“The search for efficiency is the administrative equivalent of painting the Golden Gate Bridge. The work never ends.”
—Janet Napolitano
We were asking a basic question: How many full-time employees were being paid in the president’s office of the University of California system? To answer it, Katie Lapp, the newly recruited head of business operations, had to do something astonishing, almost embarrassing. She went through all the payroll slips, counting them one by one, for nearly two thousand employees. Short of that, there was no way to answer the question.
What Katie found was that departments had been under-stating their head counts by hiring “temporary” workers who wouldn’t count against the approved levels, but the temporary workers had actually been working there for years. The same practice was happening at the ten campuses, making it all but impossible to know how many people actually worked for the university system. This was just one among several dismaying administrative problems that I learned about in my first few years as a regent for the UC system.
It was a big deal for me personally when Governor Gray Davis appointed me in 2002. With all the time I spent in Washington, I could have raised my hand for a number of high-level appointments. But the only assignment I ever wanted—with real authority in the public sector—was to be a member of the UC Board of Regents.
I’d spent much of my career trying to analyze organizations, identify future trends, and help them solve problems. I figured I had developed a good sense of knowing when an organization was well run and doing what it was supposed to be doing, and tried to apply this to my role as regent. It turned out I knew less about the UC system than I thought. A lot less.
My first impression as a new regent was jarring: The university administration wasn’t properly focused on its mission. The bureaucracy was unwieldy. Financial planning and operations management were lagging. It was difficult to get information or identify key actors on an issue. I was astonished—angered, actually—by how the ineptitude in basic management harmed students and faculty and how it prevented teaching and research across UC from continuing to excel.
The Office of the President’s senior finance team, although well-meaning, for years embraced a policy of keeping individual campus administrations and the regents in the dark about systemwide budgets and funding. The board of regents wasn’t briefed on many important issues, sometimes by design and sometimes through neglect.
We couldn’t even review a budget for the president’s office, because we couldn’t find one. There was a systemwide budget (mostly for funds that needed to be raised), and there was an expense budget that was so opaque, you couldn’t tell whether it was good or not. What’s going on here? I thought, This is not some rural community college educating a hundred students in the 1950s. We were talking about the University of California, with nearly 190,000 students and 165,000 faculty and staff in 2002.1 It was the biggest university system in the country! The absence of budgets and other financial planning tools was distressing, to put it mildly. I would never consider investing or working with any business that was run like this.
During my first six to nine months as a regent, I wondered at times if I wanted to serve out my term, which was twelve years. One of my colleagues on the board, a highly accomplished entrepreneur and CEO, did resign after a few years, saying, “This place just wears me down.”
What appeared to be willful disarray in the headquarters for the UC Office of the President in Oakland was dismaying. The prevailing culture at the time reflected a belief that because UC was the largest and best public university system in the world, surely it must be the best at everything, including administrative processes, with nothing to learn from others. Resistance to change was high, and excuse-making widespread. Occasionally we would hear that administrators offered this excuse: “Oh, the regents don’t want to do it.” It was nonsense.
We discovered many missed opportunities and looming threats that, in our view, were due mainly to ineptitude, indifference, or inaction within the administration. These failures were avoidable. The regents’ mission was to work with the administration to face awkward facts about how the university was being run, and to push for better results and generally do whatever possible to maintain and strengthen the UC system’s outstanding academics and research.
I survived my first and second years and then headed the finance committee for two years beginning in 2004. In 2006, I was elected to chair the full board. I had the flexibility to put long hours into confronting these long-simmering internal administrative challenges and the reductions in state funding, before an even greater challenge flared between 2009 and 2012: a crisis created when the state legislature slashed $900 million, or 30 percent, from the state’s contribution to the UC annual operating budget.
Our country is full of public institutions that are the envy of the world. Their roles are to help keep us safe, improve the quality of life, and support people in need. But the United States needs more of our institutions to be equally focused on how they can deliver greater impact with the fewest funds. My time as a regent has made me wonder what is happening at some of these other institutions. If the best public university system in the country (according to US News & World Report, which in 2016 put six of the ten UC campuses in the top ten of all public universities in the United States) was being managed so inefficiently—wasting resources, money, and big opportunities to further its mission—what is happening elsewhere?
