Proposal to Convert UCLA Anderson s Full-time MBA Program from State-Supported to Self-Supporting Status

Proposal to Convert UCLA Anderson s Full-time MBA Program from State-Supported to Self-Supporting Status

Proposal to Convert UCLA Anderson s Full-time MBA Program from State- Supported to Self-Supporting Status Table of Contents I Introduction... 2 II Guidelines for Converting the State-Supported MBA Program... 3 III Program Intent & Congruence with University Mission... 3 IV Impact on Existing Programs Within UCLA Anderson... 5 V Program Description... 6 VI Faculty... 9 VII Program Governance... 10 VIII Resource Analysis & Disposition of Program Revenue... 11 IX Appendices... 12 1

Proposal to Convert UCLA Anderson s Full-time MBA Program from State-Supported to Self-Supporting Status I Introduction The UCLA Anderson full-time Master s of Business Administration degree has been the cornerstone program for the School of Management for over 50 years. The intent of this proposal is to convert the current funding structure of the program from state-supported to selfsupporting status. No other element not curriculum, faculty, or program requirements -- of this highly ranked and successful program (see Appendix A), will be altered during this conversion process. Nothing will impact the academic quality or financial viability of the two remaining state-supported programs, the UCLA Anderson PhD program and the Undergraduate Minor in Accounting, by the move to a self-supporting status for the full-time MBA. As an integral member of the UC and UCLA family, UCLA Anderson is fully committed to continuing to support and to advance the public mission and excellence of the University of California system by creating a more viable funding approach to our flagship MBA program. The current fiscal environment is threatening the very essence of our university. State funding is not just declining, but is doing so with a high degree of unpredictability. This places our students in dire straits since they are confronted with last-minute tuition increases. UCLA Anderson adds significant professional differential fees, over and above the base tuition that the university collects. As base tuition increases, it runs the risk of pricing the MBA tuition above the highest of our private competitors, unless the school itself pays for the cost of our students tuition hikes, by reducing our professional differential fee, thus keeping their tuition bill constant. Either scenario is unsustainable. This suggests great urgency in converting the MBA program to self-supporting, to insulate our students and the school from these circumstances. The current fiscal situation will end up crippling the school s finances or pricing MBA tuition out of the market, and, either way, jeopardizing our continued excellence in research and teaching. Converting our full-time MBA program to self-supporting status offers benefits not only to UCLA Anderson but also to UCLA, by enabling the university to recoup a portion of its permanent budget shortfall: $2.7 M in state funds as well as an additional $4.2 million in campus overhead costs. These funds can be redirected to under-funded areas of the campus. In parallel, Anderson is protected from the negative effects of further UC tuition increases on its professional differential fee. With a self-supporting MBA program, all tuition remains with the school. Given a higher base tuition than is presently the case, we would have the capacity to increase financial aid offered to our students. We expect an increase in financial aid of at least 15% relative to the current scenario, thus facilitating greater student access to the MBA program. The trajectory of tuition increases, when the MBA program is self-supporting, would be modest, and would likely be lower than expected tuition increases under the state-supported model, because of President Yudof s projection of rapid escalation in tuition over the next four years. 2

