The university is under assault – politically and economically. As you may have read, the House Bill (but not the Senate Bill) would tax student tuition waivers as if these waivers constitute income. But the assault on the university is far broader. According to a document circulating in the higher levels of the administration:
- With the proposed increase in standard deductions, Berkeley would face reduction in gifts of around $23 million annually. (Both Senate and House Bills)
- Proposed doubling of estate tax exemption would give rise to estimated reduction of $21 million annually in planned estate gifts. (Both Bills)
- Repeal of College Athletic event seating rights as a charitable deduction would mean loss of $11 million annually for Cal Athletics. (Both Bills)
- Excise tax on executive compensation of football coaches receiving more than a million dollars in income and benefits would cost Berkeley (!) $1.24 million annually. (Both Bills)
- Elimination of State and Local Tax Deductions has unknown but negative effects. (Both Bills)
- Repeal of “Unrelated Business Income Tax” would have “drastic” impact on UC Pension funds. (House Bill more drastic)
- Taxation of tuition waivers would increase taxable income of Berkeley graduate students by $150 million. (House but not Senate Bill)
- Repeal of deduction based on Interest on Student Loans. (House but not Senate)
- Taxation of employer provided education assistance for employees. (House but not Senate Bill)
Many of the proposed changes weaken the administration’s current strategy of seeking to offset the decline in state support by increases in private philanthropy. The more we model ourselves as a private corporation, the more we will be taxed like a private corporation without special exemptions. At the same time, we are still a public entity, so the shenanigans at the highest levels of UCOP (see below) put us in an ever worse light, undeserving of tax breaks or state funding.
Chair of the BFA.
Berkeley Faculty Association
UCOP interfered with a state audit into the office’s finances, according to a report conducted on behalf of the UC Regents, though the investigators stopped short of concluding President Janet Napolitano knew the interference was intend to systematically scrub unfavorable comments directed at UCOP by UC campus leaders. The report concluded two of Napolitano’s top aides, Seth Grossman and Bernie Jones, undertook “actions with the specific purpose of shaping the responses to be less critical of” UCOP. Grossman resigned before the Regents report was released to take a job at American University and denies any wrongdoing, as does Jones.
While the report stops short of concluding Napolitano’s plans to review campus responses to the state auditor were intended to remove negative comments, it contends her review had a “chilling” effect on potential criticism. After the chancellor of UC Santa Cruz submitted his response to the auditor without review from UCOP, he alleges Napolitano called to berate him.
According to the report, “President Napolitano’s activities in connection with the survey responses from UC Santa Cruz are the strongest evidence on which to conclude that the president understood that members of her staff were systematically highlighting and sanitizing critical comments from the campuses.”
In its analysis, the LA Times emphasized how the report highlights tension between campus leaders and UCOP. According to the paper, “Some chancellors, campus officials said, have chafed under what they regard as a top-down, heavy-handed management style by Napolitano and Grossman, especially in controlling information and messaging to the public.”
In other news, the proposed GOP tax plan has been shown to have catastrophic consequences for graduate students, as the bill would tax the value of tuition waivers. In response, UC Berkeley leaders have called on students to demand action from their legislators and promised to lobby against the provision, though a satirical mass email masquerading as being sent by Dean of the Graduate Division Fiona Doyle accused the university of not doing enough. The full post includes a number of articles and commentaries on the proposal.
If your undergraduate students seem glum this week, it’s not likely out of solidarity with their GSIs: Cal lost to Stanford in a squeaker, 14 – 17.
11/15 – UC President Janet Napolitano’s aides interfered in audit of her office, investigation finds (LATimes): Following the report, Assemblywoman Catharine Baker (R-Dublin) called on Napolitano to resign.
11/16 – Doctoring an Audit (IHE): According to the article, “Dianne Klein, spokeswoman for the Office of the President, said via email Wednesday that Napolitano approved the plan to coordinate the survey results to ensure they were accurate, within the scope of the audit, and that the chancellors were aware of what their campuses were submitting.”
Regents Documents from 11/16 Meeting on the Audit Report
Report on Personnel Actions Related to the State Audit (link):
The working group concluded, based on Justice Carlos Moreno and Hueston Hennigan’s findings of fact, that the President of the University bears ultimate responsibility for the interference in campus survey responses to the State Auditor, whether intentional or not. The President is responsible for the conduct of her direct reports, including her Chief of Staff and Deputy Chief of Staff. The President also is responsible for setting an appropriate tone from the top and fostering a culture of transparency and accountability on behalf of the University, which operates as a public trust for the State of California. While Justice Moreno and Hueston Hennigan found that there is insufficient evidence to conclude that President Napolitano knew and approved of the full range of Chief of Staff Seth Grossman’s and Deputy Chief of Staff Bernie Jones’ conduct, and insufficient evidence to conclude that President Napolitano knew or approved of any plan to suggest revisions to campus survey responses, the evidence did show – and the President has admitted – that she directed or caused to be directed responses to be sent through Chancellors and to the Office of the President for review.
Statement by Chair Kieffer Regarding Janet Napolitano (link):
It is important to note that, in directing that the State Auditor’s campus surveys go through the Chancellors and also to her office for review, the President relied on the advice of counsel. We are also mindful of the context for the actions taken, including the lack of trust between the Office of the President and the State Auditor based on a previous audit. Finally, we view the President’s conduct in the context of a long record of public service and leadership, including strong leadership of this University. The Board continues to have confidence in and fully supports her continuing leadership. Nonetheless, the President’s decision to approve a plan to coordinate the survey responses reflected poor judgment and set in motion a course of conduct that the Board of Regents finds unacceptable.
Response By UC President Janet Napolitano to the Board of Regents on the Finding of Interference In a State Audit (link):
I would like to assure the Board of Regents, the students, faculty and staff of the University of California, state legislators and the people of California that I hear them loud and clear. I regret deeply that I did not show better judgment in connection with this matter. I have already taken steps to ensure that this does not happen again and together with the Board will work to implement the additional changes being recommended by the Board to further strengthen our processes in this regard.
Independent Fact-Finding Review for the Board of Regents of the University of California: Summary of Findings (link): This link contains the full report from the law firm Hueston Hennigan.
GOP Tax Plan
11/17 – How the House GOP Tax Plan Would Affect Grad Students (Chronicle):
11/16 -Op-Ed: The House Just Voted to Bankrupt Graduate Students (NYT): The author, a graduate student at MIT, notes the change means that “graduate students (at his institution) would be responsible for paying taxes on an $80,000 annual salary, when we actually earn $33,000 a year. That’s an increase of our tax burden by at least $10,000 annually.”
11/15 – House G.O.P. Tax Writers Take Aim at College Tuition Benefits (NYT): The article poignantly highlights how the bill would also hit university employees whose children go to the campus where they work and receive waivers as a benefit. The article makes this point by profiling a Boston College janitor whose five children graduated from the prestigious university. If the tuition waivers the janitor received on behalf of his children were to be taxed, the cost would have been insurmountable.
11/14 – Op-Ed: Think of the Harm Taxing Tuition Waivers Will Do (WSJ): The conservative editorial page published a letter by an academic decrying the proposal.
11/7 – Op-Ed: The GOP Tax Plan Will Destroy Graduate Education (Forbes): The author, an astrophysicist, argues, “If the goal of the new tax plan is to shift the tax burden from wealthy, older Americans onto young, already-indebted students pursuing their higher education dreams, it’s poised to be a smashing success.”