The US Agency for International Development (USAID) used to be a manifest example, until Dr. Rajiv Shah, a former executive with the Bill & Melinda Gates Foundation, got his hands on it. (Chapter 12 describes some of Raj Shah’s important USAID initiatives.) For years USAID was burdened by a deserved reputation as slow-moving and arrogant in its choice of aid and how it delivered that aid to poor countries. I can’t count the times USAID’s unimaginative responses left Erica Stone and me shaking our heads. In most cases, we just decided to find other partners for the American Himalayan Foundation in Nepal—or just go it alone.
Of course, that’s just in the United States, where government transparency is higher than in most developing and many developed countries. The ineptitude, even corruption, of public institutions in developing countries is much worse and much more dangerous. People die as a result of such inefficiency, and hundreds of millions more continue to live in severe poverty. No, better-run public programs and services won’t solve all the world’s problems. But it’s a sad situation when those same programs, services, or institutions create or exacerbate those problems.
To many people, an organization like the UC system seems so complex, it’s almost impossible to change in meaningful ways. The American public certainly holds that opinion of our government system right now. But it’s simply not true. As a group, the regents proved change was possible. Our efforts highlight some important lessons about pushing for change in these types of organizations—lessons that I believe are valuable for anybody working in development.
If you count all students, faculty, and research and administrative staff, the University of California has more people engaged in advancing knowledge and innovation than even global industrial giants like IBM and GE. Truly a national treasure, the UC system embraces an astonishing array of people whose collective activity is breathtaking in sophistication, breadth, and impact on the world. UC has ten campuses, five medical centers, three national laboratories, and dozens of professional schools, with 250,000 students and 199,000 faculty and staff. Their work deserves to be supported with the best management practices available to any modern organization, especially one dedicated to improving the quality of life on earth.
Year after year, the Berkeley campus is ranked number one in teaching and research among all public national universities in the country, and is the only public university among the top five global universities in academic research.2 Other UC campuses—Los Angeles, Santa Barbara, Irvine, San Diego—are regularly included in the top ten list of public universities. The value that all the campuses together bring to California, the nation, and the world is immense.
My biggest desire in becoming a regent was to give back to the UC system that gave so much to me. More broadly, I wanted to support public higher education. Reestablishing strong support for public higher education is essential, but older generations today are not doing enough. If we do not invest more in our young citizens and provide greater opportunities for an outstanding education, our nation’s economic future will suffer.
“Most people don’t realize that America’s greatest comparative advantage is our system of higher education,” former president Bill Clinton said in a handwritten note to me shortly after I was named chair. “We need to keep it that way.” In his first address to a joint session of Congress a few years later, President Obama said, “The countries who out-educate us today will out-compete us tomorrow.”
Slowly we gained a reputation as the most activist group of regents in recent memory. To begin, we sought an independent assessment of the facts, with recommendations to build our case for better management. We brought in two management consulting firms—McKinsey and Company, followed by the Monitor Group—to perform organizational diagnostics, identify big issues, and then dig into those details and make change happen alongside sharp-eyed expert Betsy Horan, whom we brought on to help lead and coordinate the projects when I became chairman.
Betsy knew the players and surfaced several key issues. She supported and trusted excellent, reform-minded midlevel managers and was as impatient as any of us on the board with whatever stonewalling, lack of focus, or outright incompetence she encountered in these analyses. Teaming with the consultants, working day and night, Betsy made major contributions to reforms and restructurings.3
The Office of the President had more than two thousand employees, and staff groups were Balkanized much as all the different campuses were, doing mostly what they wanted. Different blocks of people within the same headquarters buildings in Oakland wouldn’t even talk to each other. Problems just festered.
Worse, we had no centralized purchasing practice across the system. We might have been the only major organization in the country with employees paying retail prices for Microsoft software instead of buying at big negotiated discounts. The same was true for pens, paper, copiers—all the basics. It was clear that we could be saving millions of dollars a year. There was so much waste. At times I said some rather harsh things because it was the only way I could get enough people to listen. My statements were all rooted in one central criticism: Your inefficiencies are forcing students to pay more to go to school here. If you’re not efficient, you’re driving up tuitions.
