At the same time that UC President Mark Yudof declared a fiscal emergency this summer, the UC was reviewed for a new set of bonds by Moodys, and the bond raters told a very different story than the one the Office of the President was presenting to the public and its own employees. According to recent reports from Moodys, the university generates billions of dollars of profits and has billions of dollars of funds that it can use for any purpose. Here are some of the highlights from recent bond reports, which detail UC’s fiscal health:
1. “Excess of $4 billion of net patient revenue at its five academic medical centers”; [net revenues equals profits]
2. “Healthy and highly consistent operating performance, with operating cash flow in excess of $2 billion driven by a highly diversified revenue stream with no single revenue source exceeding 26% of total revenues”;
3.” Sizeable balance sheet that remains highly liquid, with $5.9 billion of unrestricted financial resources and active treasury management monitoring a short-term investment pool approaching $8 billion in recent years”; [a total of $14 billion that can be used for any purpose]
4. “UC's financial resources have grown from approximately $11 billion in FY2002 to over $15.5 billion in FY2006. Expendable financial resources have grown from less than $8 billion to over $13 billion over the same time period”. [more total revenue and more unrestricted funds]
5. “Resource growth has partially been driven by fundraising success across the campuses. The University reports total private giving in FY2006 approached $1.3 billion with over $10 billion raised in the last decade”. [the endowment funds allows for borrowing and flexible funds]
6. “With expendable financial resources covering pro-forma debt by 1.4 times, and debt service consuming only 3.6% of operating expenses, we believe the University retains significant additional debt capacity”. [UC can borrow more money at a low cost]
It is clear that the medical facilities generate a huge profit that can be shared with the other units. It is also evident that the UC has billions of dollars of unrestricted funds that can be used to deal with the current state budget crisis. Moreover, the UC is able to borrow money at a very low interest rate because it has so much unrestricted funds in its multiple revenue streams. In other words, everything Yudof and the Regents have said about the dire state of the UC’s finances is simply untrue.