Archive for February, 2011

A $4 Billion Mystery is Solved!

A $4 Billion Mystery is Solved!

by Charles Schwartz, UC Berkeley

This is Act III of the “$4 Billion Mystery at UCOP,” the earlier parts having been posted on February 10 and February 17 at http://UniversityProbe.org . A letter from Patrick Lenz, the University’s Vice-President for Budget and Capital Resources, received February 22, succeeds in solving the first Mystery of the missing money; and he has taught me something I didn’t know before about nomenclature in the UC budget and accounting systems. However, the second Mystery remains to be answered: Why is so much State money appropriated for the University’s Instructional program diverted to other uses, year after year?  In addition, VP Lenz confirms essential parts of my earlier analysis that led to alternative budget proposals in this time of a State budget crisis.
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$4 Billion Mystery at UCOP: Act II

$4 Billion Mystery at UCOP: Act II

by Charles Schwartz, UC Berkeley

While top officials at the University of California Office of the President (UCOP) remain silent in the face of the huge financial discrepancy previously reported (See my posting dated February 10, 2011), some new data analysis shows us which portion of the University’s State-funded budget has been the primary victim of this diversion: it is the Instructional program.
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$4 Billion Mystery at UCOP

What is the explanation for this apparent discrepancy?

$400 – $500 Million per year

by Charles Schwartz, UC Berkeley

General Funds = Unrestricted money from the State of California to the University of California (UC) for its operating budget.

Regents’ Budget = UC Budget for Current Operations; see table near the end, titled,  “Income and Funds Available”. FY 2010 data from budget for 2010-11, issued 11/2009.  These are budget numbers, originating from The Regents and eventually approved in Sacramento, which show how much of General Funds UC received each year. [Note: These are not the amounts requested by UC for the next fiscal year, they are the amounts for the current fiscal year that have been approved by the Legislature and the Governor.]

CFS = UC Campus Financial Schedules, Schedule 12-D.  These are accounting numbers, which show how much of General Funds has actually been spent each year as operating expenditures.

The gap between these two numbers is a mystery. How can it be that the amount of this money  actually paid by the State to The Regents for their annual budget should be so much larger than the amount of this same money actually spent by UC for its annual operating costs. Where did that difference go?  This is not just a one-time effect: over the ten year period described above the total discrepancy adds up to $4.8 Billion.

In a recent paper I looked at alternatives in the present budget crisis, focusing on the University’s Core Funds – General Funds plus Student Fees. Noted there was a discrepancy between budget data and expenditures data for General Funds in the last fiscal year 2009-10. The graph above shows that discrepancy occurring systematically each year over the last decade. What follows is the correspondence I have had with top officials at the University of California Office of the President (UCOP) seeking some explanation for this surprising situation.

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On January 25, 2011, I sent this graph of General Funds data by email to Patrick Lenz, UC’s Vice President for Budget, with a copy to Peter Taylor, Executive Vice President for Finance.

Dear Patrick;
I wonder if you can explain to me the apparent discrepancies in data about General Funds at UC, which are shown in the attached document.

Thanks,
Charlie

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February 1, 2011
Dear Patrick and Peter;

It is now one week since I sent you my inquiry, asking for some explanation of the large discrepancies shown in the attached data concerning General Funds at UC.
When may I expect your response?

Charlie
cc: President Mark Yudof

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February 1

Professor Schwartz – We’re working on your response and I’ll get you an
estimated time when I’m in Oakland tomorrow to meet with my staff.

Patrick
cc: President Yudof
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February 4
Dear Patrick and Peter;

While waiting for your response to my inquiry about apparent discrepancies in General Funds at UC, I have looked again at the data available to me and found one correction that reduces the discrepancies somewhat.  Taking account of the “Expense Capitalized” contribution to General Funds expenditures, as found in the Campus Financial Schedules, I now have the corrected data shown in the attached Table.

The Cumulative Discrepancy over the past 12 years now stands at just over $4 Billion. I look forward to your explanation of this matter.

Charlie
cc: President Yudof

General Funds at UC: Budgeted and Spent

Fiscal Year Budgeted * Spent ** Difference
$ Millions $ Millions $ Millions
1998-99 2,817 2,435 382
1999-00 3,050 2,717 333
2000-01 3,576 3,137 439
2001-02 3,786 3,422 364
2002-03 3,704 3,431 273
2003-04 3,442 3,094 348
2004-05 3,265 2,957 308
2005-06 3,399 3,081 318
2006-07 3,637 3,303 334
2007-08 3,851 3,539 312
2008-09 3,834 3,515 319
2009-10 3,263 2,891 372
2010-11 3,736
12 year Cumulative Discrepancy $4,102

* Budgeted figures from “UC Budget for Current Operations”, table of Income and Funds Available: State General Funds + UC General Funds + ARRA
** Spent figures from “UC Campus Financial Schedules”, Current Funds Expenditures: General Funds from Table 12-D or 12-H, including Expense Capitalized
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February 8, 2011
President Mark Yudof;

I have been waiting two weeks to hear UCOP’s explanation for this discrepancy in accounting for State Funds at UC.  Your silence suggests that there is something more than simple incompetence behind this. How much longer should I wait before making this information public?

Charlie
cc: Vice Presidents Lenz and Taylor

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February 10: Continued silence from UCOP.

When Mark Yudof became President of the University of California he announced a new dedication to accountability and transparency. Something is very wrong up there.

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This is a blog: that means that you, the reader, are invited to post your own comments:

What do you suggest I might do about this situation?

What do you suggest you might do about this situation?

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