Mission Statement for Occupy Education Northern California*

The attack on public education is one aspect of a larger attack on the public sector and on democracy more generally, where corporate interests now dominate political, social, and economic decisions. Occupy Wall Street has reshaped the debate over this country’s direction with the demand that the destruction of our communities and our earth resulting from corporatization must end: we seek something entirely different.

Occupy Education Northern California shares these broad goals and believes that we need more than simply increased funding for public education. The problems with education are deeply linked to and cannot be treated separately from racism; privatization; global economic competition rather than cooperation; and lack of access to food, housing, and healthcare. In order to address these issues, we must change the conditions in which students live and learn and provide them with tools to reimagine and reclaim their futures. Furthermore, education must prepare students to be empowered participants in a democratic community and to take respectful care of each other and of the planet.

To these ends, this is our vision:

• Public education, from birth to life-long learning, is to be government-funded and free of charge for all individuals.
• End the privatization of education, which includes funding cuts and fee hikes, top-down control, outsourced labor, standardized test-driven curricula, competition for access to schools, internet-based classes without human interaction, and the militarization of our campuses.
• Education must be shaped by the needs of students, teachers, workers, and community members with their full, democratic participation in decision-making.
• In the interests of education and all other public services, end corporate personhood and revoke the charter of any corporation that acts against the public’s political, financial, social, or environmental wellbeing.
• Focus the goals of education on supporting the ethical and democratic interests of all the world’s inhabitants.

We will no longer plead with politicians who act in the economic interests of the 1%, and we will no longer buy into the false notion of “shared sacrifice.” We intend to stop the corporate program to privatize education by carrying out actions that positively embody the above principles.

Occupy Education Northern California believes that the 99% has the untapped political power necessary to realize this vision, and it is our mission to take part in a democratically led transformation of education. We invite you to join us!

*Note: We believe that the Mission Statement for Occupy Education Northern California is a living document that should be revised regularly to reflect the changing ideas of our participants, old and new.

Send us your feedback and find out when and where we’ll meet next: OccupyEducation.NorCal@gmail.com

by Charles Schwartz, UC Berkeley

On November 23, 2011, I sent a request for information to the Public Records office at the University of California Office of the President (PRA@ucop.edu ). [PRA stands for California’s Public Records Act.]

On December 22 I received a response from that office.

—————————————————-
From: Mark Yudof
Date: Tue, 22 Nov 2011 14:28:29 -0800

Chancellors:

Thank you for making time for our meeting Monday. These are difficult times and I deeply appreciate your commitment to ensuring that we address the challenges we face together as wisely and carefully as possible.

Below is a set of principles I suggest we all follow in the days and weeks to come. I realize many of you already have these processes, and more, in place, but it doesn’t hurt to reiterate them.

1. Campus police chiefs should be directed to show restraint when dealing with peaceful and lawful demonstrations.

2. Every campus should review its incident command plan and ensure that police follow specific protocols regarding appropriate responses and which decisions must be reviewed with campus leadership before action is taken.

3. Campuses should make every effort to ensure a member of the campus senior leadership team is on hand during major demonstrations and should consider making use of trained, independent staff observers.

Best wishes to you all and your families for a peaceful and happy Thanksgiving.

Mark
—————————————————

Yudof’s principle #1 is quite shocking.  It specifies calling for police “to show restraint” only in certain circumstances: “when dealing with peaceful and lawful demonstrations.”

Does the President of our University have no understanding whatsoever of the concept of nonviolent civil disobedience? Such acts are often deliberate violations of some law, carried out by nonviolent means for moral and political reasons. According to Yudof’s principle, such demonstrations on this University’s campuses may well be met with violent (unrestrained) actions by our own police, acting under orders from the Chancellors.

Beyond that, who is to decide what constitutes a “peaceful” or “not peaceful” protest? Many a picket line will make a lot of noise which may disturb somebody’s peace.

