilit a te c o m paris o n a cro ss o th e r s ta te s. 7 . S in ce t h e d ata u se d a re p ub lic ly a va ila b le , o th e r c o lle ctio ns o f c o m para b le g ro up s c a n b e c o nstr u cte d . 8 . W e u se t h e 2 0 10 C arn e g ie C la ssif ic a tio ns a n d in clu d e t h e R 1, R 2, R 3, M 1 a n d M 2 u niv e rs it ie s, w hic h a re t h e c a te g orie s t h at in clu d e t h e U C a n d C SU s c h o ols . S ee C arn e g ie C la ssif ic a tio n o f H ig he r E d uca tio n In stit u tio ns f o r a d is c u ssio n o f t h e m eth o d olo g y. 9 . T he se s c h o ols w ere la st r e p orte d in t h e C PEC p ub lic a tio n F is c a l P ro file s 2 0 10 . 1 0 . I t is im porta n t t o r e ca ll t h at t h e c o st p er d eg re e m easu re in clu d es a ll d eg re es, n o t ju st b ach e lo r’s d eg re es. T his a sp ect is e sp ecia lly im porta n t w he n d is c u ssin g U C b eca u se p ub lic r e se arc h u niv e rs it ie s p ro vid e t h e v a st m ajo rit y o f g ra d uate d eg re es in C alif o rn ia . P ro d ucin g g ra d uate d eg re es r e fle cts a n im porta n t p art o f U C’s m is sio n a n d t h e se d eg re es s ig nif ic a n tly in cre ase t h e o ve ra ll c o st p er d eg re e. 1 1 . C SU r e ce ntly a n no unce d a n e w g ra d uatio n in it ia tiv e w hic h a im s t o , a m ong o th e r g oals , im pro ve f o ur-y e ar g ra d uatio n r a te s, im pro ve t w o-y e ar g ra d uatio n r a te s f o r t r a n sfe r s tu d ents , a n d c lo se a ll a ch ie ve m ent g ap s b y 2 0 25 . C SU e stim ate s t h at t h is n e w in it ia tiv e w ill c o st b etw een $ 40 0 a n d $ 50 0 m illio n a n d is a sk in g f o r a n a d dit io nal $ 32 6 m illio n i n t h e 2 0 17 – 18 b ud get. T his in it ia tiv e p ro pose s t o p ro d uce a n a d dit io nal 1 .7 m illio n g ra d uate s b etw een n o w a n d 2 0 30 . I f t h at m an y d eg re es a re p ro d uce d w it h a n a d dit io nal $ 50 0 m illio n, t h e c o st p er d eg re e w ould in cre ase b y $ 30 0, o r l e ss t h an 1 p erc e nt o f t h e c u rre nt c o st le ve l— a p ote ntia lly s ig nif ic a n t r e tu rn f o r a m od est a d dit io nal in ve stm ent. R EFE R EN CES A ng uia n o , M aria , e t a l. 2 0 17 . “ O ptim iz in g R eso urc e A llo ca tio n f o r T each in g : A n e xp erim ent in A ctiv it y B ase d C ostin g .” U niv e rs it y o f C alif o rn ia , R iv e rs id e. B elk in , D oug la s a n d T hurm , S co tt. 2 0 12 . “ D ean s L is t: H ir in g S pre e F atte ns C olle g e B ure au cra cy— And T uit io n . ” T he W all S tr e et J o urn a l . D ece m ber 2 8. B ow en, W illia m G . 1 9 68. T he E co no m ic s o f t h e M ajo r P riv a te U niv e rs it ie s . C arn e g ie C om mis sio n o n H ig he r E d uca tio n. C ho , D avid . 2 0 09. “ A s c o lle g e c o sts r is e , lo an s b eco m e h ard er t o g et . ” T he W ash in g to n P ost . D ece m ber 2 8. C olle g e F u tu re s F o und atio n. 2 0 17 . S ecu rin g t h e P ub lic T ru st: P ra ctic a l S te p s t o w ard H ig he r E d uca tio n F in a nce R efo rm in C alif o rn ia . D elt a C ost P ro je ct. 2 0 13 . D elt a c o st p ro je ct d ocu m enta tio n o f IP ED S D ata base a nd r e la te d p ro d ucts . G ord on, T ra cy M ., J a im e C alle ja A ld ere te , P atr ic k J . M urp hy, J o n S onste lie , a n d P in g Z han g . 2 0 07. F is c a l R ea lit ie s: B ud get T ra deo ffs in C alif o rn ia G ove rn m ent . P ub lic P olic y In stit u te o f C alif o rn ia . J o hnso n, H an s, e t a l. 2 0 14 . H ig he r E d uca tio n in C alif o rn ia : In stit u tio na l C osts . P ub lic P olic y In stit u te o f C alif o rn ia . M artin , A nd re w . 2 0 12 . “ S lo w ly , A s S tu d ent D eb t R is e s, C olle g es C onfr o nt C osts ”. T he N ew Y ork T im es. M ay 1 4 . N atio nal R ese arc h C ouncil. 2 0 12 . Im pro vin g M easu re m ent o f P ro d uctiv it y in H ig he r E d uca tio n. M ea su rin g H ig he r E d uca tio n P ro d uctiv it y : C once p tu a l F ra m ew ork a nd D ata N eed s . T ere sa A . S ulliv a n , C hris to phe r M ack ie , W ill ia m F . M assy , a n d E sh a S in h a, E d it o rs . C om mit te e o n N atio nal S ta tis tic s a n d B oard o n T estin g a n d A sse ssm ent, D iv is io n o f B ehavio ra l a n d S ocia l S cie nce s a n d E d uca tio n. W ash in g to n D C: T he N atio nal A ca d em ie s P re ss. U S D ep artm ent o f E d uca tio n. In stit u te o f E d uca tio n S cie nce s, N atio nal C ente r f o r E d uca tio n S ta tis tic s. In te g ra te d P osts e co nd ary D ata S yste m (IP ED S). W ellm an , J a n e . 2 0 16 . F a cto rs S ha pin g t h e E vo lu tio n o f P ub lic H ig he r E d uca tio n F in a ncin g in C alif o rn ia . C olle g e F u tu re s F o und atio n. A C KN O W LE D G M EN TS T he a u th o rs w is h t o a ck n o w le d ge G arre tt A sh le y, J a co b J a ck so n, H an s J o hnso n, N in a R ob in so n, a n d J a n e W ellm an f o r t h e ir r e vie w s o f e arly d ra ft s o f t h e p ap er. W e w ould a ls o a ck n o w le d ge L yn e tte U bois f o r b oth h e r e arly r e vie w o f t h e d ra ft a n d la te r c o ntr ib utio n t o t h e r e ad ab ilit y o f t h e f in al d ocu m ent. F in ally , w e w ould lik e t o t h an k N ate J o hnso n f o r p ro vid in g i n sig ht in to h ig he r e d uca tio n m etr ic s a n d s ta ff a t t h e U C a n d C SU s y ste m s w ho p atie ntly in fo rm ed u s a b out t h e d eta ils a n d c h alle ng es a sso cia te d w it h d eve lo pin g s u ch a m easu re . A ny e rro rs a re o ur o w n. A BO UT T H E A U TH O RS K evin C ook is a r e se arc h a sso cia te in t h e P PIC H ig he r E d uca tio n C ente r . H is r e se arc h in te re sts in clu d e e d uca tio n f in an ce a n d p olic y f o r b oth K –12 a n d h ig he r e d uca tio n, a n d h is c u rre nt w ork f o cu se s o n p erfo rm an ce -b ase d f u nd in g , o nlin e l e arn in g , a n d p ub lic p ensio ns. B efo re jo in in g P PIC , h e w ork e d a s a r e se arc h a ssis ta n t in t h e in ve stm ents d iv is io n o f t h e C alif o rn ia S ta te T each e rs ’ R etir e m ent S yste m , w he re h e c o nd ucte d s u sta in ab ilit y r is k a n aly sis . H e h o ld s a n M PPA f r o m S acra m ento S ta te U niv e rs it y a n d a B A in h is to ry f r o m O ccid enta l C olle g e. P atr ic k M urp h y is d ir e cto r o f r e se arc h a n d a s e nio r f e llo w a t t h e P ub lic P olic y In stit u te o f C alif o rn ia , w he re h e h o ld s t h e T ho m as C . S utto n C hair in P olic y R ese arc h . H e is a ls o a m em ber o f t h e P PIC H ig he r E d uca tio n C ente r t e am . H e is a n a d ju nct p ro fe sso r o f p olit ic s a t t h e U niv e rs it y o f S an F ra n cis c o , w he re h e s e rv e d a s t h e d ir e cto r o f t h e M cC arth y C ente r f o r P ub lic S erv ic e . P re vio usly , h e w ork e d f o r R A N D a n d a t t h e O ffic e o f M an ag em ent a n d B ud get in W ash in g to n, D C. H e h o ld s a P hD f r o m t h e U niv e rs it y o f W is c o nsin – M ad is o n a n d a m aste r’s o f p ub lic a ffa ir s f r o m t h e U niv e rs it y o f T exa s– A ustin . T alib J a b bar w as a n a d m in is tr a tiv e a n d r e se arc h a sso cia te a t t h e P ub lic P olic y In stit u te o f C alif o rn ia . H e c u rre