Financialization is a national problem.
Financialization is the increasing influence of the financial sector (its methods, motivations, and actors) on decisions made for institutions, like universities or government, whose missions are not profit-centered. This influence creates a shift away from the original intent of the organization.
This is why many universities' board of trustees members have backgrounds in finance, trading, and banking, rather than education. In the context of higher ed, it also means cutting long-term investments in students and faculty and putting money towards short-term revenue generating projects like new buildings, flashy marketing initiatives, and high-risk, high-reward investing.
When our administrators only look at the bottom line, we don't prioritize student and faculty resources essential to UC simply because they fail to make a profit. Having some financially-minded B.O.T. members revenue-driven projects is important for universities, but too much of this is what we, and most college students in America, are experiencing: the financialization of higher education.
Further reading on financialization:
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Under the PBB model, the university does not prioritize education.
Performance Based Budgeting was implemented in FY 2010 as an emergency measure after the administration blew past their budget constructing and updating a number of buildings on campus . This trend of administrative overspending, coupled with stagnant financial support from the state government since the 2008 recession , resulted in a budget model with a heavy focus on revenue generation.
Colleges (Lindner, A&S, CEAS, etc.) use money for things directly related to the academic mission: paying for professors, supplies, labs, etc. The administration funds anything that doesn’t come out of a specific college and is intended to benefit everyone: dorms, athletics, infrastructure, etc. Since PBB was implemented, the split of revenue brought in by tuition went from 50-50, between individual colleges and the administration, to around 40-60: 40% staying in the colleges, and 60% going to the central administration . In all, this decrease has resulted in $52 million lost in tuition revenue for the colleges between 2010 and 2017-- money that has instead gone towards a similar pattern of overspending under the current administration .
The current administrative financial priorities (and consequently the budgeting model) have taken millions away from the academic focus of UC at the expense of students and faculty, spending it instead on empty marketing initiatives and endless athletic expenses. Until we give students and faculty a real voice in how money is spent, reckless administrative spending can and will continue under any budgeting model. Replacing PBB, which the administration intends to do between 2020 and 2021, will not solve this crisis by itself. Until a budgeting process involves those actually invested in education, this top-heavy, profit-driven mindset cannot change.
Since each student’s tuition money is split between their “home college” and the college(s) in which they take other courses (e.g. BoK courses), colleges that are in debt try to increase revenue by getting “butts in seats”—whether that’s by increasing the number of 1000-level courses open to all students or by marketing classes with catchy names but minimal content. This reduces the available professor hours available for higher level, major-required courses that many students need to advance in their degrees.