Or perhaps it is worse than ignorance on Yudof’s part. Could it be that he meant to convey exactly that policy of police brutality in order to squash protests that might have a significant impact in opposing the administration which he heads?

by Charles Schwartz, Professor Emeritus, UC Berkeley

On the official web site of the Regents of the University of California it says,
“If you would like to email the Regents, please address your comments to Regents Office (regentsoffice@ucop.edu )”

Alternatively, you can find that Marsha Kelman is the Secretary and Chief of Staff to The Regents and her email address is  marsha.kelman@ucop.edu .

Here is my recent experience with that channel of communication.

- – - – - – - – - -
9/16/2011
Marsha Kelman
Secretary and Chief of Staff to The Regents
Dear Marsha;

Please forward the attached letter (via email, so as to retain
electronic links therein) to each member of the Board of Regents.

Thank you,
Charlie
- – - – - – - – - -

11/3/11
Marsha Kelman
Secretary and Chief of Staff to The Regents
UC Office of the President
Dear Marsha;

…  On September 16 I sent you some material … which I asked to be distributed to the regents.  Was that distribution carried out? And if so, in what manner?

Thank you,
Charles Schwartz
Professor Emeritus
UC Berkeley
- – - – - – - – - -

11/9/11
Professor Schwartz,

…  We have not located the email you sent on September 16.  If you will send it again, I’m happy to make it available to the Regents through our normal correspondence process.

Marsha
- – - – - – - – - -

11/9/11
Marsha;

Here is the email I sent you on September 16.  Please acknowledge immediately that you have received this.
I cannot imagine how the original email did not reach you.

Charlie
- – - – - – - – - -

11/9/11
Charlie,

I have received your email with the attachment.

Marsha
- – - – - – - – - -

11/10/11
Marsha;

My original request was that you forward my letter (which was the attachment) to each regent by email.  Will this be done?  When?

Charlie
- – - – - – - – - -

11/10/11
Charlie,

Our process is the same one we’ve had in place for many years.  We list the
correspondence we have received and ask the Regents what they would like copies of for review.
…
Marsha
- – - – - – - – - -

11/10/11
Marsha;

Thank you for FINALLY acknowledging what I had feared: That it is almost impossible for an ordinary person to communicate with members of the Board!

Charlie
- – - – - – - – - -

by Charles Schwartz at UC Berkeley

Trying to make sense of recent events here, I came up with the following.

- – - – - – - – - -

DRAFT#1  by C.S. 11/19/11

The past two weeks have seen an unprecedented outbreak of police violence against peaceful students on UC campuses at Berkeley and Davis.  And this comes amidst the continuing loud protests against the privatization of UC.  Are those two things connected?

I expect that the Regents would say, No: privatization is necessary because the state has failed to provide enough money; and police action is necessary because some students don’t behave the way they should.

It seems clear that the Regents approve of the police violence – since we have heard no words of condemnation, or even regret, from them after the fact. Furthermore, it is quite conceivable that they actually ordained this violence, telling their Chancellors to “be tough” in the face of protesters. In any case, The Regents, are the legally responsible authority.

From ARTICLE 9 SECTION 9 of the California Constitution:

(a) The University of California shall constitute a public trust, to be
administered by the existing corporation known as "The Regents of the
University of California," with full powers of organization and government,

But, again, what has this got to do with privatization?

Freedom of Speech is protected by the U.S. Constitution, but only in the public domain. Any private business may fire employees and exclude customers whose speech displeases the bosses.  Freedom of Assembly is also only in the public domain. Any private business may call in the police to remove anyone they dislike from their private property.

Therefore, we propose ……

- – - – - – - – -

For a reality check, I sent this draft to a well-respected colleagues, as follows.

X;
We have been on opposing sides of some arguments lately; so now I want to see if we might possibly collaborate on something.  Below is my first draft of a somewhat broader statement about what is happening at UC.  Please tell me what you think of this and whether there is some form in which we might promote these ideas in concert.
Charlie

He replied,

Charlie,
I’ll pass on this one.  I don’t believe anyone supports the violence – I think that far too many in our administration are well intentioned but incompetent.
On top of that, …
X

To which I replied,

X, thanks for your response.
I find your second sentence most thought-provoking: did that violence just fall, like rain, from the sky?
Charlie

- – - – - – - – - -

So, now I am posting this for wider commentary.

