On April 26, 1960 the California Legislature signed into law the California Master Plan for Higher Education. Read a brief history of the Plan, how it intersects with the SAT and affirmative action, how the transfer function is failing, and how better coordination is needed.

California is a state of extremes when it comes to educational attainment. It ranks near the top of the states in the percentage of adults with bachelor’s degree or higher, but it is also the state with the highest proportion of adults with less than an eighth-grade education.

In the middle part of the 1900s, up until about 1970, California’s growth was driven by migration from other states. Many of these immigrants were well-educated. In 1960, 66 percent of all college graduates living in the state of California had earned their degrees in other American states. By 2005, that percentage had fallen in half and the net domestic migration of college graduates fell below zero for the first time in decades.

Meanwhile, foreign-born college graduates filled up nearly all of this slack. Contrary to popular belief, immigrants to California, both foreign and domestic, have actually helped make the state more educated. This has been improving over time. The percentage of recent international immigrants with college degrees increased from 18 percent in 1985-1990 to 33 percent by 2000-2005.

Still, projections on California’s workforce needs in 2020 predict that the state will need to increase college graduates by 15-20 percent, on top of in-migration and existing educational opportunities, in order to meet demand. To meet this challenge, California needs to re-examine the way it coordinates and funds its higher education institutions. It needs to come up with a Master Plan for 2010.

To begin with, the state needs to understand that students are being turned away from public colleges and universities. The University of California took 2,300 fewer students, Cal State enrolled 40,000 fewer, and the California Community Colleges turned away nearly 250,000 students last year. In January the New Yorker reported that the UC Chancellor planned to double the percentage of out-of-state students at UC-Berkeley. Because out-of-state students pay higher fees, it would save the university $60 million (out of a $3 billion budget) The dream of offering universal access is crumbling.

Declining access at public colleges and universities is directly related to how California funds its institutions, which is itself directly related to the Master Plan. One notable aspect of the original 1960 Plan was that it said remarkably little about how it planned to finance everything.

One measure designed to save money reduced the undergraduate enrollments of the University of California (from about the top 15 percent of high school graduates to the top 12.5 percent) and the California State Universities (from half to one-third of high school grads).

Everyone else was reserved a spot at the cheaper-to-operate community colleges. But that costs money too, especially considering that community college enrollment soared, just as the Plan intended. Twelve percent of the nation’s 18-64 year-olds live in California, but California has 23 percent of the nation’s community college students (the blue bar in the chart below), 98 percent of whom attend a public institution ($). This is a conscious choice that California has made in favor of access to higher education, but it’s not paying off in degree completions. Despite its open access, the state awards only 13 percent of the associate’s degrees handed out annually in the United States (the red bar in the chart below) and less than 10 percent of the bachelor’s degrees.

The Master Plan also endorsed a “Cal Grant” program that was intended to give students financial support if they chose to attend a private California college or university. In some sense this could be considered a cost-saving move because it cost less to provide a Cal Grant than it did to educate that student at a UC or CSU school. In 1961 more than 91 percent of Cal Grants went to students attending independent institutions; last year, only 15 percent did. This decline is linked to the rising cost of tuition at private colleges. It’s no longer cheaper to pay a significant portion of the cost of a student attending a private college than it is for the state to cover its share at a public college or university.

Perhaps the most important, most frequently cited, and least understood finance aspect of the 1960 California Master Plan was free “tuition.” It recommended that students be charged fees to cover, “such operating costs as those for laboratory fees, health, intercollegiate athletics, student activities, and other services incidental to, but not directly related to, instruction [emphasis added].” Despite this language, today in California, the word “fees” pretty much means the same thing “tuition” means everywhere else. And, just like everywhere else, California has financed much of its cuts to higher education over the years off the backs of students. At the UC, where the state contributed nine times what students were expected to contribute in 1976, the ratio is now down to 2:1.

Barring a sudden reversal in the state’s financial outlook, California has some real problems on its hands. The best economic projections suggest the state needs to increase the number of students receiving college degrees by 15 percent, a figure that is not likely to occur from in-migration. Its current colleges and universities aren’t likely to meet this need, either, without a radical reconfiguration. And the state’s broke, so any changes will have to be completed without new infusions of cash.

All of this calls for a new compact for higher education in California. It must balance the interests of the tripartite system, include a plan to help more students complete degrees, not just start them, and figure out a way to pay for it, all while retaining the national prominence and prestige California higher education institutions have built up over the years. This will not be an easy task, but the 50th anniversary of the Master Plan is a perfect time to do it.