Sunday, August 9, 2009

Refuting President Yudof’s Claims

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.

10 comments:

  1. 1) unrestricted may mean one thing in accounting, another in practice: i.e. those are operating funds, but brought to the UC for a certain purpose (i.e. for a designated lab, endowed chair, building, etc) and the UC won't go against the donors/grant agencies
    2) bond rating considers the flow of student fees and the value of land and buildings. neither are likely to be liquified for salaries
    3) hm...
    4) this doesn't make logical sense. since they had market losses, they can move funds around? are you bernie madoff?
    5) overhead is NOT revenue. it is a charge for already incurred cost of infrastructure (expensive lab equipment, buildings and their utilities, etc) - and the real-world rate is nowhere near 50%.

    ReplyDelete
    Replies
    1. Wow.. a lot of money spend without a right priorities?

      - backlink berkualitas -

      Delete
  2. University of California President Yudof Approves $3,000,000 to Outsource UCB Chancellor’s Job
    The UC President has a UCB Chancellor that should do the high paid job he is paid for instead of hiring an East Coast consulting firm to fulfill his responsibilities. ‘World class’ smart executives like Chancellor Birgeneau need to do the analysis, hard work and make the difficult decisions of their executive job!

    Where do consulting firms like Bain ($3,000,000 consultants) get their recommendations?
    From interviewing the senior management that hired them and will be approving their monthly consultant fees and expense reports. Remember the nationally known auditing firm who said the right things and submitted recommendations that senior management wanted to hear and fooled government oversight agencies and the public? Consultants never bite the hand that feeds them

    Mr. Birgeneau's executive officer performance management responsibilities include "inspiring innovation and leading change." This involves "defining outcomes, energizing others at all levels and ensuring continuing commitment." Instead of demonstrating his capacity to fulfill his executive accountabilities, Mr. Birgeneau outsourced them. Doesn't he engage University of California and University of California Berkeley (UCB) people at all levels to help examine the budget and recommend the necessary trims? Hasn't he talked to Cornell and the University of North Carolina - which also hired Bain -- about best practices and recommendations that might apply to UCB cuts?

    No wonder the faculty and staff are angry and suspicious. Three million dollars is a high price for Californians to pay when a knowledgeable ‘world-class’ Chancellor is not doing his job.
    Please help save $3,000,000 for teaching our students and request that the UC President require the UCB Chancellor to fulfill his executive job accountabilities!

    ReplyDelete
  3. Why does one of the top universities in the world have to spend $3 million of taxpayer money for consultants to do what should be done internally by UCB Chancellor Birgeneau?
    Who teaches auditors how to audit? Do UC professors not have the knowledge to perform what they teach?
    Having firsthand knowledge of consulting, I know one cardinal rule, "Don't bite the hand that pays you."
    In a nutshell, we have a high-paid, skilled UCB Chancellor who is unable or unwilling to do the job he is paid to do. Why do we wonder that UC and California are in a financial crisis!
    I'm sure taxpayers would not object to the $3 million payout if the money is reimbursed by taking money from the UCB Chancellor's salary over the next 10 years.
    Stop the spending of $3,000,000 on consultants by President Yudof and the UCB Chancellor and do the job internally
    Respectfully

    Doye O Sivils

    ReplyDelete
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