Pension finances were another worry. For fifteen years, the university had not contributed anything from its yearly revenues to pension pools for faculty and staff; nor had any employees done so. The people in charge, evidently blinded by a long bull market in equities, were leaving it to appreciation alone to keep retirement funding on track. When the markets collapsed in 2008 and 2009, the pension plans for more than fifty thousand retirees of the UC system suddenly were only 70 percent funded.
I began to focus on two main objectives: first, improving salaries so we could retain outstanding faculty, and second, helping these faculty stars get new buildings approved and constructed to improve their prospects of attracting funds from the federal government and other sources. These scientists had big dreams of their own; they were working on projects that would be vital to the future of the state, the nation, and the world: all good. I wanted UC to support and keep them.
On the issue of salaries, it’s my belief that you’re only going to get the most skilled professionals if you pay them well. Yet the chancellors of the ten UC campuses, who typically were paid 40 percent less than their peers around the country, were an inspiring exception. I told this group several times before the legislature slashed UC’s funding that I would walk the plank for them. “You guys deserve more money. You want it, I’ll propose it.” Each year, unanimously, they said no.
We pressed to simplify the university’s bloated bureaucracy, raise noncompetitive salaries for faculty, restart contributions to pension plans, and recruit a new team of outstanding leaders and managers. We also tossed out ridiculously low, self-imposed limits on debt financing and streamlined approval processes to unlock and accelerate funding for several state-of-the-art research centers and other much-needed new campus buildings.
Yet it can take a great deal of time, persistence, and persuasion to make progress with organizations large and small. This is certainly true in the world’s developing economies and poor communities—and also here in the world’s largest economy and our nation’s most populous state.
The first time I learned about low spending limits for capital projects on each campus was when a vice chancellor at Berkeley said he couldn’t spend more than $50 million.
I said, “A month?”
He said, “No, a year.”
Well, you can hardly keep toilets fixed for $50 million a year on a campus the size of Berkeley. How could this be? So I asked him to give me a course on Berkeley Finance 101.
Each of the UC campuses had debt caps assigned arbitrarily by the finance team in the Office of the President. Their belief was that the university’s systemwide debt capacity was less than $1 billion. The effect was every department was cowed by these limits. New residence dorms weren’t built. Hundreds of buildings needing seismic retrofits were untouched, an enormous liability for the regents and the administration because we all were aware of the risks. New buildings intended for important research ready to be funded weren’t built.
Some of us looked at the balance sheet and the income statement, and thought, This makes no sense. We have to have much more debt capacity.
We were able to get a group of debt-financing experts at Lehman Brothers to study the situation, and they agreed. “Your debt capacity is not $1 billion,” they told us. “It’s between $9 billion and $11 billion over the next five years.”
Meanwhile, campus and university-system administrators had been working with the regents and the Monitor team to simplify the process for reviewing and approving capital projects, which were often delayed by months because of little tweaks—like the color of tile—being made late in the approval process. The new methods greatly accelerated construction timelines and saved millions of dollars in administrative costs alone.
As chairman, I thought I should try to use the position as a bully pulpit—to dig deeper into details and understand issues better, and then make recommendations to my colleagues. I was often mulling the question, How can I best help this place?
One answer from the beginning was to try to help UC’s faculty superstars, who had become entangled and frustrated by the bureaucracy. Steven Chu was one of them. With colleagues at the Lawrence Berkeley National Laboratory, he mapped out scientific research needed to discover and create technologies for harnessing solar power (and other renewables) and converting it to power transportation. President Obama would later appoint Steven as energy secretary, a post Steven held from 2009 to 2013, often using it to champion nuclear power and renewable energy as the best global response to easing climate change.
But back on campus in the mid-2000s, he wasn’t going to get far in his renewable power research without a building designed and built specifically to conduct that research. And he wasn’t getting anywhere with the finance and planning staff in the UC Office of the President. They had placed a debt cap of zero on UC’s national laboratories.