To The Regents of the University of California
Via the Office of their Secretary and Chief of Staff

Dear REGENTS;

I read in this morning’s newspaper that you want to see alternative plans for UC’s future budgeting. So, please read: “A BETTER PLAN for the Future of the University of California,” posted at http://socrates.berkeley.edu/~schwrtz/ToTheCommission.pdf .

This document was originally presented to the UC Commission on the Future in December 2009. I personally handed the papers to Vice President Taylor at a public meeting where he represented the President’s Office on the Commission. I have never received any substantive response to the analysis and proposals contained therein.

You will discover that the analysis of this paper directly contradicts the financial scheme presented to you yesterday by Vice Presidents Brostrom and Lenz. They rely on the bad old habit of hiding all the costs of faculty research under the misleading title of  “Average Expenditures for Education” (Display 3 in Item F8).

The central issue here is to acknowledge the Cost of Research and the Cost of Education as two essential and distinguishable parts of the University’s core budget. Then one can intelligently pursue the question, Who should pay for what?  To ignore (or to obfuscate) this issue is a fundamental fault, which I have tried to bring to President Yudof’s attention on several previous occasions. But he has chosen to ignore this challenge.

Therefore, I now invite you, The Regents, to dig into this basic problem yourselves. I hope it will lead you to ask more questions and promote more healthy debate.

Sincerely yours,
Charles Schwartz
Professor Emeritus
Schwartz@physics.berkeley.edu

Dear President Yudof;

I have just come upon what looks like a significant error in the University’s budgeting/accounting system and I ask that you look into this promptly. It concerns certain fees paid by UC students.

In the Budget for Current Operations (Detail) there is a table at the back that shows “Income and Funds Available”. One item listed there is “Student Fees: Application for Admission and Other Fees” in the annual amount of $28 million. This revenue is listed under UC General Funds, which means that it will be combined with State General Funds to form the “core” budget for the University’s operation.

If I then look at the accounting report “UC Campus Financial Schedules” (for 2007-08), I can find details of Expenditures of Current Funds for each campus; and on Schedules C, under Student Services, there is an entry for “Admissions”. If I add the General Fund portion of that expenditure for each campus I find a total amount of just under $29 million. So that seems to mesh with the number quoted as Income from the Budget.

The problem arises when one notes that all of the expenditures from General Funds for Student Services are replaced by funds coming from other student fees. This is the line item labeled as “Educational Fee Expense Proration” in the Campus Financial Schedules.

The conclusion I draw from these facts is that students are being charged twice for the same service. They pay Application for Admission Fees when they first apply to any campus, and it seems reasonable that that money would be used to cover the costs of processing their applications. But then it turns out that the actual operations of those offices that handle their applications are paid for with the Educational Fees that the students must pay when they enroll.

Please let me know if you find anything incorrect in the data or interpretations I have given above; and, if I am correct, I trust you will move rapidly and publicly to repair this mistake.

Sincerely,

Charles Schwartz
Professor Emeritus
UC Berkeley
———————————————————–
December 14, 2009
Dear Professor Schwartz:

I am writing in response to your 11/30/09 email to President Yudof regarding Application for Admission and Other Fees paid by UC students.

Based on a long-standing agreement with the State, revenue from Applications for Admission is pooled with other general funds earned by the University to provide unrestricted general support for the university’s core mission activities.   Collectively referred to as UC General Funds, these also include a portion of overhead on federal and state contracts and grants, DOE laboratory overhead and management, nonresident tuition, a portion of patent royalty income; and interest on General Fund balances.

The intent of the UC General Fund is to provide undesignated funding, irrespective of functional source of the revenue.  For expenditure, most of these revenues are pooled with State General Funds into a single fund number and thus become largely indistinguishable.   The application fee revenue is not explicitly tied to funding campus admissions offices.

Educational Fee revenue also provides general support for the University’s operating budget, including student financial support.  In order to simplify and reduce the departmental administrative burden of split-funding their general activities, Educational Fee revenues are also pooled with other General Funds into a single fund number (except for the portion used for financial aid).  In order to reflect Educational Fee expenditures in the accounting statements, expense transfers are implemented at year-end at the functional level, and it is our practice to transfer all General Fund expenses in student services to Educational Fees.