ntly is a P h.D . c a n d id ate a t t h e U niv e rs it y o f C alif o rn ia , S an ta C ru z. B efo re jo in in g P PIC , h e w as a r e se arc h a ssis ta n t a t t h e V arie tie s o f D em ocra cy (V D em ) In stit u te , in S w ed en. H e h as w ork e d a t b oth p riv a te a n d p ub lic s e cto r o rg an iz a tio ns, i n clu d in g t h e N atio nal A ca d em y o f S ocia l In su ra n ce in W ash in g to n, D C. H e h o ld s a n M S in s o cia l p olic y f r o m L u nd U niv e rs it y a n d a B A f r o m t h e U niv e rs it y o f C alif o rn ia , S an ta C ru z, w he re h e m ajo re d in p olit ic s. O TH ER P U BLIC ATIO NS H ig her E duca tio n in  C alifo rn ia H ig her E duca tio n in  C alifo rn ia : In stitu tio nal C osts H ig her E duca tio n in  C alifo rn ia : P erfo rm ance  B udgetin g © 2017 Public Policy Institute of California The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research. PPIC is a public charity. It does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source. Research publications reflect the views of the authors and do not necessarily reflect the views of our funders or of the staff, officers, advisory councils, or board of directors of the Public Policy Institute of California. PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 600 San Francisco, CA 94111 T 415 291 4400 F 415 291 4401 PPIC SACRAMENTO CENTER Senator Office Building 1121 L Street, Suite 801 Sacramento, CA 95814 T 916 440 1120 F 916 440 1121 ppic.org" } ["___content":protected]=> string(104) "

R 0317KCR

" ["_permalink":protected]=> string(108) "https://www.ppic.org/publication/measuring-institutional-costs-at-californias-public-universities/r_0317kcr/" ["_next":protected]=> array(0) { } ["_prev":protected]=> array(0) { } ["_css_class":protected]=> NULL ["id"]=> int(9040) ["ID"]=> int(9040) ["post_author"]=> string(1) "1" ["post_content"]=> string(0) "" ["post_date"]=> string(19) "2017-05-20 02:43:18" ["post_excerpt"]=> string(0) "" ["post_parent"]=> int(4609) ["post_status"]=> string(7) "inherit" ["post_title"]=> string(9) "R 0317KCR" ["post_type"]=> string(10) "attachment" ["slug"]=> string(9) "r_0317kcr" ["__type":protected]=> NULL ["_wp_attached_file"]=> string(13) "R_0317KCR.pdf" ["wpmf_size"]=> string(6) "246535" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(48874) "March 2017 Kevin CookTalib Jabbar Patrick Murphy Measuring Institutional Costs at California’s Public Universities Supported with funding from the Sutton Family Fund Summary California has recently increased its investment in higher education after many years of reducing state support. At the same time, the state’s four-year public systems, the University of California (UC) and California State University (CSU), are currently poised to raise tuition for the first time in several years. If the past is any indication, intense discussions lie ahead about the need for additional higher education resources. We offer a constructive starting point for those discussions by introducing a straightforward and objective assessment of institutional costs. We rely on a measure that connects institutional costs to the number of degrees UC and CSU produce. This measure provides a clear understanding of trends in California’s institutional costs and allows comparisons with colleges and universities in other states. It also offers higher education institutions the opportunity to demonstrate progress toward their goals in an accessible, transparent way. Applying this measure to California’s public four-year institutions, we find that: Institutional costs per degree across UC and CSU fell significantly —17 percent—from 1987 to 2013. This is an important savings in a state that will need to amp up its number of college graduates to meet future economic demand. At UC, the cost per degree fell 6 percent over the period —from $116,000 to $109,000. UC’s institutional costs in 2013 were lower than a comparison group that included both public and private institutions across the nation. But UC’s costs were higher than a national comparison group of public schools only. At CSU, the cost fell 33 percent —from $67,000 to $45,000. CSU’s 2013 costs were lower than both types of comparison groups—one that included public schools only and one that included both public and private institutions. We recommend that policymakers and higher education leaders use the cost per degree measure as a way to frame higher education finance discussions. It provides a consistent, reliable, and objective measure of institutional costs and performance. For the measure to be most effective, accurate data reporting will be essential. We also recommend the reintroduction of a state-level higher education authority to add validity to the process of gauging institutional performance. Using the measure within a larger framework of agreed-upon goals would go a long way toward improving higher education finance policy in California. I n tr o d uctio n P PIC r e se arc h h as f o und t h at if c u rre nt t r e nd s p ers is t, C alif o rn ia w ill f a ll 1 .1 m illio n c o lle g e g ra d uate s s h o rt o f m eetin g e co no m ic d em an d b y 2 0 30 . T o c lo se t h is g ap , w e e xp ect t h at b oth t h e s ta te a n d i t s s tu d ents w ill b e a sk e d t o c o ntr ib ute m ore t o h ig he r e d uca tio n in c o m in g y e ars . H ow f a r w ill a d dit io nal in stit u tio nal r e so urc e s g o t o w ard t h is e ffo rt w ill b e d ete rm in e d b y h o w m uch it c o sts t o p ro d uce a d eg re e. H ow eve r, r e ce nt d is c u ssio ns a b out h ig he r e d uca tio n c o sts h ave f e atu re d p olic ym ake rs a n d h ig he r e d uca tio n a d m in is tr a to rs e ng ag ed in a d eb ate t h at a p pears t o le ave a ll p artie s d is sa tis fie d . A s h as b een n o te d b y t h e C olle g e F u tu re s F o und atio n, t h e e le m ents o f t h is f r u str a tio n a re m ult if a ce te d a n d h ave b een b uild in g o ve r s e ve ra l d eca d es; t o a d dre ss t h is p ro b le m , t h e ir r e p ort r e co m mend s t h e d eve lo pm ent o f a c o m mon g ro up o f m easu re s t o a sse ss p ast p erfo rm an ce a s w ell a s t o g uid e f u tu re f in an ce d ecis io ns (C olle g e F u tu re s F o und atio n 2 0 17 ; W ellm an 2 0 16 ). O ur p ro je ct t a ke s a f ir s t s te p in t h at d ir e ctio n. W e p ro pose a m easu re — in stit u tio nal c o sts p er d eg re e— th at c o nne cts r e so urc e s t o o utc o m es in a w ay t h at is c o nsis te nt, c o m para b le , a n d b ro ad ly a cce ssib le . T o b e s u re , h ig he r e d uca tio n is a n d w ill r e m ain a c o m ple x, e xp ensiv e e nd eavo r— an d r e so urc e s a re lik e ly t o r e m ain s c a rc e . B ut, b y e sta b lis h in g a c o m mon m easu re o f c o sts , w e a im t o p ro vid e p olic ym ake rs a n d t h e p ub lic w it h a n im pro ve d , in tu it iv e s e nse o f w hat t h e ir in ve stm ent in h ig he r e d uca tio n p ro d uce s, b ase d o n a cce p te d n um bers . H ig he r e d uca tio n s y ste m s c a n , in t u rn , d em onstr a te w he th e r o r n o t t h e y a re m akin g p ro g re ss t o w ard t h e ir g oals in a c o st- e ffe ctiv e m an ne r. T R A C KIN G T H E C O ST O F H IG HER E D UCATIO N T he d eb ate s u