New UC tax generates concern about financial impact on student fees

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A shift in the way the UC Office of the President gathers funds from each campus has caused some concern about the impact on student fees and the financial state of individual campuses.

In previous academic years, revenue generated from individual campuses had been collected and then redistributed across the UC system, but a change in policy implemented at the start of the 2011-12 academic year has allowed campuses to keep these revenues and instead pay 1.6 percent of that amount to UCOP.

The taxed funds can come from sources such as tuition, state general funds, application fee revenue and patent revenue. The funds then go toward shared systemwide needs such as multicampus research projects and central administrative services.

UCOP has left the question of whether to tax revenue such as fees generated by student fee referenda up to the chancellors at each campus, according to UCOP spokesperson Shelly Meron. The Berkeley campus currently does not collect revenue from student fee referenda for this purpose, but concerns have been raised at other campuses where fee referenda face taxation.

After UC Santa Barbara Associated Students expressed concern over the impact that the new funding model might have on student fee referenda, a forum was hosted on campus on April 16 at which students discussed the tax with UCOP Executive Vice President of Business Operations Nathan Brostrom and Executive Vice President and Chief Financial Officer Peter Taylor.

Student leaders on the Berkeley campus have raised objections to the inclusion of student fee referenda funds in the 1.6 percent tax.

Bahar Navab, campus Graduate Assembly president, said she felt that the inclusion of student fee referenda was unfair because students might have been aware when voting for the new fees that some of the money might go toward the UCOP tax.

“I’m hoping that UCOP will offer a stronger message to chancellors that this money shouldn’t come from student fee referenda and student money, but in the long term we’d like to see UCOP not include student referenda or student money in these calculations,” Navab said.

Erin Gore, UC Berkeley associate vice chancellor and chief financial officer, said that the new tax method, which resulted in UC Berkeley paying approximately $27 million this academic year, is better for the campus because the previous method of gathering revenue made it difficult to determine the actual revenue amount Berkeley would receive from taxed funding sources.

“As a campus, we are seeking ways to achieve financial stability — both by knowing the revenues we expect to receive and the expenses we expect to incur,” Gore said in an email. “This change is a move in the right direction, it supports our ability to predict campus revenues and expenses.”

Gore added that the amount the Berkeley campus paid this year under the new funding initiative was comparable to “off the top” funds UCOP would have received under the previous revenue collection model.

The new method of collecting revenue also gives campuses more of an idea of how money will be applied, according to Elizabeth Deakin, co-chair of the campus division of the Academic Senate Committee on Academic Planning and Resource Allocation.

“We are actually better off because we have a clearer picture of what we bring in on each campus and what we  are paying for shared systemwide services,” Deakin said.

However, in light of financial problems, UCSF Chancellor Susan Desmond-Hellmann has expressed concerns with the new tax, and the campus has made moves to increase its independence from the system in order to strengthen its financial situation.

According to UCSF spokesperson Jennifer O’Brien, Desmond-Hellmann has asked the UC Board of Regents and the UCOP to partner with UCSF to review governance and financial issues. The regents have responded by agreeing to convene a work group, which will report to the regents in July.

Jamie Applegate covers higher education.