In a recent press conference in Santa Barbara, the UC President Mark Yudof reiterated his claim that the UC does not have access to unrestricted funds. President Yudof insisted that almost all of UC’s $20 billion operating budget and its $50 billion investment portfolio is legally restricted. This post will provide evidence to disprove Yudof’s claim.
1) UC’s own audited financial statements declare that in 2008, $13.7 billion out of a total of $18 billion were listed under the category of unrestricted funds: (http://socrates.berkeley.edu/~schwrtz/FinU17.html). Either they are lying on their official financial statements, or they do not read their own reports.
2) In July 2009, Moody’s gave the UC a high bond rating because of the diversity of its assets and its large level of unrestricted funds (http://changinguniversities.blogspot.com/2009/07/ucs-high-bond-ratings.html). Once again, we have to ask if UC is misrepresenting its financial standing or does it have a high level of unrestricted funds. Furthermore, do to its high bond rating, the UC system was able to borrow and lend $200 million to the state of California (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/06/BAGK1942B2.DTL).
3) UC must have extra cash at hand because it continues to find money to raise executive compensation (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/06/MNSG194N2P.DTL).
4) UC has $4.6 billion in endowment funds and $7.2 billion in its short-term investment funds: (http://www.ucop.edu/treasurer/invinfo/COI_IAG_Perf_Summary_3-09.pdf)
Since UC has recently lost billions in these funds, it clearly has the ability to move this money around. Also, much of the UC endowment fund is supposed to be dedicated to the educational mission, and so this source of funding could be used to help make up for state reductions (http://changinguniversities.blogspot.com/2009/07/is-university-of-california-well.html).
5) A third of the UCs revenue stream comes from external grants, and the university usually charges an overhead rate of about 50% for each grant. While some of this money is earmarked for particular purposes, much of the money goes to shared university functions like facilities, administration, staff, libraries, and utilities (http://www.lao.ca.gov/2004/uc_fac_fclty/062304_uc_fac_res.pdf). The UC system could raise general funds by simply increasing the overhead rate or by sharing funds in a more equitable way.
It is clear that most of UCs money is unrestricted and can be used for any purpose the university wants to pursue. In fact, a legal fact-finding report found that the university has the money to pay its employees at a higher rate, but it just decides not to make this a priority (http://www.cueunion.org/bargaining/ffreport.php). UC does not have a budget crisis; it has a crisis in priorities.