rro und in g h ig he r e d uca tio n f in an ce is o ft e n o b sc u re d b y t h e p erv a siv e v ie w t h at c o lle g e c o sts a re o ut o f c o ntr o l. T his v ie w t y p ic a lly s te m s f r o m c o nce rn s a b out t u it io n in cre ase s, a n d , in d eed , t u it io n t o d ay is t r ip le w hat it w as t w enty y e ars a g o a t U C a n d d oub le a t C SU . B ut t h is p erc e p tio n is a ls o r e la te d t o a w id esp re ad b elie f t h at a d m in is tr a tiv e c o sts , f a cu lt y s a la rie s, e xe cu tiv e c o m pensa tio n, a n d f a cilit ie s a n d m ain te nan ce e xp ense s a re t o o h ig h— as w ell a s t o a g ene ra l s e nse o f g ro w in g in e ffic ie ncy in t h e h ig he r e d uca tio n b usin e ss m od el. T his n o tio n is n o t n e w a n d it s te m s f r o m t h e c o m ple x, o paq ue n atu re o f h ig he r e d uca tio n f in an ce (J o hnso n e t a l. 2 0 14 ). T ra ck in g d olla rs a s t h e y f lo w t h ro ug h h ig he r e d uca tio n s y ste m s is in h e re ntly c h alle ng in g . P ub lic u niv e rs it ie s t y p ic a lly h ave m ult ip le f u n d in g s o urc e s a n d t h e y p urs u e s e ve ra l m is sio ns a n d a ctiv it ie s — all o f w hic h c o m bin e t o c re ate a n in tr ic a te w eb o f c ro ss s u b sid iz a tio n, w it h r e ve nue s a sso cia te d w it h s o m e a ctiv it ie s b ein g u se d t o o ffs e t h ig he r c o st a ctiv it ie s. C onse q ue ntly , a ssig nin g c o sts t o s p ecif ic o utc o m es is d if fic u lt . T ra ck in g a s in g le d olla r f r o m s o urc e t o e xp end it u re is e ve n h ard er. F o r e xa m ple , it m ay c o st a u niv e rs it y m ore t o p ro d uce a c h e m is tr y m ajo r t h an a s o cio lo g y m ajo r b eca u se o f t h e n e ed f o r e xp ensiv e la b ora to rie s a n d e q uip m ent a s p art o f a c h e m is tr y m ajo r’s i n str u ctio n. S im ila rly , s m alle r c la sse s c o st m ore t h an la rg er o ne s; a s a r e su lt , g ra d uate c o urs e s c o st m ore t o p ro vid e t h an u nd erg ra d uate c o urs e s, a n d u p per d iv is io n u nd erg ra d uate c o urs e s g ene ra lly c o st m ore t h an lo w er d iv is io n u nd erg ra d uate c o urs e s. B ut u niv e rs it ie s d o n o t a cco unt f o r s p end in g b y m ajo r o r c o urs e le ve l, le t a lo ne b y in d iv id ual s tu d ents . In ste ad , t h e y t r a ck t h e d olla rs t h e y s p end o n f a cu lt y s a la rie s, s tu d ent s e rv ic e s, m ain te nan ce , a n d o th e r b ro ad -b ase d c a te g orie s. C om plic a tin g t h e p ic tu re is t h e f a ct t h at h ig he r e d uca tio n is s u p porte d b y m ult ip le r e ve nue s o urc e s, a n d t h o se f u nd s a re n o t a llo ca te d in t h e s a m e m an ne r f o r e ach s tu d ent. F o r e xa m ple , r e so urc e s f r o m t h e s ta te ’s G ene ra l F u nd a re u se d t o s u p port m ost s tu d ents , b ut u niv e rs it ie s d o n o t c h arg e a ll s tu d ents t h e s a m e a m ount o f t u it io n. It is v e ry p ossib le t h at d if fe re nt s tr e am s o f r e ve nue s u p port t w o s tu d ents in t h e s a m e p ro g ra m , w it h o ne s tu d ent p ayin g f u ll t u it io n w hile t h e o th e r is a tte nd in g w it h t h e s u p port o f C alG ra n ts a n d in stit u tio nal a id . T his w eb o f c ro ss s u b sid iz a tio n is n e ce ssa ry t o a ch ie ve t h e m ult ip le m is sio ns o f a h ig he r e d uca tio n i n stit u tio n. H ow eve r, it m ake s it v e ry d if fic u lt t o c o nne ct a n in stit u tio n’s p ro d uctio n c o sts w it h it s t u it io n p ric e a n d w it h t h e s ta te ’s c o ntr ib utio ns. It is h ard ly s u rp ris in g , t h e n, t h at t h e d eb ate s u rro und in g h ig he r e d uca tio n c o sts s tr u g gle s t o f in d c o m mon g ro und . 1 2 3 T H E C O ST P ER D EG REE M EA SU RE T o b ette r u nd ers ta n d c o lle g e c o sts it is h e lp fu l t o s e p ara te t h e “ c o st s h arin g ” a sp ect o f h ig he r e d uca tio n— in w hic h t h e s tu d ent, in stit u tio n, a n d g ove rn m ent b ear d if fe re nt p ortio ns o f t h e c o st o f h ig he r e d uca tio n— an d t h e “ p ro d uctio n c o st” o f h ig he r e d uca tio n, w hic h is t h e a ctu al c o st t o t h e i n stit u tio ns t h e m se lv e s. It is c le ar t h at t h e c o st o f h ig he r e d uca tio n h as in cre ase d f o r s tu d ents , in t h e f o rm o f h ig he r t u it io n a n d liv in g e xp ense s, w hile t h e c o st t o t h e s ta te h as d ecre ase d , g iv e n t h e r e d uce d s h are o f G ene ra l F u nd s p end in g o n h ig he r e d uca tio n. W hat is le ss c le ar is w he th e r t h e in stit u tio nal c o sts o f c o nd uctin g h ig he r e d uca tio n h ave in cre ase d o ve r t im e (J o hnso n e t a l. 2 0 14 ). P olic ym ake rs a n d t h e p ub lic a lik e o ft e n a ssu m e t h at t h e t r e nd in t h e se c o sts f o llo w s a s te ad y u p w ard c u rv e . B ut o ur in ve stig atio n in to t h e a va ila b le d ata s h o w s a m uch m ore c o m ple x p ic tu re , a s t h e c o st p er d eg re e m easu re w ill s h o w . W e b elie ve t h at t h is m easu re , f r o m a s ta te p olic y p ers p ectiv e , b est c o nne cts f u nd in g w it h in cre ase d d eg re e p ro d uctio n. T he c o st p er d eg re e m easu re is b ase d o n e sta b lis h e d s c h o la rs h ip a n d a llo w s in stit u tio nal c o sts t o b e m easu re d a n d e va lu ate d a cro ss in stit u tio ns, s ta te s, a n d t im e u sin g c u rre nt p ub lic ly a va ila b le d ata . T his m easu re p ro vid es a d dit io nal c la rit y t o t h o se s e ekin g t o b ette r u nd ers ta n d t r e nd s in i n stit u tio nal c o sts a n d e va lu ate t h e se t r e nd s r e la tiv e t o t h e n um ber o f d eg re es t h e se in stit u tio ns p ro d uce . T ho ug h n o s in g le m easu re c a n a d eq uate ly c a p tu re t h e p ro d uctiv it y o r e ffic ie ncy o f a c o m ple x s y ste m lik e a u niv e rs it y , t h e c o st p er d eg re e m easu re o ffe rs a r e lia b le , c o nsis te nt, a n d o b je ctiv e w ay t o u nd ers ta n d a c rit ic a l a sp ect o f h ig he r e d uca tio n f in an ce . T his r e p ort b eg in s b y e xa m in in g c o sts p er d eg re e a cro ss b oth o f C alif o rn ia ’s f o ur-y e ar h ig he r e d uca tio n s y ste m s a n d c o m parin g t h o se c o sts t o s im ila r p ub lic in stit u tio ns n atio nw id e. W e t h e n l o ok a t t h e U C a n d C SU s y ste m s s e p ara te ly , t r a ck in g t h e ir c o sts p er d eg re e a n d c o m parin g t h e m t o s im ila r in stit u tio ns o ve r t im e. N ext, w e t a ke a c lo se lo ok a t t h e k e y e le m ents t h at c a n a ffe ct a n i n stit u tio n’s c o st p er d eg re e a n d c o nsid er h o w t h o se e le m ents w ork t o g eth e r t o in flu e nce c o sts . F in ally , w e m ake t h e c a se f o r in cre asin g t h e p ro file o f t h e c o st p er d eg re e m easu re a n d o ffe r r e co m mend atio ns t o h e lp p olic ym ake rs a n d h ig he r e d uca tio n le ad ers b ette r u nd ers ta n d t h e c o nne ctio n b etw een d olla rs in ve ste d a n d o utc o m es r e aliz e d in C alif o rn ia ’s h ig he r e d uca tio n s y ste m s. D ata a n d M eth o d s T hro ug ho ut t h is r e p ort, w e u se d ata f