Our idea was to demolish some old California Department of Health buildings on the Berkeley campus and construct a new building with advanced laboratories that would research how to efficiently produce renewable, carbon-neutral biofuels. Known as the Helios Energy Research Facility, it would be the new home for the Energy Biosciences Institute and would include space for future use by the university’s Department of Bioengineering. The US Department of Energy had committed millions for the research, funds that would partially be used to repay loans needed for construction.
UC president Robert Dynes was on board, but his staff stone-walled the project. They were ignoring his mandate to plan and develop the building in partnership with the federal government, arguing that the Energy Department funds technically were not a permanent source of income because Congress had to approve the appropriation each year. They concluded, therefore, that budgeting plans for the building were “against policy.”
It was unusual for a regent to get involved in individual campus projects, but I became quite agitated about this. I had kind of gotten out my metaphorical AK-47 by then, and Steven Chu and Betsy Horan were no shrinking violets. We pushed back: “Whose policy?” we asked. “The state’s or the university system’s?”
“Well, no,” came the response. “It’s just a practice by the staff.” One that nobody bothered to question, of course. “We’ve always done things this way.” It was a phrase I heard many times.
“That’s not a reason to keep doing things the same way now,” I would reply. “If that’s the thinking, I guess I shouldn’t be surprised to find an employee whose job it is to make sure students don’t ride horses too fast across the campus!” It was Management 101: If we have some practice tied to our policy, and we want to change the practice, we should just change the policy.
To break the logjam on Helios, I met with Bob Dynes and we found a simple solution: The Energy Department would send a letter assuring the university that there would be a steady stream of revenue to repay the loan required for the building.
Not long after we announced plans and timeline for Steven’s building, the global energy company BP pledged $500 million over ten years to fund the new research on cleaner fuels in partnership with the Lawrence Berkeley National Laboratory, the University of Illinois, and UC San Diego. Three of the world’s great private universities had been competing for that funding and were on BP’s short list: the Massachusetts Institute of Technology, Cambridge University, and the Imperial College of London. If we hadn’t gotten the Helios building approved and moving forward, UC Berkeley wouldn’t have gotten that BP commitment to fund the research.
“Addressing the major problems that face our society is our public mission,” UC Berkeley’s chancellor Robert Birgeneau said at the time of BP’s announcement, adding that the project would deepen UC’s legacy of research, teaching, and innovation “in service to our state, our nation, and the world. This is our generation’s moon shot.”4
Early in 2015, against the backdrop of collapsing oil prices and a steep new financial burden after settling lawsuits from the Deepwater Horizon oil spill, BP decided to halt its development of a cellulosic biofuels business. The company asked the Energy Biosciences Institute to wind down research in that field while exercising its option to pare its original funding commitment proportionately. BP generously agreed to honor its pledge to support graduate and postdoctoral students for up to thirty months longer. BP also extended its partnership with the institute through 2020 (at the reduced funding rate) and supported the university’s efforts to raise funds from other corporate sources.
Dr. Stanley Prusiner, a 1997 Nobel laureate, and Dr. Stephen Hauser, leaders of the best neuroscience faculty in the world, had been asking for a new building at the new UCSF campus in Mission Bay so they could expand their research teams, upgrade equipment, and make faster progress in their research.
When we started investigating, the UCSF development staff advised us that the building would cost several million dollars more than the actual proposal from private donors (who would fund development and construction, and lease the building back to UCSF). Yet a UCSF executive who looked over the initial budgets explained that people in the planning office must have padded the initial estimate. “They have made this thing look ridiculously expensive,” he said. In one example, estimated monthly lease costs for UCSF were put at $21,000, 50 percent above actual plans for a donor-built project. Why would they do this? In the proposed model, which required fewer university administrative resources, some of them might lose their jobs.