Please rest assured that students are not being double-charged to fund the same activity.

Sincerely,

Debora Obley
Associate Vice President –
Budget Operations
University of California
Budget and Capital Resources
——————————————————
December 14, 2009
Mark Yudof, President
University of California
President@ucop.edu

Dear Mark;

On November 30 I wrote to you pointing out what appeared to be a significant error in the University’s budgeting/accounting system – concerning the payment of student fees for Applications for Admission.  After detailing the facts on record, I concluded that students are being charged twice for the same service; and I asked you to investigate and correct that situation.

Now I have received a response from your office; it comes from Debora Obley, Associate Vice President for Budget Operations. Her letter verifies in detail every bit of the factual story that I had laid out in my letter. But then she reaches the diametrically opposite conclusion, namely, “that students are not being double-charged to fund the same activity”.

Such illogic must be embarrassing to any member of this academic community; and your office, in particular, is in great need of rebuilding and protecting its public image. So I think it only fair to give you the opportunity to reconsider this matter.

Sincerely,

Charles Schwartz
Professor Emeritus
UC Berkeley

by Charles Schwartz, UC Berkeley

This is a subject I have written about several times in the past, based upon analysis of statistical data published by the University. Official response has been pathetic. Now, some new data not only extends the time frame over which we can see enormous growth in management positions but also lets us identify the main sources of funds paying for this estimated $1 Billion per year in apparent waste.

If you want to read a summary of my past studies of this subject, along with accounts of how UC officials have responded to these analyses, see http://socrates.berkeley.edu/~schwrtz/Seminar/Seminar10_13_09.pdf

While those earlier studies covered the time period 1996-2006, this new data spans a larger interval, 1991-2010, and shows overall even more excessive growth. Here is the latest picture for all of the University of California.

Source of data:  http://www.ucop.edu/ucophome/uwnews/stat/
“Total” Employment numbers scaled (x0.0289) to match Management at 1991.
“Management” means the employment category:
SMG & MSP (Senior Management Group & Management and Senior Professionals)
“FTE” means Full-Time Equivalent positions
This data excludes DOE Laboratories but includes UC Medical Centers

Detailed graphs of this type for each individual UC campus are available here.

To see the implications of this data, I have made the following summary table.

Table 1. Campuses Ranked by Management Growth 1991-2010

“Excess” Management FTE  is calculated as follows:
(2010 Mngt FTE) – (1+% Growth in Total Employees)x(1991 Mngt FTE)

With an average compensation for MSP staff of $122,000 per year, this total Excess costs the University around $560 Million per year.

In my earlier studies I identified another employee category that showed exceptionally large growth.  This is the sub category of PSS (Professional and Support Staff) positions labeled “Code-F” and named “Fiscal, Management & Staff Services.”  It appeared that most of these positions were likely to be support staff (above the clerical level) for the Managers discussed earlier. Over the period 1993-2010, this category of employees at UC grew from 7,162 to 18,102 FTE, for an overall increase of 153%.  Using the same method as above, this leads me to estimate a present Excess of (18102) – (1.46)x(7162) = 7645.  Thus, with an average $63,000 per year salary for these positions, I estimate this Excess cost at around $480 Million per year.

Adding these two estimates together I get a cost to UC of just over $1 Billion per year for apparent bureaucratic bloat.

The next question is, What sources of money are used to pay these management and management-support positions? The University of California Office of the President (UCOP) publishes Compensation reports, which, it turns out, are not useful in answering this question. The whole MSP category is broken into several portions, some of which are shown there but others appear to be hidden within the PSS Code-F category.

Fortunately, I have been able to obtain some detailed payroll data from UCOP and the following tables show what we are interested in. These data cover only Base Pay for the fiscal year 2009-10.

Table 2. FY 2009-10 Payroll Data – Total UC

* Note.  There are small differences between some FTE numbers shown here and those reported above; also, there was a recent move of Academic Deans, out of the SMG category. These quibbles are not important for our purposes here.

