Alumni donations.

My favorite breakfast restaurant in Beachwood Canyon raised its prices recently. At first I was bummed, but then I thought about who really pays for the price increase. My usual breakfast was $7.85. I would usually leave $10, for a tip of $2.15. Now my bill comes to $8.25. But I still leave $10.

So I’m paying the same $10 before and after the increase. But the waitstaff is getting 40 cents less as a tip. On balance, the price increase isn’t a transfer from my pocket to the restaurant—it’s a transfer from the waitstaff to the restaurant.

I wonder if something similar goes on with tuition increases. Right now the Regents are contemplating raising UC fees another 10% or so. According to a recent email from the UCLA Graduate Students Association, “Since 2001, fees have increased 79% for undergrads, 84% for grads, and up to 131% for professional students.” I’m too lazy to check that assertion, but sounds roughly right. (UPDATE: Current fees and past fees.) (UPDATE 2: This week, they did approve a 10% fee increase for the professional schools for next year.)

Meanwhile, Dean Christopher Edley of Boalt is advocating for even bigger tuition hikes. Why does he want the money? To give Boalt the capital to move up in the U.S. News rankings, of course. According to Ben Allen, a Boalt student quoted in the article, “law students are very prestige-conscious, and when the dean talks about spending the money to put Boalt back in the top five, that resonates”. Of course, that particular student also is a member of the Regents, so maybe his view is a wee less than representative. (And we won’t tell him the bad news.)

Wait, there’s more. All of this happens against a backdrop of declining alumni participation in school fundraising. According to the Wall St Journal, fewer alumni are giving, and school fundraising has flatlined. Their chart:

Since U.S. News factors alumni participation into its rankings, this has led to schools (naturally) engaging in shenanigans to boost their apparent participation rates. For example: taking a student’s $25 donation in one year and treating it as 5 annual donations of $5. In a stroke of Enron-worthy accounting cleverness, this lets them count the student as five donations rather than one.

It all sort of makes me wonder whether tuition increases aren’t starting to be a little like the restaurant price increases—rather than raise revenue, they just move revenue from the future (alumni donations) to the present (student tuition). If tuition increases dampen the enthusiasm of students to give after graduation, how is that worth it?

The UC system is in a different position than, say, Harvard. The UC is part of the state government and is accountable to an annual budget. So short-term results are the priority. Whereas Harvard, deriving giant returns from its huge endowment, can afford to weather fluctuations in its year-to-year revenue and focus on maximizing alumni contributions in the long term (which it does with near-intravenous efficiency).

I had lunch with a UCLA professor & alumnus last semester who repeatedly asserted how important it was to give money after graduation. Throughout my college education, Harvard banged it into us how our tuition didn’t cover the true costs of our education and that we were expected to make it up down the line in the form of donations. (I’m pretty sure I haven’t, but the point was made.)

But something different seems to be going on these days. The UCs are a special case, but it seems like a lot of colleges and universities have used the mostly-good economy of the last 15 years as a basis to raise tuition faster than inflation. (Again, too lazy to give you a footnote.)

This has not gone unnoticed by students. I used to justify my donations to Harvard by saying “sure they have a lot of money, but they also make about 20% a year investing it. So they use it wisely.” But when they crossed the $1 zillion mark a couple years ago, I did start to wonder “gee, is my petty little donation going to make a difference? Maybe I should send it somewhere where it matters more.”

When I think about donating to UCLA, I’m ambivalent. Some part of me still clings to the same belief that the professor did—alumni donation is part of the ethical contract a student makes with an institution.

Another part of me feels like shit, Regents, you weren’t shy about bringing my tuition up a huge amount to cover your short-term deficits. You weren’t shy about sticking me with the bill from the Kashmiri case. Can you really say I got that much of a bargain?

So the ethical appeal for alumni fundraising—you got more than what you paid for—is less compelling than it used to be.

We move on to the altruistic appeal—give money to UCLA because it’s the best use of your charitable dollar. But if anything, the shenanigans of the last three years show that the UC system is no model of financial management.

For argument’s sake, I’ll accept that alumni have an ethical duty to support their schools with donations. But if that’s true, then schools also have an ethical duty to protect their students’ pocketbooks while they’re in school. I got a good legal education at UCLA. But the UC system didn’t quite hold up its end of the deal.

