Report of the Chair

I regret that the CFA speakers and others have left the room as I wish they could hear my comments today.

I would like to welcome back our faculty and students, and other members of the CSU community from summer break. Summer break this year was too short, and -- thanks to the budget crisis -- not as restful as any of us had hoped. We had two full board meetings in July alone to deal with California’s financial crisis. And the Chancellor and his staff worked around the clock through August to implement this Board’s policy and deal with the fall-out of the terrible cuts we face.

This is ordinarily the time that I talk about some of the great achievements of our campuses and individual members of the CSU community. And so I’d like to touch on some of them, but then I have some personal news and reflections to share.

First to celebrate our achievements. Somehow, in the shadow of financial disasters you still deliver. This past month, Cal State East Bay launched a new on-line degree program. This program meets a great unmet need -- making college available to working adults who started their education but can’t get to campus to complete it. East Bay is offering these people a 2-year upper-division online program to complete their bachelor’s degree in business administration. Other campuses saved and scratched and borrowed and begged to keep student services adequate. Humboldt rewired and improved its Library. Stanislaus cut the ribbon on its long-needed Student Recreation Complex. And finally, virtually all of our campuses were recognized in one way or another by the college ratings that came out this summer. Many of the CSU campuses were recognized as best buys, best in the West, or top choices. The campuses still vibrate with those wonderful rituals of fall: kids dragging their bags and refrigerators and mattresses up staircases, friends hugging and reuniting, parents kissing a child good bye, and our faculty and campus leaders inspiring students at fall convocations. I congratulate the campus presidents, faculty, staff, and students for keeping the spirit alive.

Now I’d like to speak personally for a minute.

As some of you are aware, last week, the President asked me to serve as the next United States Ambassador to Australia and he delivered my nomination to the Senate last Monday. I cannot predict how long the Senate confirmation process will take or how it will turn out. I may be able to complete the remaining 8-months of my Term as a trustee and as chair of this Board. But if the Senate acts more quickly than that, then I may have to step down before I planned. If that is the case, I will do it with tremendous great sorrow because I love the CSU and the opportunity to serve this system has been the greatest professional privilege of my life.

Because I can’t know for sure how many Board meetings I may have left, I would like to make a statement about my service here at CSU and the future of the CSU.

As a member of the Board of Trustees, we do not have opportunities to tell our own story. I came to California because of the education system here. I did not grow up in California. I went to public schools in Connecticut, and attended college back East on partial scholarships and financial aid. Like many of the students at CSU -- my family did not have a lot of money -- and so I had to work part-time and borrow money to pay for school. By my first year of grad school, I’d maxed out my financial aid and was relying on large PLUS loans in the 1980s that charged 14% interest to pay for school. I couldn’t get more financial aid and I was fully maxed out on loans. And so my wife Becky and I could not afford for me to go to law school, which had always been my dream.

I applied and went to UC Berkeley Law School because it was the only top law school in the United States that we could afford.

It turned out to be the greatest education I have ever received.

And I got it because the people of the State of California -- its leaders and its taxpayers -- were willing to invest in me. For the past 20 years, ever since I graduated, I have felt a duty to this State, and to pay back the people of this State.

So when I had to figure out where to build a practice, buy a home, raise my family, volunteer my time and energy, and where to make my own investments, I didn’t go to New York, or Boston, or Washington, D.C. I chose California -- the State that literally gave me my law degree.

I joined a California firm – Munger, Tolles & Olson -- and have worked there for two decades. This year, our small California firm was named the number one firm in the nation this year by American Lawyer. That success is California’s success. It has meant millions of dollars in taxes paid to California, hundreds of thousands of hours of volunteer time donated to California, houses and families and investments made in California, and hundreds more talented people attracted to work and grow and help California.

I’ve told my story because it is not unique. It is the story of nearly every single person in this room. Those from California stayed here and succeeded here because of their California education. Others like me came here for the education and then stayed to use that education to advance California. We benefitted from a generation that understood that it had a duty to pay it forward. I look at my colleagues on this Board, on the leaders of the faculty, our alumni, our administration and staff and I see in their success and their commitment to education the very genius of the California Master Plan.

That was the bargain that California made with us when it established the California master plan in 1960. If we make California the State where every qualified and committed person can receive a low cost and high quality education, all of us benefit. California will attract and retain the leaders of the future, and as a state we will grow bigger and stronger. When we talk about every dollar we spend on a CSU student returning $4.20 to the State, this is experience is what we are talking about.

So as someone who has lived the California dream, there is nothing more painful to me than to see this dream, this vision, dying right in front of our eyes. It is being starved to death by a public that thinks any government service -- even public education -- is not worth paying for. And by political leaders who do not lead, but instead give in to our worst, short-sighted selfish instincts

The current financial crisis is the product of a lot of factors that occurred outside of California as well as within. But the response to the crisis reflects problems that have been hurting California for decades now. There is no one culprit or one bad decision, there are many bad decisions by many people because they’ve stopped thinking about the big picture. The big picture is that California succeeds when we have a smart, trained, and engaged work force. But decision after decision in Sacramento ignores that.