r o m t h e D elt a C ost P ro je ct, c re ate d b y t h e A m eric a n I n stit u te s f o r R ese arc h . T he ir d ata c o m es f r o m t h e U S D ep artm ent o f E d uca tio n’s In te g ra te d P osts e co nd ary E d uca tio n D ata S yste m (IP ED S) b ut m ake s s o m e a d ju stm ents t o f a cilit a te a n aly sis . T he c o st p er d eg re e m easu re it s e lf (s o m etim es k n o w n a s “ e d uca tio n a n d r e la te d c o st p er d eg re e”) is d esig ne d t o c a p tu re c o sts d ir e ctly a sso cia te d w it h in str u ctio n a s w ell a s t h e i n d ir e ct e xp end it u re s a sso cia te d w it h m ovin g a s tu d ent t o w ard c o m ple tio n— in clu d in g a d m in is tr a tio n, a d vis in g a n d t u to rin g , a n d o pera tio ns a n d m ain te nan ce . D esp it e t h e m an y t y p es o f c o sts in clu d ed in t h e m easu re , it s a ctu al c a lc u la tio n is q uit e s tr a ig htfo rw ard . It e stim ate s t h e a g gre g ate c o st o f p ro d ucin g a d eg re e b y d iv id in g t h e t o ta l c o st o f e d uca tio n b y t h e t o ta l n um ber o f d eg re es p ro d uce d — in clu d in g b ach e lo r’s , m aste r’s , p ro fe ssio nal, a n d P hD . F o r m ore d eta ils , p le ase s e e t h e t e ch nic a l a p pend ix . 4 5 C osts p er D eg re e a t U C a n d C SU C ontr a ry t o p opula r b elie f, in stit u tio nal c o sts p er d eg re e a t C alif o rn ia ’s p ub lic u niv e rs it ie s (U C a n d C SU c o m bin e d ) h ave d eclin e d s u b sta n tia lly o ve r t im e. F ro m 1 9 87 u ntil 2 0 13 — th e y e ar o f t h e m ost r e ce nt d ata — in stit u tio nal c o sts p er d eg re e f e ll f r o m $ 85 ,0 00 t o $ 71,0 00, a d eclin e o f 1 7 p erc e nt. R ela tiv e t o o th e r s ta te s, h o w eve r, C alif o rn ia ’s s to ry b eco m es m ore c o m plic a te d (F ig ure 1 ). F ro m 1 9 87 t o 2 0 03, in stit u tio nal c o sts in C alif o rn ia w ere s ig nif ic a n tly h ig he r t h an t h o se a t c o m para b le p ub lic u niv e rs it ie s— sc h o ols o f s im ila r s iz e a n d m is sio n— in t h e r e st o f t h e c o untr y . A t t h e s a m e t im e, C alif o rn ia ’s c o sts f e ll s te ad ily in t h is p erio d w hile in stit u tio nal c o sts a t c o m para b le s c h o ols r o se s lig htly . F ro m 2 0 04 t o 2 0 11, C alif o rn ia ’s c o st p er d eg re e h o ve re d w it h in 4 p erc e nt o f c o m para b le s c h o ols in t h e r e st o f t h e c o untr y . M ore r e ce ntly , in 2 0 12 a n d 2 0 13 , c o sts in C alif o rn ia h ave r is e n s o m ew hat w hile t h o se in o th e r s ta te s f e ll s lig htly , c re atin g a n 1 1 p erc e nt g ap . F ig ure 1 . C alif o rn ia ’s c o st p er d eg re e h as f a lle n o ve r t im e S O URC E: D elt a C ost P ro je ct. N O TE: F o r a d esc rip tio n o f s c h o ols in clu d ed in t h e a n aly sis a s w ell a s t h e c o m posit io n o f t h e n atio nal c o m paris o n g ro up s, p le ase s e e t h e t e ch nic a l a p pend ix . C osts a d ju ste d f o r in fla tio n. H ow d o w e s e le ct c o m paris o n s c h o o ls ? R ath e r t h an c re ate o ur o w n c a te g orie s, w e r e ly o n e sta b lis h e d g ro up in g s. In t h e e xa m ple a b ove , w e r e ly o n t h e C arn e g ie H ig he r E d uca tio n C la ssif ic a tio n a n d in clu d e p ub lic d octo ra l- g ra n tin g in stit u tio ns a s w ell a s m ed iu m a n d la rg e u niv e rs it ie s t h at g ra n t m aste r’s d eg re es. W hile F ig ure 1 lo oks a t C alif o rn ia ’s p ub lic f o ur-y e ar i n stit u tio ns a s a w ho le , in t h e d is c u ssio n b elo w w e e xa m in e U C a n d C SU s e p ara te ly , d iv id in g t h e ir c o m paris o n g ro up s a cco rd in g ly . F o r in sta n ce , a ll t h e s c h o ols in t h e U C c o m paris o n g ro up h ave a v e ry h ig h le ve l o f r e se arc h a ctiv it y a n d g ra n t P hD d eg re es— th e U niv e rs it y o f M ic h ig an , U niv e rs it y o f V ir g in ia , a n d U niv e rs it y o f T exa s a t A ustin a re p art o f t h is g ro up . F o r t h e C SU c o m paris o n g ro up , m ost s c h o ols h ave a m id -le ve l r a n g e o f r e se arc h a ctiv it y , g ra n t m aste r’s a n d p ro fe ssio nal d eg re es, a n d m ay c o nfe r a s m all n um ber o f d octo ra te s. B elo w , w e c a ll t h e se g ro up in g s t h e “ n atio nal c o m paris o n g ro up .” I n t h e f o llo w in g s e ctio ns, w e a ls o in tr o d uce a s e co nd s e t o f c o m paris o n g ro up s f o r U C a n d C SU . T he se g ro up s w ere in it ia lly c re ate d b y C alif o rn ia P ostS eco nd ary E d uca tio n C om mis sio n (in c o nsu lt a tio n w it h t h e s ta te le g is la tu re a n d t h e s y ste m s t h e m se lv e s) f o r t h e p urp ose o f m akin g s a la ry c o m paris o ns. T o s o m e d eg re e, t h e y m ay b e c o nsid ere d “ a sp ir a tio nal” c o m paris o n s c h o ols , w it h f a cu lt y s a la rie s b ein g v ie w ed a s a p ro xy f o r t h e q ualit y o f t h e in stit u tio n. A s s u ch , t h e se c o m paris o n g ro up s in clu d e a m ix o f p ub lic a n d p riv a te in stit u tio ns f r o m a ro und t h e c o untr y . W e c a ll t h e se g ro up in g s t h e “ c o m mis sio n c o m paris o n g ro up .” (S ee t h e t e ch nic a l a p pend ix f o r f u ll lis ts o f t h e se s c h o ols a n d m ore d eta il a b out o ur m eth o d s.) 6 7 8 9 C ost p er D eg re e a t U C S in ce 1 9 87, t h e c o st o f p ro d ucin g a d eg re e a t t h e U niv e rs it y o f C alif o rn ia h as f a lle n b y 6 p erc e nt— t h at’s $ 7,0 00 in c o nsta n t d olla rs o ve r t h e p erio d — fr o m m ore t h an $ 116 ,0 00 t o $ 10 9,0 00 (F ig ure 2 ). C osts a m ong t h e n atio nal c o m paris o n g ro up r o se m ore t h an 6 p erc e nt, o r a b out $ 4,0 00. F o r t h e c o m mis sio n c o m paris o n s c h o ols — in clu d in g S ta n fo rd a n d Y ale — co sts r o se m ore t h an 6 9 p erc e nt, o r n e arly $ 69,0 00. I n t h e m ost r e ce nt y e ars f o r w hic h d ata a re a va ila b le , U C’s c o st p er d eg re e h as i n cre ase d s lig htly (5 p erc e nt). F ig ure 2 . U C’s c o st p er d eg re e h as f a lle n o ve r t im e S O URC E: D elt a C ost P ro je ct. N O TE: F o r t h e lis t o f s c h o ols in clu d ed in t h e n atio nal a n d c o m mis sio n c o m paris o n g ro up s, p le ase s e e t h e t e ch nic a l a p pend ix . C osts a d ju ste d f o r in fla tio n. U C’s c o st p er d eg re e t r a je cto ry f a lls s q uare ly b etw een t h e t w o c o m paris o n g ro up s. In f a ct, s in ce t h e e arly 2 0 00s c o sts a t t h e c o m paris o n g ro up h ave in cre ase d m ark e d ly — by 2 0 13 , t h e c o st p er d eg re e i n t h is g ro up w as 6 0 p erc e nt h ig he r t h an a t U C. T his la rg e, s u sta in e d in cre ase is d riv e n p rim arily b y r is in g c o sts a m ong t h e f o ur p riv a te u niv e rs it ie s in t h e g ro up (H arv a rd , Y ale , M IT , a n d S ta n fo rd ). T he c o st p er d eg re e f o r t h e n atio nal c o m paris o n g ro up h as a ls o in cre ase d o ve r t h e p ast 2 0 y e ars , t h o ug h s lo w ly — an d it r e m ain s b elo w t h e U C s y ste m . T he f a ct t h at U C’s a ve ra g e c o st p er d eg re e h as b een c o nsis te ntly a b ove t h at o f s im ila r in stit u tio ns n atio nally r e fle cts , in p art, p ub lic s a la rie s t h at t r y t o k e ep p ace w it h h ig he r c o st o f liv in g in a n e xp ensiv e s ta te (G ord on e t a l. 2 0 07). C ost p er d eg re e a t C SU T he d ow nw ard t r e nd in in stit u tio nal c o sts is e ve n m ore d ra m atic a t C SU . In a s p an o f 2 5 y e ars , C SU l o w ere d t h e ir c o st p er d eg re e b y m ore t h an 3 3 p erc e nt— fr o m $ 67,0 00 t o $ 45 ,0 00 (F ig ure 3 ). B y c o m paris o n, c o sts f o r t h e n atio nal c o m paris o n g ro up r e m ain e d r e la tiv e ly c o nsta n t o ve r t h e p erio d . A nd c o sts f o r t h e c o m mis sio n c o m paris o n g ro up c o sts r o se s ig nif ic a n tly — by m ore t h an 1 3 p erc e nt, o r $ 9,0 00. 