12 Mar 07

Comments

I was wondering when you would get to this topic. You’re a great writer, well-informed and thorough. When you graduate from UCLA this summer, you’re going to do wonders representing your client critically and no doubt, ethically. Being proud of your school is important. It has and will continue to help you get to where you want to go. I’m really happy with my own law school (USC) for this reason. That’s why I give in spite of my outstanding loans - I want to affirm my support. And, as the WSJ article notes, if my giving of small dollars helps USC’s giving rate, which in turn helps it to better apply for funds from the Kresge Foundation, then why not do it since it means making my school better? Such foundational funds can certainly enhance our clinical programs and improve faculty hiring/retention.

It’s probably a different mindset for private schools, I don’t know for sure. However, while the UCs obviously have serious recent issues to contend with, it has wonderful strengths too. If that’s not reason enough for anyone to want to give and help where your school is in need and can perhaps be better because of it, then you’re not going to ever want to do it.

Posted by: Eric at March 13, 2007 12:57 PM

At heart I like to think I’m a free-market capitalist but I often question statements like “we need to spend our way back into the top five.” I was also very concerned with the Boalt Dean’s comments when I saw them on the news. Our interim chancellor (of UCLA, not the law school) and former law professor also echoed this outlook over last summer when he said UCLA would have to greatly increase tuition to “keep up” with other research institutions. What has made UCLA and UCLA Law top-ranked schools in only 50 years has not been outspending our competitors but keeping the schools financially accessible and attractive to the greatest number of potential students. The idea that more money = higher ranking is true to some extent but is not determinative. More money can help recruit professors, offer a limited number of scholarships to high-achieving students, or maybe buy some more lockers, but I don’t see either of these factors propelling us into the top 10. US News ranks the law schools and couldn’t care less which faculty we recruited or what our top few students’ LSAT and GPA were. US News cares about three main things - reputation, GPA (25/75), and LSAT (25/75). I don’t see what giving the dean a war chest financed by dramatically increased fees is going to do to influence these factors. But what if tuition was still $5,000? Where would a student go who got into Cornell (36k), Georgetown (39k), and UCLA Law Schools? There are many students who pick up the US News and make their decision based on the highest ranked school they got into (but do we really want these folks anyway?). There are also many students who consider the location of the school, the douchebag factor of the students (goodbye Georgetown!), the potential to work in the community, or the amount of debt they could be looking at. If the tuition was still $5,000 (circa 2000) we would be attracting numerous students that perhaps got into higher ranked schools but made their decision based on other factors like not having to sell out immediately upon graduating without collapsing in debt. I also don’t know anybody who decided which law school to go to based on a comparison of faculty or the number of desks in the library. If our midrange LSAT was 167/170 instead of 162/169 we would likely be in the top 10 or at least be ranked higher than 15. I think that, ceteris paribus, 5k tuition would do more to increase our prestige than 20k tuition that uses 15k of that to try to do all of the other things that the dean seeks to do. We’re not a private school, let’s not try to be. We’re not going to beat NYU at a game they invented.

Also, remember that UCLA is only 50 years old which kills us in prestige rankings. If I were schools ranked 7-14 I would be a lot more concerned about them maintaining their rankings against a young “up and comer” like UCLA. Along the same lines, one has to remember that the number one source of endowed chairs/large gifts is usually wills, trusts, and estates. There aren’t many deceased UCLA Law alums out there or even that many who have reached the age where they think about distributing their wealth. Private schools/older publics have chairs/funds that were established a hundred years ago or more. This puts us at a tremendous comparative disadvantage.

Posted by: TR at March 13, 2007 07:44 PM

When I was applying to law school, a number of attorneys I knew told me to go to the best state school that accepted me. The rationale was that I would leave law school without crushing debt. Other people made a similar decision and turned down higher-ranked schools to attend UCLA. Now UCLA is charging its students private school tuition to attend a public university. It is requiring professional students to subsidize the graduates and undergrads. It is taking in huge numbers of LLMs (who pay higher fees) and 1Ls, leading to overcrowding and meaning that there are very few classes for 2Ls and 3Ls. Current students have not seen any benefit from this added cashflow. But at least we’ve been able to hire a czar to run the place.

