The Regents and the future of UC

The Regents are meeting today in San Diego, to hear a gloomy report from UCOP concerning the budget. People are talking about massive layoffs and a "shrinking university". Let's hope that they set out to do this in some remotely intelligent way: cutting across the board, as we have already said, is the absolutely stupid way to cut.

I am also amazed that people are taking these cuts in stride, including people who howled at Schwarzenegger's budgets. This is far worse than anything Arnold ever tried. And just because he's a Democrat and dated Linda Ronstadt does not mean Jerry Brown gets a pass.

Eight Questions for Mark Yudof

We've known for quite a while that the University enjoys a higher credit rating than the state, so much so that UC recently borrowed $200M on behalf of the State. Thanks to a cogent and detailed Open Letter authored by Bob Meister, now we know why: the University can do something that the State can't, i.e., raise revenue at will by increasing tutition (whereas the State cannot raise taxes, given the political and legal constraints).

Meister's letter should be required reading in every classroom in the system: it explains in details how UC has pledged student fees as collateral for its bonds, which in turn are used to finance capital construction projects around the campuses.

Careful reading of the letter elicits the following eight questions for UC President Yudof, questions to which we anxiously await answers.

1. How much revenue does UC obtain through tuition-backed bonds?
2. Will UCOP disclose its plans to issue new tuition-backed bonds in the future?
3. How much money will UC be committing to service debt incurred through any future tuition-backed bonds?
4. Where exactly does UC list in its financial statements the reserves being held by the bond trustee, Bank of New York Mellon Trust (BoNYMellon)?
5. Will UCOP release the "due diligence" documents it furnished the bond trustee, BoNYMellon, and the bond-rating agencies, Moody's and Standard & Poor's when it first issued bonds in 2004?
6. More in general, what are UC's plans to raise capital in the bond market, whether these bonds are backed by tuition or not?
7. Has UC ever diverted funds off-the-top from instruction budgets to construction budgets, and if so, in what amounts?
8. Last but not least, how much revenue does UC derive from its contracts with the Department of Energy and the private partners at the National Labs?

UPDATE: based on Meister's report, Charles Schwarz asks whether, beside being pledged as collateral for construction bonds, tuition is or will be used also to actually service debt. We are confident this question will receive as swift a response as the eight questions above.

All hat and no cattle

If one needed any  proof that Gov. Schwarzenegger's emphasis on transparency and accountability is just for show, one would have to look no further than the Governor's veto of  S.B. 86, S.B 218 and S.B 219.

S.B 86 would have imposed limits on executive compensation at CSU and UC; S.B. 218 would amended the California Public Records Act to include organizations performing auxiliary functions for CSU and UC; and S.B. 219 would have extended whistleblower protection to UC employees. All three bills were introduced by Sen. Leland Yee, and approved by the Legislature. All three were opposed by senior management at UC and CSU.

We had already commented on Sen. Lee's laudable efforts. It does look like Sen. Lee and Lt. Governor Garamendi are the only ones left in California public life who have any sense at all.

Schwarzenegger defended his veto of executive compensation caps by claiming that

A blanket prohibition limiting the flexibility for the UC and CSU to compete, both nationally and internationally, in attracting and retaining high level personnel does a disservice to those students seeking the kind of quality education that our higher education segments offer.

But even if we agreed with the Governor's (and UCOP's) privatization strategy, this seems backwards: if it wanted to guarantee students the best education experience California has to offer, the University should be actively recruiting and appropriately compensating its faculty, not the administrators. Let me ask you: When's the last time you heard of universities and colleges being ranked by the quality of their administrators? I can imagine it already, US News and World Report advising students to attend such and such a school — they have lousy teachers and no facilities, but their administrators rock!


The other lesson we learn from this (besides the fact the Governator talks the talk but does not have the balls to walk the walk), is that UC's (and CSU's) lobbying efforts paid off handsomely, at least for senior management at UCOP and across the campuses. The lobbyists UC employs (at an annual cost of $1.6M in payroll only) obviously managed to get the Governor's ear, convincing him to overturn the decision of elected officials in the California legislature.

UC's very own Darth Vader

As reported by the UCSB Daily Nexus, Pres. Yudof traveled to Irvine on Saturday to sit down with UCI Chancellor Drake for a group interview with various UC student newspapers. The interview itself rehearses the same main talking points as in Yudof's address to the Regents or his Chronicle piece. What is noteworthy is that a "swarm" of students and service workers had planned a protest in advance of Yudof's arrival in Irvine and that as a consequence Pres. Yudof had to be whisked to an "undisclosed location" (pretty much like the original Darth Vader) to meet the student reporters.

It says a lot about the sorry state of the University when the UC President dos not stop to chat with — in fact purposely avoids —  a few dozen students and service workers who are, after all, members of his own constituency.