1 0 F ig ure 3 . C SU ’s c o st p er d eg re e is n o w lo w er t h an m an y s im il a r s c h o ols S O URC E: D elt a C ost P ro je ct. N O TE: F o r t h e lis t o f s c h o ols in clu d ed in t h e n atio nal a n d c o m mis sio n c o m paris o n g ro up s, p le ase s e e t h e t e ch nic a l a p pend ix . C osts a d ju ste d f o r in fla tio n. C SU ’s im pre ssiv e r e d uctio n in in stit u tio nal c o sts is m ost lik e ly r e la te d t o im pro ve m ents in g ra d uatio n r a te s. S in ce 2 0 00, C SU h as d oub le d it s f o ur-y e ar g ra d uatio n r a te a n d im pro ve d it s s ix - y e ar g ra d uatio n r a te b y a lm ost 2 0 p erc e nta g e p oin ts (J a ck so n a n d C ook 2 0 16 ). F u rth e rm ore , t h e se i m pro ve m ents o ccu rre d d urin g a p erio d o f s ig nif ic a n t f u nd in g c u ts . In 2 0 00, C SU r e ce iv e d n e arly $ 9,4 0 0 p er f u ll- tim e s tu d ent— by 2 0 13 , t h is a m ount h ad d ro pped t o a b out $ 6,5 0 0, a lt h o ug h C SU m ad e u p s o m e o f t h is r e ve nue lo ss w it h t u it io n in cre ase s. T he c o st p er d eg re e m easu re , w hic h r e ve als t h is s u sta in e d d ow nw ard t r e nd , d em onstr a te s t h e s ig nif ic a n t g ain s m ad e in g ra d uatin g m ore s tu d ents . A s w e’v e s e en, t h e t r e nd s in c o st p er d eg re e a t b oth U C a n d C SU c h alle ng e t h e c o m monly h e ld b elie f t h at t h e in stit u tio nal c o st o f p ro vid in g h ig he r e d uca tio n is r is in g r a p id ly a m ong p ub lic u niv e rs it ie s in C alif o rn ia . In f a ct, a cco rd in g t o o ur m easu re , t h e c o st o f p ro d ucin g a d eg re e a t t h e se s y ste m s h as d ecre ase d o ve r t im e. N eve rth e le ss, d esp it e t h is d ow nw ard t r e nd , in stit u tio nal c o sts a t U C r e la tiv e t o s o m e o th e r in stit u tio ns a p pear t o b e h ig he r. H ow eve r, a s w e d is c u ss in t h e n e xt s e ctio n, m an y f a cto rs a ffe ct c o sts p er d eg re e. It is im porta n t t o u se t h is m easu re a s a n in d ic a to r o f t h e im pact o f h ig he r e d uca tio n in ve stm ents r a th e r t h an a s a n a ll- e nco m passin g p ro xy f o r e va lu atin g i n stit u tio nal e ffic ie ncy a n d p ro d uctiv it y . C osts p er D eg re e in P ers p ectiv e T he s im plic it y o f t h e c o st p er d eg re e m easu re is p art o f it s a p peal. B ut u nd ers ta n d in g t h e im pact o f t h e u nd erly in g c o st d riv e rs is n o t s o s tr a ig htfo rw ard . S eve ra l in d ep end ent f a cto rs c a n a ffe ct c o st p er d eg re e c a lc u la tio ns (T ab le 1 ). 1 1 T ab le 1 . C osts p er d eg re e c a n b e a ffe cte d b y m an y e le m en ts N O TE: T he p ro je cte d im pact o n t h e c o st p er d eg re e m easu re a ssu m es a ll o th e r f a cto rs a re h e ld c o nsta n t. O f c o urs e , t h e t r a d e-o ffs s h o w n in T ab le 1 a re b ase d o n t h e a ssu m ptio n t h at a ll o th e r p arts o f t h e s y ste m r e m ain u nch an g ed . T his is a u se fu l a ssu m ptio n in t h e a b str a ct, b ut o ne t h at is u nlik e ly t o h o ld in p ra ctic e . F o r e xa m ple , in ve stin g m ore r e so urc e s in s tu d ent s e rv ic e s a n d a d vis in g w ill c o st m ore m one y, a n d a ll o th e r t h in g s b ein g e q ual, t h is w ill in cre ase t h e c o st p er d eg re e. B ut it is a ls o q uit e p ossib le t h at t h is in ve stm ent w ould im pro ve t h e c h an ce t h at m ore s tu d ents g ra d uate in a t im ely m an ne r— in cre asin g g ra d uatio n r a te s a n d d ecre asin g t h e c o st p er d eg re e. In o th e r w ord s, b eca u se t h e m easu re d is tills s e ve ra l in te rre la te d p olic y c h o ic e s in to a s in g le n um ber, it is im porta n t t o b e c a re fu l n o t t o o ve rs im ply c o sts . I n te rp re tin g c h an g es in c o sts p er d eg re e, p artic u la rly o n a y e ar-to -y e ar b asis , is e sp ecia lly c h alle ng in g . F o r e xa m ple , a s c h o ol c o uld c h o ose t o p ut o ff m ain te nan ce a n d ig no re r e p air s t o it s p hysic a l p la n t t o s a ve m one y— re d ucin g it s c o st p er d eg re e in a p artic u la r y e ar, b ut le ad in g t o g re ate r c o sts d ow n t h e r o ad . O r a s c h o ol m ay d ecid e t o e xp an d it s h e alt h s c ie nce s a n d e ng in e erin g p ro g ra m s in r e sp onse t o a n in cre ase in d em an d f o r S TEM g ra d uate s. T he se p ro g ra m s t y p ic a lly c o st m ore o n a p er s tu d ent b asis b eca u se o f e xp ensiv e in str u ctio nal e q uip m ent a n d h ig he r f a cu lt y s a la rie s. T his s c h o ol c o uld b e m akin g a n im porta n t c o ntr ib utio n t o t h e s ta te ’s w ork fo rc e n e ed s, b ut i t is lik e ly t o in cu r a h ig he r c o st p er d eg re e in b oth t h e s h o rt a n d lo ng t e rm s. T he f a ct t h at in t h is c a se t h e c o st p er d eg re e g oes u p d oes n o t s u g gest t h at t h e s c h o ol h as s o m eho w b eco m e le ss e ffic ie nt. It is s im ply a r e fle ctio n o f t h e r e alit ie s o f in ve stin g in p ro g ra m s w it h h ig he r c o st s tr u ctu re s. O th e r e le m ents a ls o h ave a d efin in g im pact o n a n in stit u tio n’s c o st p er d eg re e— fr o m it s m ix o f s tu d ents t o it s o ve ra ll m is sio n. A s c h o ol t h at h as a g re ate r s h are o f c o m munit y c o lle g e t r a n sfe r s tu d ents is lik e ly t o h ave a lo w er c o st p er d eg re e, s in ce t h o se s tu d ents w ill b e a b le t o c o m ple te t h e ir p ro g ra m q uic k e r. S im ila rly , a s c h o ol w it h in t h e C SU s y ste m , w it h it s f o cu s o n u nd erg ra d uate i n str u ctio n, w ill h ave a f u nd am enta ll y d if fe re nt c o st p er d eg re e t h an o ne in t h e U C s y ste m , w hic h h as a s tr o ng er e m phasis o n g ra d uate a n d p ro fe ssio nal in str u ctio n, a s w ell a s r e se arc h . In f a ct, t h e c o st p er d eg re e n atio nw id e a t s c h o ols w it h v e ry h ig h r e se arc h a ctiv it y a ve ra g es 2 0 p erc e nt h ig he r t h an a t s c h o ols w it h a le ss in te nse f o cu s o n r e se arc h . (F o r m ore d eta ils o n t h e se f a cto rs a n d o th e rs , s e e t h e t e ch nic a l a p pend ix . ) F in ally , t h e o ne c rit ic a l f a cto r n o t c a p tu re d b y t h e c o st p er d eg re e m etr ic is e d uca tio nal q ualit y ( N atio nal R ese arc h C ouncil 2 0 12 ). A rtic u la tin g a s in g le d efin it io n o f w hat c o nstit u te s a q ualit