I agree that there is a moral obligation to support one’s school. I give to my alma mater (which has a huge endowment that it uses wisely) and my high school every year. UCLA is not getting one red cent. ever.

Posted by: SJP at March 13, 2007 09:43 PM

I can at least give Dean Edley credit for having a clear public stance on what he wants and why he wants it. I really could not tell you what Dean Schill’s vision is for UCLA law school in the next 3, 5, 10 years. (I don’t think he’ll be sticking around that long, but that’s another story.)

That leads me to TR’s point, which I agree with: as a public school, UCLA cannot compete in a head-to-head arms race against private law schools. Those schools have institutional & fundraising advantages that we can’t overcome merely with willpower and elbow grease.

The way I see it, UCLA has two choices: 1) stay true to its roots as a state school and be the best UCLA it can be, or 2) privatize, so it can compete with private law schools on an equal footing.

But I think it’s half-assed and futile for UCLA to maintain its status as a state school and simultaneously try to out-Stanford Stanford. That won’t work.

And then the question becomes: supposing that’s an accurate summary of UCLA’s strategy, should I donate to help the cause, even though I consider it akin to funding research for pig flight? Honestly, if UCLA said “we are going private, give us money” I would have an easier time opening my wallet.

Posted by: MB at March 13, 2007 09:51 PM

Not sure what you mean here.

What specific course of action by UCLAW would represent “trying to out-Stanford Stanford” as opposed to just “being the best UCLA it can be” (or vice versa)?

Posted by: at March 14, 2007 01:17 AM

What I mean is the arms race for professors, for students, for facilities, for clerkships, for prestige, for rankings, etc. All that costs money. As a public school, UCLA has to operate under financial constraints that Stanford doesn’t.

To be “true to its roots” as a state school would mean to care less about ranking and more about making a really solid legal education accessible to the widest range of Californians. After all, there is some notion that the point of a public education program funded with tax dollars is that it returns benefits to the public.

Bear in mind that for 20 years, UCLA has maintained its ranking around #15-20 without the benefit of huge funding. Tuition at the law school from 1999-02 was around $11,000. This year it’s $25,000.

So clearly, being a state school is not per se incompatible with maintaining a good ranking. But moving up in the rankings means displacing competitors who are private and much better-funded. And that is expensive.

Consider the effect on career choices as well. As tuition goes up, UCLA will become more of a feeder school for big law firms, since that’s the only job that will pay off the debt. You’re not going to be seeing UCLA lawyers taking careers in public service and other lower-paying but vital positions.

Posted by: MB at March 14, 2007 08:32 AM

Sounds like you think we shouldn’t even be trying to out-USC USC.

I think most people here would agree, though, that the school is better off with an eye toward upward mobility than a mission to settle in as the Hastings of Los Angeles.

Posted by: at March 14, 2007 06:17 PM

Yeah, I actually had a similar reaction—we’re trying to out-Stanford USC, not Stanford. And aren’t we still cheaper than USC? That doesn’t seem like a bad position to maintain.

Also, agreed that we’re better off trying to be more like Boalt than like Hastings or Davis.

Mainly, though, I think it should be pointed out that seeing “UCLA lawyers take careers in public service and other lower-paying but vital positions” is also an expensive proposition. At other schools it’s called LRAP (Loan Repayment Assistance Program) and it’s more common at the higher-ranked schools that UCLA is presently angling to compete with than at state schools. My understanding is that the school is presently trying to establish a program like this (although I don’t know how soon). If that’s part of the arms race, then I say “Keep stockpiling.”

Also, TR’s comment about a young school not having access to all those bequeathments and trusts yet should bode well. Long live the class of ‘54, but they can’t live forever.

Posted by: ungraded memo at March 14, 2007 07:10 PM

Re upward mobility: What upward mobility? There’s nowhere to go. See prior post on futility of ranking quest.

Re LRAP: I don’t follow your argument that an LRAP is a sign of prestige. An LRAP is designed to reduce the impact of high tuition. The lower your tuition is, the less you need an LRAP.

Posted by: MB at March 15, 2007 11:34 AM

Which law school are you thinking of whose tuition is low enough that LRAP doesn’t matter?

Posted by: ungraded memo at March 15, 2007 05:23 PM

UCLA 10 years ago.

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