In essence, the financial dimension of this conversion boils down to the following. In 2011-2012, the state-supported MBA program receives approximately $15.5M in state funding, plus $20M in professional degree supplemental tuition. Using 2011-2012 as a base, the MBA program will retain $12.8M in tuition in 2012-2013 but pay $4.2M in various charges to UCLA. We do not make this request to convert our flagship MBA program to self-supporting status lightly or hastily. This concept has been under serious consideration since 2006. The Academic Senate review of the Anderson School in 2005 and the AACSB accreditation report in 2005 both highlighted the fundamental challenge to Anderson s funding model under declining state funding, and the previous Dean and Chancellor at that time already advocated for a selfsupporting funding model. The 2010 AACSB accreditation report (Appendix L) included under the heading II. Identification of Areas That Must Be Addressed Prior to Next Maintenance Review only two items, one of which is Implementation of a Financial Self-Sufficiency model that will relieve the school of the vagaries of uncertain state support. Our internal and external accreditation agencies have been telling us since 2005-06 that we must change our funding model, which we are currently seeking to do. II Guidelines for Converting the State-Supported MBA Program With a continuation of the worsening economic news followed by yet further cuts in UC state funding, the Coordination Committee on Graduate Affairs (CCGA), anticipating many proposals to institute new self-supporting degree programs, issued guidelines for reviewing proposals for new self-supporting graduate degree programs in May 2011. In his letter of April 15, 2011 to Provost and EVP Larry Pitts, Daniel Simmons, Chair of the Academic Council, noted that the CCGA guidelines do not address conversion of existing graduate degree programs from state- supported to self-supporting status CCGA is developing guidelines for such cases. In June 2011, CCGA issued a short report entitled CCGA Instructions to Divisional Graduate Councils: Conversion of Graduate Degree Programs from State- Supported to Self-Supporting and from Self-Supporting to State-Supported Status (Appendix B). It is this latter set of guidelines that UCLA Anderson is following to convert the existing full-time MBA Program from state funding to self-supporting status. III Program Intent & Congruence with University Mission First and foremost, whatever source of funding underlies the full-time MBA degree, the fundamental elements of academic excellence, world renowned faculty and research, and a record of service, collaboration and public accountability will remain unchanged. The actual intent behind recasting the MBA as a self-supporting program is to achieve a new level of financial robustness for UCLA Anderson for its cornerstone program. UCLA Anderson has five other MBA and Masters-level degree programs which are all self-supporting, some dating back to the 1980s. 3

Moving the full-time MBA Program from state-supported to self-supporting funding provides many benefits and creates new opportunities for program growth and excellence at the Anderson School, at the University, and at the State. At the School level, a self-supporting full-time MBA program provides increased predictability in student fees, flexibility to invest in the MBA program to improve teaching and learning, and student support that renders the school more competitive with our elite peers. In terms of benefits to UCLA, a self-supporting full-time MBA degree allows the University to recoup a portion of the permanent budget university budget shortfall: $2.7M in state funds as well as an additional $4.2 million in campus overhead costs. Finally, re-direction of these funds to the College and to other underfunded academic priorities at UCLA enables not only UCLA but also the University of California system to address the ongoing budget crisis now, and in the future. As previously stated, the proposed self-supporting MBA degree remains congruent with the mission of the University: a focus and commitment to the creation and application of knowledge to better the lives and well-being of those around us. Research, teaching, and public service engagement will continue to serve as the foundations of the School s activities and contributions to the intellectual life of UCLA and the UC system. A strong commitment to financial aid, enabling financially challenged students to have access to the MBA program, will continue and will be further enhanced by the conversion to a self-supporting program. We expect to increase financial aid by at least 15% in absolute terms relative to the current level. Given that total tuition paid by MBA students is the same or lower under the selfsupporting scenario than under the state-supported scenario with several years of UC fee increases, this increase in financial aid will effectively lead to a significant reduction in the aggregate fees paid by our students, net of financial aid. Based on donor support and conversations to date, we also expect increased fundraising opportunities to materialize once the program becomes self- supporting. UCLA Anderson has long had a tradition of, and dedication to, public service outreach that will continue without regard for the status of the MBA program. The school has and continues to deliver a variety of management education programs to under-served populations in the US and globally. Examples of long-time public outreach programs, in which faculty and/or students share our management education expertise include: Microfinance student projects in under-developed regions of the world; Management education for heads of Head-Start programs from around the US; Training in establishing entrepreneurial businesses to a variety of populations including local women, returning Veterans with disabilities, and young women in emerging economies; Involvement across all of UCLA in developing intellectual property and in its commercialization; Management education for heads of healthcare delivery systems in East Africa, West Africa, and South Africa; Student field study projects in non-profits to help grow and develop managerial and operating capacity in community organizations and NGOs. Involvement in the public mission will continue as an integral ingredient of the UCLA Anderson ethos. 4