Financially, the case for constructing the building was beyond dispute. Dr. Prusiner had proven the existence of a type of protein known as the prion that can cause normal proteins in the brain to fold abnormally, triggering rare neurodegenerative disorders. He held dozens of patents (fifty as of this writing), all of which were assigned to the University of California and represented hundreds of millions of dollars of potential future revenue. His research center receives $7 million a year in funding from the National Institutes of Health and he leads the world’s most talented team of researchers in neuroscience at UC San Francisco’s Institute for Neurodegenerative Disease, exploring for cures for dementia, Alzheimer’s disease, Parkinson’s disease, and other debilitating disorders of the brain. Dr. Hauser researches genetic factors for developing multiple sclerosis and leads the UCSF neurology department. It would have been a terrible loss for UCSF if Stan and Steve had decided to leave due to lack of support from the university. More important, their research really matters. Countless people all around the world will benefit from it.
The financing for what became the Sandler Neurosciences Center was a masterstroke as a public–private partnership. Once again, after construction was under way, a major pharmaceutical company agreed to fund a significant portion of Stan and Steve’s research program over many years. With any sort of research facility especially, you first must build it, and then they may or may not come. In this case they did.
Seeing this project take shape and the research move ahead in Mission Bay has been a thrill. When Stan and Steve explained their work and plans at the groundbreaking in 2010, I was so proud of them and what they would accomplish. Who knows what potential advances in medicine might have been missed because of low-level politics in a slow-footed bureaucracy.
When Dianne was mayor of San Francisco, the head of the city’s Department of Public Works came up to her one day and said, “We’ve done some studies, and we’re concerned that the concrete rim around at Candlestick Park will come down in an earthquake.”
The City and County budget had no extra money and the odds of an earthquake occurring during a sporting event were long. But Dianne said, “Now that I know about this, we’ve got to fix it. We have a moral and legal responsibility. How much is it going to cost to fix the problem?”
The head of public works said, “We’ll need $6 million, but we don’t have any money in the budget.”
“We need to find it,” Dianne replied. And they did.
The engineering team updated a study, and crews completed the three-year repair project shortly before the 1989 World Series between the San Francisco Giants and the Oakland A’s. On October 17, less than an hour before the third game of the series—and the first game at Candlestick—a 6.9-magnitude earthquake struck the San Francisco and Monterey Bay region. The death toll across the Bay Area from what became known as the Loma Prieta earthquake was limited to sixty-three people. If Dianne hadn’t insisted on those repairs a year earlier, thousands of people under the rim might have been killed.
Fast-forward nineteen years. University of California officials had known for years that a major earthquake fault line, the Hayward Fault, ran beneath California Memorial Stadium, the bowl-shaped coliseum where Berkeley’s Golden Bears football team played. Nearly a thousand athletes and hundreds of staff used the stadium facilities on a regular basis, and more than seventy thousand fans often filled the stadium for home games.
The regents had been unaware of an administration report concluding that an earthquake could take down the entire west side of the stadium, which had been built on a landfill. When we learned of the report, with the close call at Candlestick Park in the back of my mind, I raised concerns about what could happen if an earthquake struck during a home game. Some people in the administration responded, “Yeah, but it’s a million-to-one chance.”
And I said, “Well, let me tell you a story.”
The UC Office of the President and the Berkeley Office of the Chancellor were not interested in a serious seismic retrofit that would cost hundreds of millions of dollars. Some opposed me publicly, initially. They had in mind a cheaper solution: build a small athletic center adjacent to the stadium to relocate the few dozen students and staff who used stadium facilities regularly, and then eventually complete a simple retrofit to address major safety concerns in the stadium structure.
But I was convinced we had to take stronger action. Over the decades, the steady seismic creep had shifted the interior of the structure of Berkeley’s Memorial Stadium so much that some doors no longer shut properly. Worse yet, several concrete columns designed to support hundreds of seats above were visibly leaning, with cracks showing at the top.
If an earthquake caused any deaths or injuries around the stadium, in my view the regents could be civilly and possibly criminally liable by allowing Berkeley’s athletic department to schedule Bears games at Memorial Stadium without a seismic retrofit. In 2008 a few of us regents made a stand: No games would be scheduled in the stadium after the 2010 season until the comprehensive retrofit project was completed.
It took nearly two years and $321 million financed by loans and an athletic department fund-raising campaign to get the work done. Although the athletic department is taking longer than expected to find buyers for three thousand reserved seats (each bearing a fifty-year contract) and to provide a cushion of capital, financing for the project was secured through bond sales without requiring one dime of public funds.