As the UC President Mark Yudof put it bluntly the other day, the State is unreliable. In response, voters came up with one cure after another that was worse than the disease -- whether it has been over reliance on initiatives driven by special interests, or term limits, or any of the other ways we’ve come up with to avoid representative democracy.

Some say AB 656 is the solution, but there are several problems with the legislation, in particular, my concern that it would supplant General Fund financing of public higher education rather than supplement it.

To win votes political leaders mandated long prison sentences that forced us to stop building schools and start building prisons. It has made us dumber and we are not any safer. To win votes leaders promised tax cuts no matter what, and did not worry about how to provide basic services without that money. Those tax cuts did not make us richer, they’ve made us poorer. To keep in office they carved the state up into districts that ensured we’d have few competitive races and no ability to compromise. Rather than strengthening the parties, it pushed both parties out to the fringes and weakened them. When the economy was good they failed to make hard choices, and then faced disasters like the energy crisis. And when the economy was bad, as it has been recently, they made no choices until the economy was worse. We didn’t even have this year’s budget until the budget year had begun, and it was a half-baked budget that has been revised three times since.

I agree with our Chancellor and President Yudof. It is not the actual people in State government now who are the problem. Privately, candidly, they share our views and admit that the system is failing. The problem is we are stuck in a dysfunctional system. The combination of uncompetitive electoral districts, initiatives that allow the minority to dictate the terms of the budget, and structural rules that ensure we have a relatively inexperienced legislature up against strong special interests is just a recipe for disaster. And as a result, we just can’t depend on our leadership.

For the past two decades we have been starving higher education. California’s public higher education has half as much to spend today as it did in 1990 in real dollars. In the 1980s, 17 percent of the State budget went to higher education and 3 percent went to prisons. Today, only 7 percent is going to universities and 9-10 percent is going to prisons.

The promise of education which brought so many here, and kept so many here, this bedrock of California’s success, has been abandoned. Our K-12 system has fallen from first in the nation to the bottom five. And higher education is now taking on water and going down too. CSU has done better than other institutions because of outstanding management. But the fact that we can bail water faster and quicker does not change the fact that we’re still sinking.

Every meeting for six years, I have seen the signs of decline. I have listened to the painful stories of faculty who could not afford to raise a family on the salaries we pay. Of students living on the financial edge because they are working two jobs and taking care of a child and barely making it with our current tuitions. I’ve seen the buildings that are out of date, and the many people on our campuses who feel that they have been forgotten by the public and Sacramento.

Charlie and I and the other trustees, we get yelled at during these meetings but you know, and we know, that we are on your side. We get yelled at not because we believe in higher fees, or lower salaries, or because we were lazy or timid in our efforts or never plead our case in Sacramento. Its because we are here and we are the only ones who seem to be listening or trying to figure out a way to keep things together. The trustees here have worked with the Chancellor and the Presidents to keep the system going on less and less, on broken promise after broken promise. We’ve gone to Sacramento over and over again, and we’ve made our pitch and we have been promised that we’d have long-term funding compacts and our budgets would be protected. But those promises have been broken.

What made California great was the belief that we could solve any problem, as long as we did two things: we acknowledged that it was a problem and we worked on it together. That is what is missing. California has not acknowledged that it has fundamentally abandoned the promise of the Master Plan. And Californians have lost the commitment to invest in one another. And this is why we have lost our way.

I admire what everyone is doing in this critical period. Everyone in our system is making terrible sacrifices. Employee furloughs, student fee increases, and campus-based cuts in service and programs are repulsive to all of us, but necessary to keep the system going. Everyone has had to step up. The employee labor groups have had to accept the pay cuts associated with furloughs. That means less food on the table and anxiety all the time. This is a huge sacrifice and we know it.

For the students and their families, we are sick about having to increase fees twice for the academic year. With the federal stimulus funds and new financial aid provisions, both federal and CSU, we’ve done our best to keep CSU affordable to every student. But it is harder to study, to make ends meet, and get out of debt when you finish. Most importantly it is unfair. I was not taxed for my great California education, and neither should you. This is fitting because education of our students benefits every Californian.

In the end, we’ve gone from investing in the future, to borrowing from it. Every time programs and services are cut for short-term gain, it is a long-term loss. The $4.20 return on investment, all those future leaders, all the reasons we have a CSU in the first place -- the need not just for education but for a good education.

The solution is very simple, but hard. It is what I’m doing now, what today’s speakers were doing, and what Chancellor Reed does every day. Tell the story. Tell what is happening to every person who can hear it. Beat this drum until it can’t be ignored. Shame your neighbors who think the government has too much money and who are happy to see Sacramento paralyzed. But we have got to wake this State up and get it to rediscover its greatness. Because if we don’t, then we will be the generation that let the promise for a greater California die.

That concludes my report.

Chancellor Reed, it is time for your report.