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Public Mission, Private Funding: the University of California, Berkeley

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Public Mission, Private Funding: the University of California, Berkeley N9-317-023 AUGUST 24, 2016 WILLIA M C . K I R B Y JOYCELYN W. EBY Public Mission, Private Funding: The University of California, Berkeley We stand at a crossroads. At stake is not our existence, per se, but the idea that society as a whole benefits when access to a world-class education is based on merit, not privilege or financial circumstances; that the private sector must not be allowed to become the sole repository of excellence; that research conducted in the public’s interest is distinct from inquiry driven by the pursuit of profit; and that the deep commitment to making the world a better place that animates our campus is no accident. — Nicholas Dirks, Chancellor of the University of California, Berkeley1 University of California, Berkeley (Berkeley) Chancellor Nicholas Dirks strode across the land that he hoped would soon become the Berkeley Global Campus. Located in Richmond, California, with a panoramic view of the San Francisco bay, the land had long been set aside for collaboration with the Lawrence Berkeley National Laboratory.a In 2013, however, federal budget cuts and shifting plans delayed the intended expansion of the Lab, and Dirks had seized the opportunity and location to establish a new model for partnership between American and international universities, one among a series of initiatives launched under Dirks’s leadership.2 Dirks came to Berkeley with a distinguished record of scholarship and academic leadership, having served as executive vice president for the arts and sciences and dean of the faculty at Columbia University. He began his chancellorship in 2013 when, after the calamitous global financial crisis of 2008, Berkeley was beginning to find firm enough footing to dedicate serious time and energy to thinking about its strategy for the future. The financial picture remained challenging, but Berkeley had endured. Dirks recalled, “There was a sense that the place had survived and now everybody could get back to work. There was such a collective sigh of relief that people were just willing to say come in and tell us what you think about the future…. I walked into a space that was enormously open.” a The Lawrence Berkeley National Laboratory was an official lab of the United States Department of Energy, managed by the University of California located close to the Berkeley campus. This entity should not be confused with Lawrence Livermore National Laboratory, which was also a federal research facility managed and operated in part by the University of California. Professor William C. Kirby and Research Associate Joycelyn W. Eby prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2016 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. 317-023 Public Mission, Private Funding: The University of California, Berkeley Given this freedom to set an agenda, Dirks chose to focus on three strategic priorities: the undergraduate experience, interdisciplinary initiatives, and global partnerships. A team of administrators reviewed ways to enhance undergraduate life, not just in the classroom but also through stronger residential programs and campus activities. Interdisciplinary initiatives such as a data science initiative and the Social Science Matrix—an institute for cross-disciplinary social science research—promoted cooperation across departments and worked against departmental isolation. Global partnerships, as exemplified by the Global Campus, would strengthen Berkeley's cooperation with institutions around the world. A better (if not yet stable) financial situation and clear strategic priorities notwithstanding, Dirks and Berkeley faced significant challenges. Like many institutions, Berkeley’s greatest strengths in one context could prove its most problematic weaknesses in another. The very foundation of Berkeley's identity was its role as a public university dedicated to access for the citizens of California. Clark Kerr's 1960 Master Plan for Higher Education in California had laid out a division of labor that had for many years coordinated the efforts of the University of California (UC) and California State University campuses, along with many California Community Colleges. Berkeley's identity as a public institution and an engine of upward social mobility remained deeply engrained in the ethos of its faculty and students and for many years had driven and inspired their work. However, California’s rapid growth and diversification had created a state that looked very different than it had under the Master Plan. The state, its citizens, and the Berkeley community struggled to balance the Berkeley ideal of equitable access and the pursuit of excellence in the context of dramatic demographic shifts and ethnic diversity. More important, unlike the era when the Master Plan was adopted, the state had massively disinvested in public higher education. Berkeley, the state's flagship institution, received only 13% of its budget from the state. Frequent student protests on campus and pronouncements from the Regents fought against tuition hikes, limiting the Berkeley administration’s tools to address diminishing state funding. Beyond funding, recent remarks by Governor Jerry Brown, disparaging Berkeley because “ordinary, normal students” were “getting frozen out,” pointed toward a diminished state commitment to Berkeley as an exceptional institution.3 And yet, professors and students largely still operated under an assumption of entitlement to public funding, even in the face of years of such support declining. The public mission that had made Berkeley so great during the good times of state support constrained its responses to, or even its acknowledgement of, reality during bad times. The passion and dedication of the faculty to the governance of Berkeley was another long- standing institutional strength. But in the new context in which financial constraints increasingly necessitated tough decisions about resource allocation, faculty participation in governance often impeded administrative efforts to move forward. By his third year in office, Dirks found himself caught in an increasingly small space between an unsupportive governor, an active UC system president, and an engaged (and sometimes enraged) faculty. On February 10, 2016, Dirks launched a strategic planning initiative to address Berkeley’s “new normal” of limited state funding and to finally confront what had become a permanent structural deficit. The mandate of the initiative was broad—ranging from evaluating human resource policies, redesigning research funding processes, and expanding fundraising capacity to re-examining the university’s athletic programs. Dirks noted that "some of the changes we will undergo will be painful," but he concluded that these changes would in no way be “an abandonment of our commitment to a public mission." Rather, he described Berkeley's "new normal" as "a fundamental defense of the concept of the public university, a concept that we must reinvent in order to preserve."4 2 Public Mission, Private Funding: The University of California, Berkeley 317-023 With such a broad vision, where should the strategic planning effort begin? What should it prioritize? How would faculty and students react to an inevitable reordering of the university’s finances and priorities? Could this effort address the fundamental challenge of what it meant to be a privately funded, public university? The History of Berkeley, from Gold Rush to Gold Standard It is not the University of Berlin nor of New Haven which we are to copy...but it is the University of this State. It must be adapted to this people, to their public and private schools, to their peculiar geographical position, to the requirements of their new society and their undeveloped resources. — Daniel Coit Gilman, President of the University of California, 18725 Yale Blue and California Gold: the Melding of Private College and Land-Grant Institution The stories of UC generally and the Berkeley campus specifically both began with the story of the College of California—a small, academic outpost in the newly-formed state of California. In fact, even before officially achieving statehood, residents of California began to discuss plans for a university. Initially, citizens' demand for higher education was filled through private institutions like the College of California, founded by Yale alumni and incorporated in 1855. Seven years later, in 1862, the United States federal government passed the Morrill Act, which incentivized state governments to develop public higher education institutions by offering public lands to states who would use them to found (or fund) the establishment of colleges for agriculture and mechanics. A wave of new institutions—the so-called "Land Grant Universities"—were established in states across the country under the auspices of this act. Californians were eager to take advantage of the federal program and to build the public university they had long desired. However, recognizing the value of the foundation—both literal and figurative—built by the College of California, it was decided that, on the condition that the new institution would include a College of Letters and Science in addition to agriculture and mechanics, the land grant institution could be built on the campus of the College of California. On March 23, 1868, this new Science and Letters-Land Grant hybrid was christened the University of California. Since 1868, the UC has been led by a President, under the direction of a Board of Regents, a leadership structure codified in the California State Constitution, ratified on May 17, 1879.
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