For me, when the question is whether or not to spend money that could—and very likely will—save hundreds or even thousands of lives, the answer is obvious.
This past year, my daughter Heidi gave my wife and me a pillow with the words Yes, dear embroidered on it. It’s a long-standing joke in the family: Dianne expresses her opinion about whatever new idea or project I’ve come up with. I say, “Yes, dear.” Then (more often than not) I go do whatever I had planned to do in the first place.
I call it “persistence” and “focus.” Other people have less positive words for it. But I think persistence and focus explain how we can get things done.
Yes, I am known as a bit of a maverick, and as I’ve said, my tolerance for arbitrary displays of authority or unnecessary policies and procedures is extremely limited. I realize this is a slippery slope. I recognize that it’s the argument many have made when accused of fraud or corruption. Here are the lines I hold firm: I don’t believe that the end always justifies the means. I don’t carry a blatant disregard for all rules and policies, even the ones I sometimes ignore. I don’t bypass rules for personal gain. And I don’t work around regulations when it would place other people at risk or potentially cause harm.
None of these ethical guardrails was breached during the months I spent with a few other regents identifying, vetting, and courting a new president for the UC system. We had to be efficient and effective, and as matters turned out, we were.
Recruiting and hiring a new president is the most important decision any board of regents can make. When Bob Dynes agreed in 2007 to step down and return to his physics lab at UC San Diego, it was my responsibility as board chair to lead the search committee. I told Governor Arnold Schwarzenegger and his chief of staff, Susan Kennedy, we would need to sharply increase compensation and do a few other expensive things to attract the best possible candidate. The governor was in full agreement. “We need to be competitive,” he said. “Do what you think is right.”
The University of California is a huge, $25 billion enterprise. We were looking for someone with proven management skills, strong academic credentials, and experience leading a multicampus university system—a rare combination. The first decision we made was to hire somebody from outside the system. In more than one hundred years, the regents had never done this, but we needed someone with broad experience, an outsider’s perspective, and no allegiances among ongoing administrative power struggles.
A leading candidate from day one was Mark Yudof. He was president of the University of Texas (fifteen campuses and 215,000 students today), former chancellor of the University of Minnesota (five campuses and sixty-five thousand students today), and a constitutional law expert who became dean of UT’s law school. But he wouldn’t even take my calls.
My friend John Moores, a Texan, had just left the UC Board of Regents and arranged for Mark and me to connect. When we did, Mark made it clear he had no appetite to be part of a beauty contest at UC. “I was perfectly happy where I was at Texas,” he later explained. If word got out that he was talking to the University of California, his rock-solid support among most UT regents, alumni, faculty, and students could be shaken. “It was too risky.”
But we soon were convinced that Mark would be an excellent fit. He was smart, a savvy advocate and negotiator, and as a former visiting professor at Berkeley, he knew a lot about UC. I reviewed the UC system’s unmatched qualities with him, adding, “UT is half the size. This is the biggest job in the land. You’d be surrounded by brilliance.”
Mark was intrigued, but he had two imperatives before he would even consider being a candidate: the recruiting process must be private, and we must not interview other candidates. I agreed. My one condition for him was that UC not be forced into a bidding war with UT if we made him an offer. I knew we would have to pay more than Mark was getting at UT—and double what Bob Dynes earned at UC—and I didn’t want to ask our board or the governor even one time to raise the ante. Mark agreed, and we secretly went to work.
There are times when following procedures could block progress toward an important goal, and you have to weigh the tradeoffs. This was one of those times. While alumni, faculty, and student representatives should have been part of the screening process, I knew that if word leaked out Mark was talking with us, he immediately would take himself out of the running.
As the regents’ chair, I controlled the recruiting process, so I invited only the regents I had put on the search committee to join me in private dinners with Mark. These were people whose judgment I respected and who I knew would move quickly once we found the right candidate. We did two meetings with three regents at each. They were all enthusiastic about Mark. After the second meeting they said, “Just hire him.”
The formal process for naming a new president called for the faculty group known as the Academic Senate to provide an initial list of candidates for the regents to consider. When the list arrived, it was a relief: It included Mark Yudof. We asked if the group would have objections if the regents went ahead and chose a president from the names on their list. They said no.