Support of the PhD program will remain unchanged. All of our PhD students are given office space, and more than 90% of our PhD students enter with a promise (conditional on satisfactory performance) of four years of support which includes all tuition and fees (including NRT), an ample stipend, and an additional stipend for those who elect to remain on campus during the summer and work on their own research. The majority of our PhD students graduate in 5 years, and receive financial aid in their fifth year. The major share of funds to support the PhD program is from the school s operating budget, i.e., a transfer from the revenues generated in our self-supporting programs. Faculty governance and Academic Senate relationships will remain unchanged: UCLA Anderson will continue to operate within, and be accountable, to the UCLA administrative structure and act in compliance with university policies. Finally, based on preliminary feedback from the donor community, a financially selfsupporting MBA Program will signal to our alumni and friends that all of our Masters programs are now self-supporting, and therefore require private support. From a financial standpoint, it will provide more stable resources, and flexibility, to challenge our state and national competitors. This can only enhance the reputation of UCLA and the entire UC. IV Impact on Existing Programs Within UCLA Anderson The conversion of the full-time MBA program to self-supporting status will have no detrimental impact on any of our existing state-supported or self-supporting programs. We will not change the size of the MBA program after conversion so there are no resource implications for other programs. The protection of our revenue, the increased financial aid, and the ability of our MBA program to compete more effectively for resources with our existing self-supporting programs, should further improve our performance in various major rankings, which in turn will benefit all of our other programs. Upon approval of the conversion to self-supporting status, the full-time MBA program will join the existing roster of self-supporting programs at the School including: Executive MBA (EMBA), Fully Employed MBA (FEMBA), Global EMBA for Asia Pacific, Master of Financial Engineering (MFE) and the recently launched Global EMBA for the Americas. The School has a long history of actively seeking to diversify its academic programs and revenues through the creation of self- supporting degree offerings. This enables the programs to be extremely responsive to the needs of the market and their students, even during times of fiscal constraint. To date, the introduction of the self-supporting programs has contributed to the enrichment of the school s intellectual capacity and enabled it to attract and support a cadre of nationally and internationally renowned research faculty as they pursue their research and other intellectual activities. The addition of the self- supporting MBA program to this group of programs will only serve to strengthen and to broaden the School s academic and intellectual reach, while investing in the MBA program to enhance the teaching and learning of our students. The PhD 5

and the Undergraduate Minor in Accounting will remain as state-funded programs. In addition, our ten joint degree programs in: Computer Science, Dentistry, Latin American Studies, Law, Library & Information Science, Medicine, Nursing, Public Health, Public Policy and Urban Planning will not be jeopardized or negatively impacted by the existence of the self-supporting MBA program. V Program Description The self-supporting MBA program will be identical to the current state-supported program in all respects, including admissions requirements, curriculum, graduation requirements, program governance, ongoing review, and faculty involvement. Our MBA program is already reviewed every five years by the AACSB (Association to Advance Collegiate Schools of Business), every eight years by the UCLA Academic Senate, and by various major rankings (US News, Business Week, Financial Times and others). Please refer to Appendices A, K, L and M which contain a 21-year overview of the school rankings, the 2005 UCLA Academic Senate Review Report for UCLA Anderson and copies of our last two AACSB Accreditation reports respectively. The mission of the UCLA Anderson School of Management is to prepare our graduates for careers of global leadership and for lives of significance. The UCLA Anderson MBA program is aimed at individuals with an undergraduate degree in any discipline and, typically, 3-7 years of work experience, who are seeking to advance their careers, obtain deep understanding of business and organizations across functions and global markets, or move from a technical career path into a managerial path. Students are exposed to the foundational frameworks and analytical models of management, and they can specialize further in one or more management discipline(s) of their choosing. The conversion to selfsupporting status will change nothing in the nature of the program. The MBA population is a non-traditional student body for several reasons. First, we require several years of work history in order to be admitted, so that students use their practical job experiences to enrich their classroom learning and their many team projects and case studies. On average, MBA students have 5 years work experience and are 28 years old. It is extremely rare that we would ever accept a student coming straight from an undergraduate program into the MBA. Second, we draw from national and international populations. About 60% of our students enter from outside California, and of those, about half are international students. In fact, the student body is deliberately diverse and global so that the learning teams are themselves rich idea labs. Third, our students follow a non-traditional schedule with many classes deviating from a 10-week quarter schedule (e.g., intensive one-week or weekend classes on and off campus, or global immersion study over a week to 10 days in locations abroad), and they all break for the summer to do a job internship around the country or the globe. Fourth, many of our MBA students take electives jointly with the FEMBA students in evenings or on weekends. In short, the MBA population is a mature, professional student body that is returning to school after years of work experience. They share many characteristics with the FEMBA population, and few with traditional university graduate students. 6