Table 3. FY 2009-10 Payroll Data – Total UC – by Fund Group

* For definitions of these categories, see http://www.ucop.edu/irc/dd/cps/cps4300s.html
(“Other Funds” are mostly Endowments, Private Gifts and some ICR.)

In Table 3 we see that State Funds are a major source of payroll for the Management positions under study here.

Therefore, this issue of Excess Management should be a major topic of attention in the University’s present budget crisis.

The distinction shown here between State Funds and Tuition & Fees is something I would question, since those two fund sources are largely intermingled.

Table 3 also shows that the Medical Enterprises are another big source of UC’s overall Management bloat (this was specifically detailed in one of my earlier papers). This observation serves to raise even higher the question of why the Berkeley campus, with no Hospital or Medical School, showed the largest overall growth in Management (see Table 1.)

With this new payroll data source one can also separate out information for the individual campuses.  Table 4 shows what I get for my own campus; and anyone who wants to do an analysis for their own campus can download a copy of this 4857 line Excel data file here.

Table 4. FY 2009-10 Payroll Data – UC Berkeley – by Fund Group

A rough estimate of Berkeley’s cost for Excess Management: over $100 Million per year.  In a recent report to The Regents, Berkeley officials state that they are in the process of eliminating 240 management positions, with an estimated savings of about $20 Million. My data says that they need to do a lot better than that.

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.

The complete letter from VP Lenz is available here.  In what follows I summarize and elucidate what he writes and offer further comments on several issues that have arisen.

I think of myself as an expert amateur on matters of university finance and I recognize VP Lenz as the professional.  I can learn from him with modest effort; but I expect that most readers will have a difficult time interpreting his letter. So, I will lay out the problem and the solution in some detail. (I will include some typical numbers here, which Lenz did not do at all.)

First we look at the Budget (Governor’s budget or Regents’ budget) and see the following layout of data – here for the fiscal year 2005-06 (current year data)
————————————-
STATE APPROPRIATIONS
General Fund                               $ 2,845 Million
Special Funds                              $      60  Million

UC General Fund Income             $    554 Million

….  more things follow …
————————————-
From this, I concluded that the total of General Funds in the Budget was $2,845 + $554 = $3,399 Million.

Now we turn to the accounting report, “UC Campus Financial Schedules” (CFS), which comes out after the end of the fiscal year and shows how various funds have actually been spent – here for the fiscal year 2005-06, Schedule 12-H
———————————-
General Funds                   $3,081 Million
Tuition and Fees               $1,786 Million – $416 Million “Scholarship Allowance”
Federal Government         $6,428 Million
Special State Appropriations
and Contracts                    $   397 Million

…more things follow…
———————————
From this, I concluded that the total of General Funds Expenditure was $3,081 Million. I understood, from previous inquiries, that “General Funds” in the CFS included both State General Funds and UC General Funds; and Lenz verifies that this is correct. So, there was my original view of a discrepancy in General Funds: $3,399 – $3,081 = $318 Million for this particular year.

The new thing that Lenz has now taught me is that one must combine “General Funds” and “Special State Appropriations and Contracts” to get the total of State funds in the CFS; and this is to be compared with “General Funds” plus “Special Funds” as found in the Budget documents.  The numbers now work out very well:  $3,081 + $397 = $3,478,  compared to  $3,399 + $60 = $3,459.
(The remaining discrepancy is $19 Million, which is really negligible compared to my original discrepancy.)  Similar good numerical agreements are found for all the years covered.

My error was in thinking that Special State Appropriations and Contracts was a category of funds distinct from General Funds.  Why did I think that?  I thought that the words “General” and “Special” were intended to be mutually exclusive. Also, most significantly, in the Campus Financial Schedules one can find clear distinctions between “Unrestricted Funds” and “Restricted Funds”; that tells which funds the University has legal authority to re-allocate. All General Funds in the CFS are Unrestricted; all Special State Appropriations and Contracts in the CFS are Restricted. (See Schedules 1-D through 11-D.)  That seemed to me a clear guideline.  But I was wrong.  Thank you, VP Lenz, for teaching me that lesson.