Mark was confirmed unanimously, by the full twenty-six-member board. It took only eight days after the board’s green light for Mark and me to negotiate his contract, get sign-offs from the regents and the governor’s office, and work out compensation details with finance and personnel staff in the Office of the President. This was handled at warp speed.
“Dick is a tenacious fellow,” Mark said later. “Once he gets a bullet between his teeth, he gnaws at it with grave energy. He took a lot of body blows later, but he got it done. Recruiting me may have been one of the most difficult, uphill things he did as the regents’ chair.”
Mark and his team made great progress. He put in place an outstanding senior team to help manage the entire UC system. One of his biggest achievements was changing the conversation with the public about UC’s dual problem of declining state funding and rising tuition. By the time Mark stepped down in 2013 to teach in Berkeley’s law school, the Office of the President was managed much more efficiently and professionally. Regents were much better informed. During Mark’s five years as president, the administration head count was reduced by one-third. Priorities were addressed. Things got done. We had more resources to pay better faculty salaries. And we kept a lid as best we could on rising student tuition.
“Mark Yudof is one of the best presidents we’ve ever had at UC,” said Sherry Lansing, former chairman and CEO of Paramount Pictures Motion Picture Group for more than twelve years, the first woman to head a major film studio, and member of the UC Board of Regents since 1999 (including two years as chair). She continued:
But we would never have gotten Mark if Dick hadn’t been the maverick. Dick’s view was, “Mark is every-one’s first choice. I’m not going to follow the process (involving all recruiting committee members), because if I do, we’ll end up with someone less than Mark.” He took a tremendous amount of heat. A lot of people were angry with him—the faculty regent was angry with him—for not involving everyone.
Dick has the ability to take criticism and not get upset by it. In fact, he doesn’t care if he is criticized, as long as he feels he did the right thing. This is a very unique and wonderful quality.
Janet Napolitano, a former Arizona governor and former head of Homeland Security, the third-largest agency of the US federal government, has continued the same discipline about budgets, management, and efficiency in the UC Office of the President.
One day, when he was president of one of the nation’s outstanding private universities, former treasury secretary Larry Summers said he was troubled by the ebbing support by legislatures across the country for state universities, including the UC system.
“Why,” I asked, “would the president of Harvard University—with the largest endowment fund of any private university—be concerned about the funding of public higher education?”5
“Public higher education is part of what makes America great,” Larry replied. He expanded on why these gateways must be preserved for young dreamers today:
Without great public universities, we will not be Thomas Jefferson’s aristocracy of talent. Our elite will increasingly be a closed club. And without the pluralism great public universities represent, the academic enterprise will be increasingly cloistered and isolated from public purpose.
It remains a mystery why state governments, not just in California, continue to underfund public and higher education. After all, every dollar the state invests in the university adds nearly ten dollars to the gross state product.6 Yet in the UC system, we were educating sixty-eight thousand more students in 2015 with the same amount of funds we had received from the state twenty years before, in 1995. The only way we did this was by increasing class size and raising tuition, strategies we would have liked to avoid.
Our biggest challenge, a loss of $900 million from the state’s annual contribution to the university system’s budget, began during my last year as chairman. The ongoing and pressing problem of insufficient long-term funding became urgent. How could we cut costs and replace revenue? What could we do about huge funding shortfalls in pension plans? Would we have to implement tuition hikes or reduce course offerings? How would we maintain world-class academic programs and continue to enroll thousands more students each year?
The federal government contributes $3 billion a year toward research and other sponsored programs at UC, plus $1 billion to the Lawrence Berkeley National Laboratory and $1.6 billion in student aid. But the truth is, our nation has been putting fewer and fewer resources into public higher education for many years. Long before the Great Recession, state legislators were cutting spending for public colleges and universities. The financial crisis just deepened the cuts and amplified the rhetoric.
It has been apparent for many years that the State of California no longer can, or has the will to, fund the University of California in such a way that UC can remain competitive with the best universities in the country. Pure and simple. One day during one of the debates in Sacramento with politicians, I complained to one high-ranking official about the short-sighted policy of slashing state funding for the UC system.