The demand for UCLA Anderson s management degrees is very robust. We admit approximately 360 MBA students per year, and we receive 6-9 applications for every entering student, depending on the year. About 60% of these students are non-residents of California, and 70-75% of graduates decide to stay in California immediately after graduating. As such, we are a net importer of advanced talent into the State. Please refer to Appendix C for a chart detailing the Full-time MBA Applications, Admissions & Yield, for the period 2007-2011. Appendix D provides an overview of other UCLA Anderson Program Admissions for 2006 2011 and Appendix E contains Fall 2011 enrollment figures for all UCLA Anderson Programs. Instruction includes a substantial amount of in-class time with a heavy amount of out-of-class preparation and assignments. The in-class instruction is a mix of lecture, case discussions, inclass exercises, and occasionally guest speakers and other forms of exposure to practitioners. The out-of-class work is a mix of individual assignments and work in teams, covering quantitative assignments, exercises, simulations, and research papers. Recruitment and Marketing Please refer to the UCLA Anderson Admissions website for further information, our information brochure and admissions event schedules: http://www.anderson.ucla.edu/x28661.xml The UCLA Anderson Office of Admissions undertakes a large number of marketing initiatives and recruiting events on campus and all around the world. On campus Class visits applicants attend a class and are paired with a current student for the day Group information sessions presented by an Admissions Officer Special events geared for women, under-represented minorities, LGBT applicants Off campus Admissions officers travel the world to offer information sessions to potential applicants. Online General information sessions Information session for Indian applicants Information session for accepted students Special Round 1 question and answer session 7

Social Media MBA Insider s Blog: provides an inside perspective on issues relevant to prospective MBA students. MBA Student Voice Blog: provides a glimpse into life inside the UCLA Anderson MBA Program. UCLA Anderson on Facebook: applicants can become a fan of UCLA Anderson. UCLA Anderson on Twitter: applicants can follow UCLA Anderson s MBA Program. You Tube: videos from students, faculty, and staff. Admissions Requirements Nothing in the program admissions requirements changes as a result of the conversion from state-supported to self-supporting status. Please refer to the full-time MBA Program Admission Requirements and full-time MBA Class of 2013 profile in Appendices F and G. Program of Study Nothing in the program of study changes as a result of the conversion from state-supported to self-supporting status. Course Requirements The four required elements of the M.B.A. program are the management core, Leadership Foundations, the advanced electives, the international requirement and the Applied Management Research project. The management core courses teach the fundamental techniques and disciplines which underlie the practice of management. Advanced electives provide specialized knowledge and skills for one or more fields of management work. The international requirement recognizes the importance of a global perspective. The management field study allows an opportunity to apply knowledge gained in the program to strategic issues in real organizations. A total of 96 units of coursework is required for the degree. Management Core. The management core consists of nine courses (Management 402, 403, 405, 408, 409, 410, 411, 420, and 421A, 421B) on subjects basic to the practice of management. Students must maintain a 3.0 (B) overall average in the management core courses. Advanced Electives. These courses are chosen by students from management curriculum area or interdisciplinary studies courses to focus on one or more fields of specialization. Up to twelve units of free electives may be selected from any University department, subject only to general University regulations. A maximum of two four-unit Management 596 courses may be applied toward the 96-unit requirement for the degree. These courses count as free electives. Fieldwork courses (Management 451, 452, 453, and 454) are offered for unit credit, 8