Transparency is not found by simply looking at documents on the University of California Office of the President (UCOP) web site; it comes through the good old fashioned student’s method of trial and error. It would be nice if there were some handbook, some guidebook, some available reference that anyone might use to become versed in the arcane ways of university finance.  I have previously made such inquiries and requests to top people at UCOP – to no avail.

Conclusions:
There is no Missing money, in terms of the whole aggregate of State funds going to UC over the past dozen years. We learn that the term “General Funds” means different things in different documents.

Other serious questions remain.

Diversion of State Funds for Instruction

In Act II we saw that the apparently missing money came very selectively from the Instructional Program.  Now we need to correct that analysis based on the new understanding provided by VP Lenz.

The previous data in Table 1 showed how Budget and Spending of General Funds was distributed over several Programs, for the sample year 2005-06. Now we see Table 1b, below, which is corrected with the addition of expenditures of Special State Appropriations and Contracts. We now use the phrase “State Funds” to replace more correctly our previous concept of “General Funds”.

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

There is a total of $60 Million in State Special Funds that is now added to the Budgeted column; but I don’t know how to apportion it by Program. So, the total Difference comes out very small (20); but the individual Differences need to be increased, in an unknown distribution among Programs. In other words, the huge diversion seen for Instruction ($337 Million this year) may actually be somewhat larger.

Lenz tells us how the total discrepancy disappears. That solves Mystery #1.  But we still have Mystery #2: Why has so much State funding that was intended for Instruction been diverted elsewhere?  Let’s see this over the years. In Table 2b, below, I make this correction, which is shown following a + sign in the third column.

Table 2b. State Funds for Instruction: Budgeted and Spent

This Cumulative Difference is now reduced a bit (from $4.4 Billion to $3.8 Billion); but it is still huge and troubling. VP Lenz, in his latest letter, says he will get to this issue sometime. We shall wait for his explanation of this continuing picture of funds diversion.

Student Fee Revenues & Current Budget Plans

Incidentally in this letter Lenz answers a separate inquiry I had submitted about how various components of Student Fee revenues were treated in the Campus Financial Schedules. What he says there confirms what I had thought to be correct; and I am happy to have that confirmation.

This whole brouhaha arose as a side issue following my January 26, 2011, paper, “Financing the University – Part 21,” where I looked into Alternatives in the Present Budget Crisis. I focused on the concept of “Core Funds”, which is a term introduced by UCOP that covers both State and UC General Funds as well as Student Tuition and Fees. I looked at data for the Core Funds in both the Budget documents and in the accounting documents (CFS). There seemed to be some discrepancy between those two sources of data and I mentioned that I was writing to UCOP for clarification. That has now been resolved.

The important part of that earlier paper was my search for alternative possibilities in moving around various groups of Unrestricted funds as reported in the CFS. That analysis remains unaffected by any of these developments about apparent discrepancies.  I hope VP Lenz will study that paper and find that it offers alternatives in planning the next UC budget which, although unconventional, are viable and valuable in preserving the best of this great public research university.

Minutiae

There are a few minor points in Lenz’s letter that I wish to comment on.

He points to a certain footnote in the Campus Financial Schedules: “Excludes General funds Specific Funds”. But on other pages that same footnote reads a bit differently: “Excludes State Specific General Funds.” In either case it was certainly not clear what that meant – until we have the full explanation he has now provided.

He makes a point about the difference between “current year” and “prior year” data in the budget documents. I had already examined that issue and found that the differences were negligible in comparison to the main discrepancy I was dealing with. The particular budget wrenching of 2008-09 is something I was aware of and this did not affect my analysis.

He chides me for my “eagerness to leap to conclusions and publish them without sufficient budgetary facts.” There was a whole history (reported in the first part of this series) of my writing to him, asking when I might expect a response, getting his promise of a quick estimate on their timetable, followed by complete silence, followed by my asking again, “How much longer should I wait [in the face of silence] before making this information public?”  I believe that if he had told me, as he said he would, that they were very busy and it would take some reasonable period of time to respond to my inquiry, I would have waited. So, Lenz’s criticism of me here is unwarranted.

On the other hand, I do accept his criticism of my using the word “incompetence” in my February 8 email to President Yudof.



$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

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

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

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

* 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?