“Look, I’m not getting paid anything for this,” I said, referring to my work as a regent. “In fact, I have committed tens of millions of dollars to this university. So I’m going to do what I think is right.”
“You know, a guy like you can be dangerous,” he said. It was a welcome compliment, offered with a knowing smile.
We all caught a lot of heat for nearly doubling tuition, to $12,192 for the 2014–2015 academic year, compared to the start of Mark Yudof’s tenure in 2008. But it is important to emphasize that Mark’s administration increased enrollment and financial aid for low- and middle-income students.7 He had the board’s support at every step.
One of our most important achievements, thanks to Mark, has been changing the public’s perception of reasons driving the rising tuition. We won a big political victory in 2012 when voters blocked Governor Jerry Brown’s plan to trim $250 million in state funding for each of the state’s three systems for higher education, and the state agreed to provide another $125 million so tuition would not be increased that year.
“Dick would get into the numbers with compassion,” Sherry Lansing observed later. “He would spot duplication and spending that wasn’t necessary. He would challenge the governor. He would challenge the legislature. He would challenge the chancellors or the students. And he would do this from his heart, not just from pure numbers.”
There were many campus demonstrations against rising tuitions. “You always blame the authority figure who’s closest,” Mark has said. “No one wanted to raise tuition, but when one-third of your state budget is cut …” Most demonstrations were organized by the American Federation of State, County, and Municipal Employees Union, which of course was arguing with the regents for contracts with higher pay and benefits. Some union members raided my office one day in 2009. I told them they didn’t understand the budget issues restricting what the regents could pay. “Why are you yelling at people like Mark Yudof and me?” I asked. “Why aren’t you talking to the legislators in Sacramento? What is it about the legislators’ decision to cut $900 million from UC’s budget that you don’t understand?”
You always want to lobby for as much state money as you can, but I think we spend too much time whining in Sacramento for what we get out of it. It seems better to understand and accept that the state is going to do whatever the state is going to do. We simply have to pursue other options, including running the university more efficiently (which we continue to work on); raising tuitions (which we have had to do); increasing federal funding for faculty research, student aid, and national laboratory research; and raising whatever money we can in the private sector through philanthropy and research grants.
Giving back to UC Berkeley is a privilege, a chance to show appreciation for everything I’ve learned and for a better understanding of the world. The UC system provided a foundation for my success in life; having achieved that success, taking the opportunity to give back for all I have been given seems the right thing to do. My financial commitments over the years to the UC system amount to more than $40 million.
Many of my friends feel the same as I do: The University of California was the best education for the money you could get anywhere in the world. Is that still true? Without question. But not everyone can afford it.
I am certain there is a deep well of untapped financial support out there among California business leaders. They profit either directly or indirectly from a strong public university. With state funding at a low point and the urgency to keep tuition affordable, we need more campaigns to go after that untapped support.
When you ask anybody in the business community if they want the University of California to be as good in ten years as it is now, the answer, of course, is always yes. Well, that means the university is going to need more resources beyond state and federal budgets and student tuition to pay competitive salaries and support innovative research.
It is an outrage—not a badge of honor—that Berkeley’s outstanding College of Engineering had capacity to accept only 7 percent of its applicants for admission in 2016. Our state and our society urgently need brilliant, well-trained technology specialists to help design and build a better future: more efficient systems and products for energy, water supplies, conservation, transportation, communications, and health care, for example.
The business and investment community, university leaders, state and local government officials, public policy experts, and concerned citizens should be laying plans now to double enrollment in the University of California system to half a million students in another ten years. People say, “Well, where will we get the money?” We may not know all the answers now, but if we don’t set the goal and start planning together, we surely never will.
We have a responsibility to future generations to keep great academic centers thriving—as institutions for personal and professional growth, and as avenues to keep our economy competitive and growing. If we don’t get it right, our competitive advantage will slip. It will become harder in the decades ahead to create new industries, good jobs, and real hope, especially for the middle class. If you want to deal with the problems of income inequality, stagnant economic conditions, and global business competition, you have to start with education.