but these courses will not be applied toward the 96-unit requirement. International Requirement. Student fulfill the international requirement in one of three ways: (1) take at least one course from a list of approved Management international electives (including, but not restricted to, Management 406, 205A, 234A, 234B, 240F, 240G, 253, 261B, 296A, 297A, 297B, 297C, 297D, or 297E), (2) spend a term abroad through an approved international exchange, or (3) complete an approved international Applied Management Research project (approval required prior to the start of the project). Applied Management Research Project. A two-term project in the second year, Applied Management Research is the final, professional requirement of the M.B.A. program. Teams of M.B.A. students complete an original applied research project over six months that integrates and expands students' capacity to solve complex business problems. Each team chooses a project from among three options: (1) Management Field Study, (2) Business Creation, or (3) Special Project. At least 96 units of work toward the degree must be completed in residence in the full time MBA program at UCLA. In special cases, up to 8 units of graduate work taken elsewhere and not used toward another degree, via petition, may be counted toward the free electives component of the 96-unit total. Time-to-Degree The full-time M.B.A. must be completed within two calendar years of admission, typically 21 months. The minimum time required to complete the M.B.A. program is six quarters. Resource Requirements This information, including faculty and staff FTE, equipment, software etc. is provided in the Resource Analysis & Disposition of Program Revenue document in Appendix H. VI Faculty The new self-supporting MBA program is the same in all respects to the current statesupported MBA program, so there is no impact on aggregate faculty teaching loads. Under current policy, the department chair makes all teaching assignments in all programs, selfsupporting and state- supported. This practice will not change when the MBA program is selfsupporting. Because the conversion will allow paid overload teaching in the MBA program (which is not currently allowed in the state funded model but is allowed in the self-supporting programs), we anticipate a modest reallocation of paid overload teaching within the school, from the current self- supporting programs to the MBA program, and an equal reallocation of the on-load teaching within the school, from the MBA program to the current self-supporting programs. The aggregate teaching load, and aggregate amount of off-load teaching, will not change, but the allocation of on-load and off-load between programs will be more effective and 9

efficient than is currently the case, serving student needs better. Moreover, the department chair, at his or her discretion, has the authority to approve or deny overload teaching. Hence, one major benefit that will arise from a self-supporting full-time MBA program is the increased flexibility in deploying faculty within our various MBA programs. The academic personnel process does not change: all faculty appointments and promotions will continue to be evaluated by the same internal processes at Anderson, by CAP, and by the Vice-Chancellor for Academic Personnel. The role and contributions of Anderson s ladder faculty, within a self-supporting full-time MBA degree program, are unaltered relative to those within the current state-supported MBA program. Ladder faculty will continue as members of the UCLA Academic Senate, subject to its Bylaws and accorded all of the rights and responsibilities contained therein. As per the Bylaws, the ladder faculty will remain responsible for the governance and supervision of the academic programs and for managing the admissions processes and decisions. Active participation in, and contribution to, the research enterprise both within the School, the UCLA community, and beyond, will remain essential and a vital priority to the ladder faculty. We see absolutely no reason that faculty research will be diminished. On the contrary there may be indirect benefits to the research programs of our faculty due to increased fundraising successes. Similarly, the academic interactions and collaborations that the ladder faculty currently engage in with other UCLA departments, schools or colleges or within the UC system, will remain intact, and new opportunities, should they arise, will be considered as before. Students from other programs on campus, where appropriate, will continue to have the same opportunities to enroll in courses and programs as they enjoy today. The highly successful UCLA Anderson PhD program and the Minor in Accounting will enjoy the full engagement and support of the ladder faculty. Our current roster of ten concurrent joint degree programs will also continue to be resourced and available to all interested students from across campus. The nominal teaching load of Senate faculty at UCLA Anderson is 5 course credits per year. Research-active faculty receive a research release of one course credit. This determination is made by the department chair in consultation with the Research Committee (3 endowed chairs). Holders of endowed chairs receive an additional course release. Additional releases are given for a range of administrative responsibilities. Every course in the self-supporting MBA program will continue to earn the same credit as the equivalent course in the FEMBA or EMBA program, as is the case today with the state-supported MBA program. All teaching assignments are made by the department chair in consultation with the area chairs and each individual faculty member. This process will not change, except that once the MBA program is self-supporting, the school will have more flexibility in allocating on-load and off-load teaching across programs. VII Program Governance Under the proposed self-supporting financial model for the full-time MBA program, the decanal, faculty, and staff governance structures will remain unchanged and continue to be 10

