Following three days of protests on campus, two officials at the University of California Santa Barbara (UC Santa Barbara) decided to “endorse” the efforts of fossil free UCSB and look for ways to engage others on divestment. The announcement does nothing to change the college’s investment policy, nor does it relay any action or future action at the college, but Fossil Free UCSB still called it “a historic moment” for its efforts.
Perhaps they forgot what that word historic means, so let’s take a look at the facts.
1) UC Santa Barbara is highly reliant on the larger University of California Board of Regents. UC Santa Barbara has around 23,000 students and a $273.6 million endowment, made up of roughly half funding from the UC Santa Barbara Foundation and half funding from the UC Board of Regents. The university continues to fundraise, but remains highly reliant on outside sources for its operations. According to a November 2016 document from the Board of Regents:
“The Santa Barbara campus is highly dependent on State appropriations and student tuition and fees: 59 percent of its revenues are derived from these two sources. UC Santa Barbara is challenged to fund its investments in state-of-the-art teaching and research facilities to match its world-class stature. Providing affordable, high-quality housing for the campus community is difficult since the surrounding community is one of the most expensive markets in the country. The campus will continue to build on its strengths, including its distinguished record of achievement, vibrant culture of interdisciplinary collaboration, and shared commitment to the missions of teaching, research, and public service.” (emphasis added)
2) Today’s announcement is from the University Chancellor, not the Board. According to the UC Santa Barbara Foundation’s website, “the investments of the UC Santa Barbara Foundation are managed in accordance with the investment strategies established by the Finance Committee of the Board of Trustees.” Yet today’s announcement is from the UC Santa Barbara Chancellor, not the Board of Trustees which actually determines investment decisions — further proof today’s “endorsement” is little more than that.
3) The University of California Board of Regents has been firm in its opposition to divestment. In September 2015, the University of California sold off its limited holdings in coal and oil sands “on the basis of economics,” but was vocally opposed to divestment. While divestment activists declared this a “huge win” for their campaign, in reality UC Board of Regents Chief Investment Officer Jagdeep Baccher came out against divestment, stating the decision was merely an investment decision and that “climate policy needs to be more complex than a divestment-or-nothing reflex.
4) A report from Prof. Bessembinder of Arizona State University finds that divestment has direct implications on student and faculty spending. Focused on analyzing the finances of the nation’s public and private universities, Prof. Bessembinder found that divestment would lead to a 15.2 percent average reduction in endowment spending. For a public school like UC Santa Barbara, Prof. Bessembinder calculates that to fund fossil fuel divestment and keep endowment spending at current levels, the school would face tuition increases of approximately $123 to $385 on average or reductions in spending on faculty costs of 3.5 percent, or a combination of these. Universities could also forego future expected spending increases and spend down their endowments, but that would simply delay the costs of divestment at the expense of future students, alumni, and faculty.
5) Last but not least, divestment does nothing to support the environment. The Chancellor’s announcement is mostly a nod to on campus efforts, and states “I look forward to working with my fellow chancellors in support of a thorough and transparent discussion on divestment from fossil fuels as part of the UC’s approach to combating the climate crisis.” As Harvard Professor Robert Stavins explains, however, divestment does nothing to support the environment:
“Students are right to be concerned about climate change, but the focus of the divestment movement is fundamentally misguided. Students, faculty and staff can be effective by acting in ways that will make a real difference, but the symbolic action of divestment — and the fight to convince universities to do so — has opportunity costs: It diverts us from focusing on what really matters.”
Bottom line: 350.org and divestment advocates may have made a lot of noise today — and will no doubt call this another victory in their lagging campaign — but let’s remember that this endorsement has no impact on the college’s endowment. And that’s good news for the pocketbooks of future UC Santa Barbara students.