28 September 2009

AFSCME's rebuttal and UCOP's priorities

AFSCME, the union representing public eployees at the State, County, and City level, has replied to UCOP off-handed dismissal of their alternative budget proposals. While AFSCME's proposals might have been, in part, somewhat unrealistic (e.g., it's clear that the idea of cutting senior managment's salaries by 25%, no matter how attractive it might appear to us, was not going to fly), they made some interesting points that were well worthy of discussion, especially when UCOP's itself had solicited the unions for proposals that would achieve the same level of savings.

ASFSCME's rebuttal contains one new piece of information, which sheds further light on the way UCOP has decided to run its finances. We had already commented on the financial scheme by which UC would borrow $200M on behalf of the State against its own assets, only to lend it, in turn, to the State to finance capital construction projects around the campuses (mostly at the medical centers, one would assume).

We now learn from AFSCME that while the State will take over 3 years to repay UC, the University will have to repay that loan short term, within nine months, as is the case for all instances of commercial paper. This means that UC can find an extra $200M in its budget over the next nine months.  The question poses itself: was this the best way to use those $200M?

If UCOP had instead decided to put those $200M towards the budget shortfall, that would have been tantamount to slowing down capital projects in times of financial hardships. What's wrong with that?

We also take time to notice a piece of news that does not appear to have received a lot of attention, but is also indicative of UCOP's budget priorities: as reported by the Sac Bee, UCOP has just decided to add one more lobbyist, Vince Stewart,  to its Sacramento outfit, at a annual salary of $120K (before the furloughs). Previously, Stewart was the Schwarzenegger's deputy secretary of higher education.

That UC maintains lobbying offices both in Sacramento and Washington, DC is a little known fact. Payroll for the Sacramento office: $859K; for the Washington, DC office:  $741K, for a total of a cool $1.6M.

This might be perhaps a worthwhile endeavor if the lobbyists were employed to reverse the de-funding
of the University. Instead, they have been active lately to kill legislature to bring whistle-blower protection to the UC and impose salary caps for senior management. (The former lobbying effort failed, the latter succeeded only partially, for the record.)

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