subject to the same UCLA administrative policies and procedures. As before, the Dean will be appointed by the Chancellor, accountable to his/her office, and responsible for adhering to and implementing all UCLA and UC policies and procedures. The Dean appoints the Senior Associate Dean for the MBA Program, after consultation with the faculty. All faculty and staff of the School will remain employees of the University of California, enjoy the protections and benefits of UC policies and procedures, and will be eligible for campus awards and recognitions. Anderson faculty will remain eligible to participate in campus and UC system research funding and projects. Within the parameters of University policy, the Dean will be able to grant faculty recruitment and retention awards. The MBA program is managed by the Senior Associate Dean for the MBA Program, who is supported by a staff that handles Admissions, Student Services, Employment, and more. Further details are contained within the financial template document in Appendix H. Since UCLA Anderson receives thousands of MBA candidate files, the admissions files are reviewed by professional staff, who make admissions recommendations to a faculty admissions committee. Final admissions decisions are made by the faculty Admissions Committee. This process will remain unchanged within the self-supporting status. The academic areas, in conjunction with the Senior Associate Dean and Department Chair, determine the curriculum. All Senate faculty participate in the governance of the curriculum through the FEC and the FEC curriculum subcommittee. Appendix I describes the governance procedures in place for various types of curriculum changes, such as changing course titles or adding new courses. The role of Graduate Council in approving MBA curriculum changes will remain unchanged. The Teaching Improvement Committee (3 Senate faculty and one Adjunct or Lecturer) advises the department chair on a range of teaching-related matters, including determining the annual teaching award winners. External reviews of the MBA program continue unchanged. The Academic Senate will continue to conduct Eight-Year Reviews of the MBA program, and the Association to Advance Collegiate Schools of Business (AACSB) will continue to conduct an accreditation review of the entire school, including the MBA program, every 5 years. VIII Resource Analysis & Disposition of Program Revenue The conversion of the full-time MBA program to a self-supporting fee structure hinges on the shift of how fees will be charged. The details of the financial template are outlined in Appendix H, which provides a transitional overview of the funding model from state-funded to selfsupporting. Assuming that the conversion to self-supporting status commences in 2012-13, the reconfigured fee structure will constitute total student cost increases of 5.8% for non-residents and 8.3% for residents. The School has elected to continue all services typically offered to full- 11

time students (detailed in Exhibit B of the appendix) and will return the revenue stream from campus-based services to the appropriate university service centers. Financial aid for students is intended to be at least 15% of revenue; the figures listed in the template during the first two years of self-sufficiency are meant to illustrate a baseline of support. Once converted to a self-supporting funding model, the School will pay Central Administrative Fees (CAF s) and Campus Indirect Costs in the amount of $4.2 million; the full-time MBA program will be assessed a pro-rated portion of costs, as detailed in Exhibit C and D of the appendix. Central Administrative Fees cover such centralized transactional services as payroll processing and human resources support; Indirect Costs cover campus services such as central administration, utilities and Operation of Maintenance of Plant (OMP). As described in Appendix H, the financial template outlines the steady state distribution of program revenue when the full-time MBA program converts to a self-supporting fee structure. IX Appendices Appendix A: Twenty- one year overview of MBA Program Rankings, 1990-2011 Appendix B: CCGA Instructions to Divisional Graduate Councils: Conversion of Graduate Degree Programs from State-Supported to Self-supporting and from Self- Supported to State-Supported Status Appendix C: Full-time MBA Applications, Admissions & Yield, 2007-2011 Appendix D: UCLA Anderson Programs Admissions, 2006 2011 Appendix E: UCLA Anderson Programs Enrollments, Fall 2011 Appendix F: Full-time MBA Program Admission Requirements, 2011-2012 Appendix G: Full-time MBA Class of 2013 Profile Appendix H: Resource Analysis & Disposition of Program Revenue (Appendix F Cost Analysis for Self-Supporting Program Fees) Appendix I: UCLA Anderson Guide for Curriculum & Program Related Actions & Changes Appendix J: Appendix V Disestablishment of the MBA Degree Program Appendix K: 2005 UCLA Academic Senate Review of UCLA Anderson Appendix L: AACSB Accreditation Report, 2010 Appendix M: AACSB Accreditation Report, 2005 12

Appendix N: Letter of Support from Dean Robert Bruner, University of Virginia, Darden Graduate School of Business Appendix O: Letter of Support for Financial Self-Sufficiency, Robert Beyer, Chair, UCLA Anderson Board of Visitors Appendix P: Letter of Support for Financial Self-Sufficiency, Anderson Student Association 13