A proposal to make the flagship program of the Anderson School of Management financially separate from state funding is now headed to University of California officials for review ““ the culmination of a three-year process that may set a precedent for funding UC graduate schools in the future.
On Thursday, the Legislative Assembly, a faculty group of the UCLA Academic Senate, voted 53 to 46 in favor of the proposal, with three abstentions.
As California’s public universities face unprecedented budget cuts and rising tuition, this new model is a potential solution to some of the problems.
Over the last 10 years, MBA student fees have almost doubled as a result of cuts in state funding, said Anderson Dean Judy Olian.
Under the proposal, the Master of Business Administration program would no longer rely on state funds which constitute 6 percent of the school’s total budget. Instead, the school would look to increased fundraising to make up for the gap in funding.
Not relying on state funds would protect the business school from the uncertainties and fluctuations associated with state funding, Anderson officials said.
The funds that would no longer go to Anderson under the new funding model will be reallocated to Chancellor Gene Block’s office for redistribution, according to the proposal.
A three-year journey
Initially put forward in 2010, the proposal marks the first time that a UC professional school’s largest program has requested to be financially self-supporting.
Five other programs at Anderson, including the Fully Employed MBA program, are already financially independent from state funds, Olian said.
The school introduced the proposal as a way to increase flexibility with funds generated by its MBA program, Olian said.
The proposal would allow the school to better compete with private business schools across the country, said Steven Lippman, an Anderson professor who has been a strong proponent of the proposal.
Officials also say the flexibility afforded by the changes will allow funds to be more easily directed to needy departments. For example, funds could be used to supplement faculty salaries or create new programming, Lippman said.
About 70 percent of Anderson faculty voted in support of the proposal in December 2011. But this March, the UCLA Academic Senate’s Graduate Council shot it down.
In their review, the council raised a number of concerns they had about the proposal, stressing uncertainties about funding the school under the new model.
A group of Anderson faculty, however, submitted an appeal to this vote, leading to the review by the Legislative Assembly. The Assembly was the last UCLA institution to vote on the proposal.
Split opinions
The proposal has divided faculty in the three years since it was introduced.
While Anderson administrators see the proposal as a solution to some budget problems, some faculty members have expressed concerns about potential implications of the plan.
The Graduate Council voted down the proposal in March partly because it may not fit under a UC policy for creating self-sustaining programs, according to a report from the council.
According to a policy adopted by the UC Office of the President in September 2011, programs that apply to become self-supporting must fall into at least one of four categories, such as catering to non-traditional students or being held off-campus.
Olian said the MBA program’s students can be classified as nontraditional because they are generally older, and further along in their careers or international.
“If you compare our (MBA) student population to the rest of the graduate student body and to our other self-sustaining programs, unequivocally our (MBA) students resemble the self-sustaining programs more than the rest of the student body,” she said.
Rachael Goodhue, chair of the UC Coordinating Committee on Graduate Affairs, said she could not comment on whether or not the Anderson proposal would qualify under the UC self-sustaining policy because she has not formally seen the proposal.
In addition to concerns about UC policies, faculty have argued Anderson’s move would mark a symbolic break from the UC system.
Anderson professor Avanidhar Subrahmanyam said he is worried the business school’s move away from state funding would imply public schools do not need state support.
“I think it sends the wrong message to the (state) legislature,” Subrahmanyam said. “The symbolic aspect of it is more important than the financial aspect ““ it’s symbolizing that we can make it on our own without the state’s help.”
Olian said, however, the proposal is not intended as a separation from the university.
She said it would be “foolish” to alienate the university ““ UCLA has brought benefits to the Anderson school, including an international name brand.
Some faculty have said the shift could alienate prospective students in the form of tuition increases, a possible by-product of a break from state funding.
“We lose students to other universities with lower fees,” said Chris Tang, an Anderson professor. “If we’re not careful, in the long run (raising fees) could have a detrimental effect on the school.”
Olian disputed views that tuition will automatically spike, saying that fluctuating state support has roughly doubled fees in the past decade. Full control over tuition will be included in the proposal, which is expected to help, rather than hurt, student fees, Olian said.
The Anderson school has recently received pledges for several large donations that would help counter state funds no longer directed to the school. Donors have pledged $19 million in endowments that will go to the business school if the proposal passes the UC Office of the President, Olian said.
Looking forward
The UC Coordinating Committee on Graduate Affairs will now review the proposal before it goes to the Office of the President.
If approved, the proposal would enter a three-year trial run. At that point, it would be reviewed again by the Graduate Council of the UCLA Academic Senate.
How quickly the proposal can be approved and put in place will depend on UC President Mark Yudof’s review, but Olian said she hopes to begin implementing the new system as early as July 1.
“There’s nothing about the program or the system that will change,” she said. “It’s a very easy budgetary change to implement.”
Subrahmanyam, who opposed the proposal in the past, said it is now important for all Anderson professors to support the new funding system if implemented.
“It’s extremely important that we accept the outcome and move forward,” he said. “An initiative like this can’t be successful unless the faculty is behind it.”