y e d uca tio n is e lu siv e , a n d n atio nal r a n kin g s o f h ig he r e d uca tio n in stit u tio ns a re b oth c e le b ra te d a n d c rit ic iz e d . N eve rth e le ss, C alif o rn ia ’s h ig he r e d uca tio n s y ste m is h e ld in h ig h r e g ard , a n d a m yo pic f o cu s o n a s in g le p erfo rm an ce m etr ic c o uld p ote ntia lly t h re ate n t h at q ualit y . F o r e xa m ple , a n i n stit u tio n c o uld d ecre ase it s c o st p er d eg re e b y t a kin g s te p s t h at h arm t h e q ualit y o f e d uca tio n t h at i t p ro vid es— in cre asin g c la ss s iz e s, d ecre asin g c o nta ct h o urs w it h s tu d ents , a n d lo w erin g g ra d uatio n r e q uir e m ents . H ow eve r, t h e re a re a n um ber o f c h e ck s t h at w ould m ake s u ch a w ho le sa le d im in is h m ent u nlik e ly . F ir s t, in te rn ally , t h e f ie rc e st p ro te cto rs o f t h e in te g rit y o f e d uca tio nal o ffe rin g s a re a n in stit u tio n’s f a cu lt y a n d s ta ff. S eco nd , e xte rn ally , a ll o f t h e U Cs a n d C SU s a re s u b je ct t o r e g io nal a ccre d it a tio n b od ie s, w ho se jo b it is t o e nsu re t h at in stit u tio ns m eet s p ecif ie d s ta n d ard s. A nd f in ally , m ark e t f o rc e s w ould d is c o ura g e s c h o ols f r o m lo w erin g t h e q ualit y o f i n str u ctio n. If t h e p ub lic p erc e iv e s a n in stit u tio n’s q ualit y t o h ave d eclin e d , f e w er s tu d ents w ill s e ek a d m is sio n a n d f e w er e m plo ye rs w ill lo ok t o h ir e it s g ra d uate s. L o okin g A head C le arly , m an y f a cto rs a ffe ct a n in stit u tio n’s c o st p er d eg re e. N eve rth e le ss, a p ply in g t h e c o st p er d eg re e m easu re a t a s ta te o r s y ste m le ve l p ro vid es p olic ym ake rs a n d o th e rs w it h a c o nsis te nt, r e lia b le , a n d o b je ctiv e m eth o d f o r e xa m in in g h ig he r e d uca tio n r e so urc e s a n d d ete rm in in g w he th e r t h e y a re p ro d ucin g t h e d esir e d e ffe cts . If a p plie d c a re fu lly , t h e m easu re c a n in fo rm a n d im pro ve p olic ym ake rs ’ u nd ers ta n d in g o f t h e b ro ad c o lle ctio n o f in stit u tio ns t h at m ake u p C alif o rn ia ’s p ub lic s y ste m o f h ig he r e d uca tio n. T he c e ntr a l a im o f t h is r e p ort is t o e nco ura g e C alif o rn ia ’s p olic ym ake rs a n d it s h ig he r e d uca tio n s y ste m s t o u se t h e c o st p er d eg re e m easu re t o h e lp f r a m e h ig he r e d uca tio n f in an ce d is c u ssio ns. F o r t h e se d is c u ssio ns t o b e m ost e ffe ctiv e , t h e r o le s a n d g oals a sso cia te d w it h p ro vid in g h ig he r e d uca tio n n e ed t o b e b ette r d efin e d . S ta te e le cte d o ffic ia ls a re b est p osit io ne d t o f o cu s o n i d entif y in g o ve ra ll g oals f o r t h e s y ste m s, e m bra cin g a r e la tiv e ly s m all s e t o f m etr ic s t o h o ld t h e m a cco unta b le . S yste m o ffic e s c o uld t h e n t r a n sla te t h o se g oals in to a ctio ns, d efin in g o b je ctiv e s a n d r e p ortin g p ro g re ss t o w ard g oals . In d iv id ual in stit u tio ns c o uld , in t u rn , f o cu s t h e ir d ata a n d a cco untin g s y ste m s t o b ette r u nd ers ta n d r e so urc e t r a d eo ffs in p urs u it s y ste m o b je ctiv e s. W it h t h is s tr u ctu re in m in d , w e o ffe r t h re e r e co m mend atio ns t o e nsu re t h at t h e c o st p er d eg re e m easu re b eco m es a n a cce p te d a n d r e lia b le m etr ic . F ir s t, it is im porta n t t h at t h e s y ste m s e nsu re c o nsis te nt r e p ortin g . T he D elt a C ost P ro je ct’s a b ilit y t o p ro d uce c o nsis te nt, c o m para b le d ata m ad e o ur a n aly sis p ossib le . R ais in g t h e p ro file o f t h e c o st p er d eg re e m easu re w ould m ake d ata c o lle ctio n m ore im porta n t t h an e ve r. C urre ntly , b oth t h e U C a n d C SU s y ste m s t a ke s te p s t o e nsu re t h at t h e ir r e sp onse s t o f e d era l f in an ce s u rv e ys p ro vid e a n a ccu ra te r e fle ctio n o f a ctiv it y o n t h e ir c a m puse s, a n d t h e se e ffo rts s h o uld b e s u p porte d . A t a m in im um , s y ste m o ve rs ig ht o f d ata c o lle ctio n s h o uld c o ntin ue , t o e nsu re t h e in te g rit y o f t h e c o st p er d eg re e m easu re a s t h e b asis f o r d is c u ssin g f in an ce d ecis io ns. S eco nd , f o r e ve n g re ate r q ualit y a ssu ra n ce w e r e co m mend t h e r e su rre ctio n o f a c e ntr a l s ta te w id e h ig he r e d uca tio n a u th o rit y . T he s tr u ctu ra l a rg um ent f o r a c e ntr a l a u th o rit y c a n b e t r a ce d t o C alif o rn ia ’s M aste r P la n f o r H ig he r E d uca tio n, w hic h s till d efin e s m uch o f t h e h ig he r e d uca tio n u niv e rs e in C alif o rn ia . F ro m a p ra ctic a l s ta n d poin t, e sta b lis h in g a c e ntr a l a u th o rit y t o t r a ck p ro g re ss t o w ard h ig he r e d uca tio n g oals w ould p ro vid e a g re ate r d eg re e o f t r a n sp are ncy, c o nsis te ncy, a n d i m partia lit y a ro und m easu rin g t h e p erfo rm an ce o f t h e s ta te ’s h ig he r e d uca tio n s y ste m . T hir d , w hile s y ste m -w id e r e p ortin g is u se fu l, it w ould a ls o b e v a lu ab le t o b re ak o ut c a m pus-le ve l c o sts . D oin g s o w ould r e ve al s o m e o f t h e d if fe re nce s in t h e m is sio ns p urs u e d b y in d iv id ual s c h o ols a n d c o ntr ib ute t o a m ore n uan ce d u nd ers ta n d in g o f t h e r e la tio nsh ip b etw een r e so urc e s a n d o utc o m es. It w ould a ls o e nab le s y ste m a d m in is tr a to rs t o e ng ag e w it h c a m pus le ad ers in d is c u ssio ns r e g ard in g t h e p ote ntia l f o r a d dit io nal r e so urc e s t o p ro d uce m ore g ra d uate s. T he id ea o f u sin g t h e c o st p er d eg re e m easu re a s t h e s ta rtin g p oin t f o r in stit u tio nal c o st a n aly se s is m ore t h an a n a ca d em ic t a lk in g p oin t. In f a ct, t h e U niv e rs it y o f C alif o rn ia , R iv e rs id e, h as a p plie d a s im ila r m eth o d t o g re at e ffe ct w it h it s a ctiv it y b ase d c o stin g (A BC ) a cco untin g t o ol (A ng uia n o e t a l 2 0 17 ). O ur m easu re a g gre g ate s c o st a n d d eg re e d ata f r o m b ro ad c a te g orie s. U CR’s t o ol c a p tu re s m uch m ore d eta ile d c o st d ata u sin g a c a m pus-w id e in te g ra te d d ata s y ste m a n d s o phis tic a te d a n aly tic a l s o ft w are . B y m erg in g in fo rm atio n o n s tu d ents , h um an r e so urc e s, f a cilit ie s, f a cu lt y w ork lo ad , a n d f in an cia l d ata s y ste m s, t h e A BC t o ol a llo w s f o r v e ry s p ecif ic d is c u ssio ns r e g ard in g r e so urc e a llo ca tio n. F u rth e rm ore , t h e c o lle g e n o w h as t h e a b ilit y t o q uan tif y t h e le ve l o f c ro ss- s u b sid iz a tio n t h at t a ke s p la ce t h ro ug ho ut t h e c a m pus a n d c a n id entif y t h e o ptim al m ix f o r a ch ie vin g t h e h ig he st le ve l o f s tu d ent s u cce ss g iv e n in stit u tio nal p rio rit ie s a n d a c o nstr a in e d b ud get. W e w ould e nco ura g e t h e e xp an sio n o f s u ch e ffo rts t o o th e r w