With the higher student fees now in place at the University of California, undergraduate students (or their parents) are paying for 83 percent of the actual cost of their education. That number is not to be found in any official publication but it is accurate, based on an informed analysis of UC's own accounting data. In a few more years, with anticipated increases in student fees, we can expect that number to reach 100 percent.

What does this mean for the concept of public higher education? What does this mean for any long-range planning for the university's fiscal health?

Until the early 1990s, a single package of state appropriation for the UC budget covered all the basic costs for the university's three-part mission: teaching, research and public service. Little attention was paid to the question of how much of that money went into each of the distinguishable functions; that prioritization was left up to the UC administration, with little or no public scrutiny or debate.

During the state budget crisis of the early 1990s, student fees were jacked up a lot; and this has happened again in the latest budget crisis. For this (2004-05) school year, average mandated fees for resident undergraduates are $6,230 per student. This figure does not include the cost of room and board, books and supplies and so on.

Here is an example of how UC has misrepresented the actual cost of undergraduate education.

In his January 2004 budget plan, Gov. Arnold Schwarzenegger said, and the UC regents accepted, that 3,200 UC-eligible students should be turned away and this would save the state $24.8 million. Another 5,000 students, the expected enrollment growth, were also to be "unfunded," with a savings of $40 million. Those figures tell us that the state had been paying UC about $8,000 for each new student: This is what officials call the "marginal cost of instruction" at UC. According to their numbers, the total cost to UC for entering freshmen, adding fee plus state appropriation, is about $14,000 per student.

In fact, this large amount covers lots more than the actual cost of undergraduate education. It includes the hiring of new faculty, with all the staff support and overhead they require, to perform all the functions of university faculty - teaching and research and so on. When I disaggregate those components, I come out with the actual annual expenditure for undergraduate education at UC being $7,520 per student, or close to half of the amount UC has charged ($14,000). (For details of this calculation, see my Web site socrates.berkeley.edu/~schwrtz/ UGcost.html)

Using this new information, we see that it is highly questionable whether any freshmen students had to be turned away from UC this year because of budget problems.

The arithmetic goes like this: With the actual total cost to UC of $7,520, and with students themselves paying $6,230 (83 percent of that total), that leaves only the small difference of $1,290 that the state needs to pay. That is a far cry from the $8,000 that UC claims the state has to pay it for each new student.

As the fees paid by undergraduate students approach the full actual cost of their own education, this means that the state is paying only for other things - the faculty research and graduate education, as well as public service programs, all of which are extremely important functions of the university - but no longer for undergraduate education.

Higher education at the undergraduate level, which covers more than 80 percent of all UC students, is no longer a public-funded program, but an individually funded commodity. (Financial aid for needy students is an important issue, but that is a separate story.)

These new fiscal facts have deep implications for the university and for the state that need a lot more attention. Faculty and administrators should face the difficult question of how to find a new balance between research and teaching as competing investments of a scarce resource. Students might consider what new voice they deserve to have in this institution, where they are full-paying customers and not anymore the beneficiaries of generous public support.

About the writer:
Charles Schwartz is professor emeritus of the Department of Physics, University of California, Berkeley. He can be reached at schwartz@physics.berkeley.edu.