$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.

February 17, 2011
President Mark Yudof
Executive Vice President (Finance) Peter Taylor
Vice President (Budget) Patrick Lenz
University of California Office of the President

Dear Mark, Peter and Patrick;

Re:  $4 Billion Discrepancy at UCOP

While I continue to believe that you are working to explain the financial discrepancies described in my earlier emails to you all, and recently posted at http://UniversityProbe.org , I do wonder about the level of your efforts.

Why have I (or anyone else in the public domain) not heard from you about this matter? This is not a trivial matter: the data suggests that there has been a momentous diversion of State funds: money appropriated for specified budget programs at UC, being spent for some  unknown alternate purposes.  This certainly requires some explanation – and that is what I have been asking you for.

While waiting, I have continued to study information available from public sources of information about University finances: and some new revelations are now found. The accompanying file shows what I have newly learned from official UC documents.

While we do not yet have any explanation for where the missing money (averaging $300 – $400 Million per year) went, this new data shows where it has been taken from: it is the University’s Instructional budget that has been pillaged.

If you find anything inaccurate or inadequate in my analyses, please let me know.

We all wait to hear from you, the responsible executive authorities of the University of California.

Sincerely,

Charlie
————————————————————————————————————

In the following Tables:

Budgeted data comes from “UC Budget for Current Operations”, table of
“Budget for Current Operations – Expenditures by Program and Fund Type”:
General Funds = State & UC General Funds

Spent data comes from “UC Campus Financial Schedules”, Current Funds Expenditures of General Funds from Table 12-D or 12-H, including Expense Capitalized

Table 1. General Funds by Program; Fiscal Year 2005-06

Program Budgeted Spent Difference
$ Millions $ Millions $ Millions
Instruction 1,828 1,431 397
Research 262 295 (33)
Public Service 84 87 (3)
Academic Support 365 474 (109)
Teaching Hospitals 51 44 7
Institutional Support 321 362 (41)
Op & Maint of Plant 401 322 79
Student Fin. Aid 60 65 (5)
Provision for Alloc. 27 27
Total 3,399 3,081 318

The Difference = Budgeted amount minus Spent amount. So a positive Difference means that less was actually spent than the original budget said; a negative Difference (number in parentheses) means that more was actually spent for that program than originally specified in the budget.

Conclusions from Table 1.:
A. The most Missing money is in Instruction; the next is OMP
B. The most Added money is in Academic Support (but not in the Libraries portion of this category); the next is Institutional Support and then Research.
C. The net amount of Missing Money ($318 Million, as reported for this year in the earlier paper) is still unaccounted for.

Now, in general, budgets are not rigid financial constraints. They represent a plan for the coming year; and that plan may be adjusted as one goes along. It is to be expected, in any reasonable organization, that those with authority over the operating finances may make adjustments to the budget as the year goes on: money may be shifted from one category to another, as needed. Nevertheless, looking at the pattern of such changes – as seen in the table above – tells one something about the priorities of those with the highest level of authority to make budget re-allocations.

One can also look at a many-year history and see if there is more to be learned. Table 2, below, has data for only the portion of General Funds for Instruction, over the last 12 years. We see a consistent pattern of large discrepancies between what was Budgeted and what was Spent in each fiscal year. This diversion of State funds from the Instructional Program is no accident: it is a systematic phenomenon.

Table 2. General Funds for Instruction: Budgeted and Spent

Fiscal Year Budgeted Spent Difference Total Diff
$ Millions $ Millions $ Millions $ Millions
1998-99 1,450 1,140 310 382
1999-00 1,527 1,250 277 333
2000-01 1,681 1,390 291 439
2001-02 1,817 1,506 311 364
2002-03 1,949 1,550 399 273
2003-04 1,901 1,452 449 348
2004-05 1,756 1,396 360 308
2005-06 1,828 1,431 397 318
2006-07 1,937 1,532 405 334
2007-08 2,067 1,658 409 312
2008-09 2,068 1,665 403 319
2009-10 1,731 1,348 383 372
12 year Cumulative Difference $4,394 $4,102

The last column in Table 2, headed Total Difference, is the discrepancy for all General Funds, which was given in the earlier paper. We note that the Difference for the Instruction portion is frequently larger than the Total Difference.

Conclusion:
There has been a huge and systematic diversion of funds provided by the State of California and intended for Instructional use at UC. Where that money has gone is still a complete mystery.

Some related questions:
• Who is responsible for that diversion?
• Who has known about it but kept that information hidden?
• What will the citizens of California and their elected representatives in Sacramento say when they learn that so much of taxpayer money given to their University for Instructional purposes has been diverted to X, Y and Z?

We wait for responsible officials at the Office of the President to give an explanation for this disturbing situation

3 Comments

  1. cloud minder said,

    February 17, 2011 @ 12:14 pm

    have you read this report in full?:

    http://www.calaware.org/audits/pub_ed/subcate_details.php?cat_id=10&id=18

    the same behavior. (In CalAware’s audit UCSF didn’t even respond apparently. UCOP says it is okay the campuses were non responsive because they/UCOP are the legal entity of UC– but UCOP can’t answer the questions either when you ask for answers.)

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  3. Tweets that mention UniversityProbe.org – a critical forum on Research Universities, their finances, their governance, …, their future » $4 Billion Mystery at UCOP: Act II -- Topsy.com said,

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