illin g in stit u tio ns. F in ally , w e p ro pose t h is m easu re a s a s ta rtin g p oin t. It is a g no stic a b out k e y p arts o f h ig he r e d uca tio n f in an ce d is c u ssio ns— partic u la rly p olic y g oals a n d t h e m ix o f r e ve nue s o urc e s. F o r t h e m easu re t o b e m ost e ffe ctiv e , p olic ym ake rs a n d le ad ers in t h e s ta te ’s h ig he r e d uca tio n s y ste m s w ould n e ed f ir s t t o id entif y t h e ir p olic y g oals a n d t h e n d is c u ss h o w t h e s u cce ssfu l p urs u it o f t h o se g oals c o uld a ffe ct c o sts p er d eg re e. T he c o st p er d eg re e m easu re w ould t h e n p ro vid e a c o nsis te nt, r e lia b le , a n d o b je ctiv e w ay t o t r a ck p ro g re ss a n d a sse ss c o st e ffe ctiv e ne ss a cro ss a n a rr a y o f o ptio ns a n d s tr a te g ie s. N O TES 1 . G ove rn o r B ro w n n o te d h is c o nce rn w it h t h e h ig he r e d uca tio n c o sts in t h e 2 0 13 – 14 s ta te b ud get s ta tin g t h at h ig he r e d uca tio n c o sts “ c o ntin ually in cre ase w it h o ut n e ce ssa rily a d din g p ro d uctiv it y o r v a lu e .” T he L A O a n aly sis o f t h is b ud get s u p porte d t h is a rg um ent (L A O 2 0 13 ). T his v ie w t h at c o lle g e c o sts a re in cre asin g f a r t o o f a st h as a ls o b een w ell d ocu m ente d in t h e n e w s m ed ia b y in stit u tio ns lik e t h e N ew Y ork T im es (M artin 2 0 12 ), t h e W ash in g to n P ost (C ho 2 0 09), a n d t h e W all S tr e et J o urn a l (B elk in a n d S co tt 2 0 12 ). 2 . T uit io n is o ft e n d is c o unte d b ase d o n a s tu d ent’s a b ilit y t o p ay g iv e n t h e ir f a m ily in co m e a n d a sse ts . T uit io n r e ve nue g ene ra te d f r o m h ig he r in co m e s tu d ents is u se d t o s u b sid iz e t h e c o st o f e d uca tio n f o r lo w er in co m e s tu d ents . It is i m porta n t t o n o te t h at m ost s tu d ents a t U C a n d C SU p ay n o t u it io n b eca u se o f g ene ro us s ta te a n d in stit u tio nal a id p ro g ra m s. 3 . C ro ss-s u b sid iz a tio n is p erv a siv e in a ll s e cto rs o f h ig he r e d uca tio n. R eve nue s g ene ra te d f r o m u nd erg ra d uate s tu d ents w ho e nro ll in lo w er c o st s u b je cts s u ch a s h is to ry a n d s o cio lo g y h e lp t o p ay f o r h ig h c o st s u b je cts lik e e ng in e erin g a n d c h e m is tr y w hic h d em an d s m alle r c la ss s iz e s a n d e xp ensiv e la b e q uip m ent. S im ila rly , lo w er d iv is io n c la sse s (f ir s t a n d s e co nd y e ar c o urs e s a n d g ene ra l e d uca tio n c o urs e s) a re le ss e xp ensiv e t h an u p per d iv is io n c o urs e s. S in ce s tu d ents i n e ach d is c ip lin e a n d d iv is io n p ay t h e s a m e t u it io n a m ount (n e t o f f in an cia l a id ) t h e “ e xc e ss” r e ve nue g ene ra te d h e lp s u nd erw rit e t h e c o st o f t h e h ig he r c o st c o urs e s. F u rth e rm ore , a sid e f r o m p ro fe ssio nal s c h o o ls , g ra d uate e d uca tio n is s u b sid iz e d in p art b y u nd erg ra d uate r e ve nue s. 4 . W hile c o st p er d eg re e is a g ood m easu re , it is s o m eth in g o f a b lu nt in str u m ent. F o r e xa m ple , w e a re m ost c o nce rn e d w it h t h e g ap in t h e p ro d uctio n o f b ach e lo r’s d eg re es, b ut w e in clu d e g ra d uate d eg re es in t h e c o st p er d eg re e m easu re . T his is f o r t w o im porta n t r e aso ns. F ir s t, t h o ug h s ta te p olic y u nd ers ta n d ab ly t e nd s t o f o cu s o n u nd erg ra d uate e d uca tio n, g ra d uate d eg re es r e m ain a n e sse ntia l o utp ut o f b oth t h e U C a n d C SU s y ste m s a n d c e rta in ly m ake a c o ntr ib utio n t o t h e s ta te ’s e co no m y. A ddit io nally , t h e p oolin g o f f u nd in g r e so urc e s c o up le d w it h t h e c ro ss s u b sid iz a tio n a cro ss le ve ls o f in str u ctio n m ake s it d if fic u lt t o s e p ara te u nd erg ra d uate a n d g ra d uate in str u ctio n a n d s u p port e xp ense s. W e d id e xp erim ent w it h d if fe re nt w eig htin g s c h e m es t o c a p tu re d if fe re nt m ix e s o f u nd erg ra d uate a n d g ra d uate d eg re es. W e f o und lit tle r e la tiv e im pact w he n c o m parin g o ve r t im e o r d if fe re nt g ro up s o f s c h o ols . P le ase s e e t h e t e ch nic a l a p pend ix f o r m ore d eta il. 5 . F o r e xa m ple , t h e c o st p er d eg re e m easu re h as b een u se d b y t h e N atio nal A ca d em y o f S cie nce s in t h e ir m eta -a n aly sis i n ve stig atin g h o w b est t o m easu re h ig he r e d uca tio n p ro d uctiv it y . T his m eth o d olo g y is d eriv e d f r o m t h e e arly w ork o f W illia m B ow en in t h e m id 1 9 60 s w ho b eg an t o d eve lo p t h e e d uca tio n a n d r e la te d c o st m easu re f o r t h e n C hair m an o f t h e C arn e g ie C om mis sio n o n t h e F u tu re o f H ig he r E d uca tio n, C la rk K err. 6 . W e c o m bin e t h e f o ur-y e ar u niv e rs it ie s h e re b eca u se b oth c o ntr ib ute t o t h e p olic y o utc o m e o f d eg re e p ro d uctio n. T ho ug h t h e s ta te f u nd s t h e s y ste m s s e p ara te ly , it is t h e t o ta l d eg re e p ro d uctio n t h at is u se d t o m easu re t h e s k ills g ap . T he c o m bin e d f ig ure s a ls o f a cilit a te c o m paris o n a cro ss o th e r s ta te s. 7 . S in ce t h e d ata u se d a re p ub lic ly a va ila b le , o th e r c o lle ctio ns o f c o m para b le g ro up s c a n b e c o nstr u cte d . 8 . W e u se t h e 2 0 10 C arn e g ie C la ssif ic a tio ns a n d in clu d e t h e R 1, R 2, R 3, M 1 a n d M 2 u niv e rs it ie s, w hic h a re t h e c a te g orie s t h at in clu d e t h e U C a n d C SU s c h o ols . S ee C arn e g ie C la ssif ic a tio n o f H ig he r E d uca tio n In stit u tio ns f o r a d is c u ssio n o f t h e m eth o d olo g y. 9 . T he se s c h o ols w ere la st r e p orte d in t h e C PEC p ub lic a tio n F is c a l P ro file s 2 0 10 . 1 0 . I t is im porta n t t o r e ca ll t h at t h e c o st p er d eg re e m easu re in clu d es a ll d eg re es, n o t ju st b ach e lo r’s d eg re es. T his a sp ect is e sp ecia lly im porta n t w he n d is c u ssin g U C b eca u se p ub lic r e se arc h u niv e rs it ie s p ro vid e t h e v a st m ajo rit y o f g ra d uate d eg re es in C alif o rn ia . P ro d ucin g g ra d uate d eg re es r e fle cts a n im porta n t p art o f U C’s m is sio n a n d t h e se d eg re es s ig nif ic a n tly in cre ase t h e o ve ra ll c o st p er d eg re e. 1 1 . C SU r e ce ntly a n no unce d a n e w g ra d uatio n in it ia tiv e w hic h a im s t o , a m ong o th e r g oals , im pro ve f o ur-y e ar g ra d uatio n r a te s, im pro ve t w o-y e ar g ra d uatio n r a te s f o r t r a n sfe r s tu d ents , a n d c lo se a ll a ch ie ve m ent g ap s b y 2 0 25 . C SU e stim ate s t h at t h is n e w in it ia tiv e w ill c o st b etw een $ 40 0 a n d $ 50 0 m illio n a n d is a sk in g f o r a n a d dit io nal $ 32 6 m illio n i n t h e 2 0 17 – 18 b ud get. T his in it ia tiv e p ro pose s t o p ro d uce a n a d dit io nal 1 .7 m illio n g ra d uate s b etw een n o w a n d 2 0 30 . I f t h at m an y d eg re es a re p ro d uce d w it h a n a d dit io nal $ 50 0 m illio n, t h e c o st p er d eg re e w ould in cre ase b y $ 30 0, o r l e ss t h an 1 p erc e nt o f t h e c u rre nt c o st le ve l— a p ote ntia lly s ig nif ic a n t r e tu rn f o r a m od est a d dit io nal in ve stm ent. R EFE R EN CES A ng uia n o , M aria , e t a l. 2 0 17 . “ O ptim iz in g R eso urc e A llo ca tio n f o r T each in g : A n e xp erim ent in A ctiv it y B ase d C ostin g .” U niv e rs it y o f C alif o rn ia , R iv e rs id e. B elk in , D oug la s a n d T hurm , S co tt. 2 0 12 . “ D ean s L is t: H ir in g S pre e F atte ns C olle g e B ure au cra cy— And T uit io n . ” T he W all S tr e et J o urn a l . D ece m ber 2 8. B ow en, W illia m G . 1 9 68. T he E co no m ic s o f t h e M ajo r P riv a te U niv e rs it ie s . C arn e g ie C om mis sio n o n H ig he r E d uca tio n. C ho , D avid . 2 0 09. “ A s c o lle g e c o sts r is e , lo an s b eco m e h ard er t o g et . ” T he W ash in g to n P ost . D ece m ber 2 8. C olle g e F u tu re s F o und atio n. 2 0 17 . S ecu rin g t h e P ub lic T ru st: P ra ctic a l S te p s t o w ard H ig he r E d uca tio n F in a nce R efo rm in C alif o rn ia . D elt a C ost P ro je ct. 2 0 13 . D elt a c o st p ro je ct d ocu m enta tio n o f IP ED S D ata base a nd r e la te d p ro d ucts . G ord on, T ra cy M ., J a im e C alle ja A ld ere te , P atr ic k J . M urp hy, J o n S onste lie , a n d P in g Z han g . 2 0 07. F is c a l R ea lit ie s: B ud get T ra deo ffs in C alif o rn ia G ove rn m ent . P ub lic P olic y In stit u te o f C alif o rn ia . J o hnso n, H an s, e t a l. 2 0 14 . H ig he r E d uca tio n in C alif o rn ia : In stit u tio na l C osts . P ub lic P olic y In stit u te o f C alif o rn ia . M artin , A nd re w . 2 0 12 . “ S lo w ly , A s S tu d ent D eb t R is e s, C olle g es C onfr o nt C osts ”. T he N ew Y ork T im es. M ay 1 4 . N atio nal R ese arc h C ouncil. 2 0 12 . Im pro vin g M easu re m ent o f P ro d uctiv it y in H ig he r E d uca tio n. M ea su rin g H ig he r E d uca tio n P ro d uctiv it y : C once p tu a l F ra m ew ork a nd D ata N eed s . T ere sa A . S ulliv a n , C hris to phe r M ack ie , W ill ia m F . M assy , a n d E sh a S in h a, E d it o rs . C om mit te e o n N atio nal S ta tis tic s a n d B oard o n T estin g a n d A sse ssm ent, D iv is io n o f B ehavio ra l a n d S ocia l S cie nce s a n d E d uca tio n. W ash in g to n D C: T he N atio nal A ca d em ie s P re ss. U S D ep artm ent o f E d uca tio n. In stit u te o f E d uca tio n S cie nce s, N atio nal C ente r f o r E d uca tio n S ta tis tic s. In te g ra te d P osts e co nd ary D ata S yste m (IP ED S). W ellm an , J a n e . 2 0 16 . F a cto rs S ha pin g t h e E vo lu tio n o f P ub lic H ig he r E d uca tio n F in a ncin g in C alif o rn ia . C olle g e F u tu re s F o und atio n. A C KN O W LE D G M EN TS T he a u th o rs w is h t o a ck n o w le d ge G arre tt A sh le y, J a co b J a ck so n, H an s J o hnso n, N in a R ob in so n, a n d J a n e W ellm an f o r t h e ir r e vie w s o f e arly d ra ft s o f t h e p ap er. W e w ould a ls o a ck n o w le d ge L yn e tte U bois f o r b oth h e r e arly r e vie w o f t h e d ra ft a n d la te r c o ntr ib utio n t o t h e r e ad ab ilit y o f t h e f in al d ocu m ent. F in ally , w e w ould lik e t o t h an k N ate J o hnso n f o r p ro vid in g i n sig ht in to h ig he r e d uca tio n m etr ic s a n d s ta ff a t t h e U C a n d C SU s y ste m s w ho p atie ntly in fo rm ed u s a b out t h e d eta ils a n d c h alle ng es a sso cia te d w it h d eve lo pin g s u ch a m easu re . A ny e rro rs a re o ur o w n. A BO UT T H E A U TH O RS K evin C ook is a r e se arc h a sso cia te in t h e P PIC H ig he r E d uca tio n C ente r . H is r e se arc h in te re sts in clu d e e d uca tio n f in an ce a n d p olic y f o r b oth K –12 a n d h ig he r e d uca tio n, a n d h is c u rre nt w ork f o cu se s o n p erfo rm an ce -b ase d f u nd in g , o nlin e l e arn in g , a n d p ub lic p ensio ns. B efo re jo in in g P PIC , h e w ork e d a s a r e se arc h a ssis ta n t in t h e in ve stm ents d iv is io n o f t h e C alif o rn ia S ta te T each e rs ’ R etir e m ent S yste m , w he re h e c o nd ucte d s u sta in ab ilit y r is k a n aly sis . H e h o ld s a n M PPA f r o m S acra m ento S ta te U niv e rs it y a n d a B A in h is to ry f r o m O ccid enta l C olle g e. P atr ic k M urp h y is d ir e cto r o f r e se arc h a n d a s e nio r f e llo w a t t h e P ub lic P olic y In stit u te o f C alif o rn ia , w he re h e h o ld s t h e T ho m as C . S utto n C hair in P olic y R ese arc h . H e is a ls o a m em ber o f t h e P PIC H ig he r E d uca tio n C ente r t e am . H e is a n a d ju nct p ro fe sso r o f p olit ic s a t t h e U niv e rs it y o f S an F ra n cis c o , w he re h e s e rv e d a s t h e d ir e cto r o f t h e M cC arth y C ente r f o r P ub lic S erv ic e . P re vio usly , h e w ork e d f o r R A N D a n d a t t h e O ffic e o f M an ag em ent a n d B ud get in W ash in g to n, D C. H e h o ld s a P hD f r o m t h e U niv e rs it y o f W is c o nsin – M ad is o n a n d a m aste r’s o f p ub lic a ffa ir s f r o m t h e U niv e rs it y o f T exa s– A ustin . T alib J a b bar w as a n a d m in is tr a tiv e a n d r e se arc h a sso cia te a t t h e P ub lic P olic y In stit u te o f C alif o rn ia . H e c u rre ntly is a P h.D . c a n d id ate a t t h e U niv e rs it y o f C alif o rn ia , S an ta C ru z. B efo re jo in in g P PIC , h e w as a r e se arc h a ssis ta n t a t t h e V arie tie s o f D em ocra cy (V D em ) In stit u te , in S w ed en. H e h as w ork e d a t b oth p riv a te a n d p ub lic s e cto r o rg an iz a tio ns, i n clu d in g t h e N atio nal A ca d em y o f S ocia l In su ra n ce in W ash in g to n, D C. H e h o ld s a n M S in s o cia l p olic y f r o m L u nd U niv e rs it y a n d a B A f r o m t h e U niv e rs it y o f C alif o rn ia , S an ta C ru z, w he re h e m ajo re d in p olit ic s. O TH ER P U BLIC ATIO NS H ig her E duca tio n in  C alifo rn ia H ig her E duca tio n in  C alifo rn ia : In stitu tio nal C osts H ig her E duca tio n in  C alifo rn ia : P erfo rm ance  B udgetin g © 2017 Public Policy Institute of California The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research. PPIC is a public charity. It does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source. 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PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 600 San Francisco, CA 94111 T 415 291 4400 F 415 291 4401 PPIC SACRAMENTO CENTER Senator Office Building 1121 L Street, Suite 801 Sacramento, CA 95814 T 916 440 1120 F 916 440 1121 ppic.org" ["post_date_gmt"]=> string(19) "2017-05-20 09:43:18" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(6) "closed" ["post_password"]=> string(0) "" ["post_name"]=> string(9) "r_0317kcr" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2017-05-20 02:43:18" ["post_modified_gmt"]=> string(19) "2017-05-20 09:43:18" ["post_content_filtered"]=> string(0) "" ["guid"]=> string(51) "http://148.62.4.17/wp-content/uploads/R_0317KCR.pdf" ["menu_order"]=> int(0) ["post_mime_type"]=> string(15) "application/pdf" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" ["status"]=> string(7) "inherit" ["attachment_authors"]=> bool(false) }