caledinsider.org: The Budget Literacy Project

Click here to listen to an audio recording of the presentation.

Please note, there is a period of silence at the beginning. A new audio recording without the awkward silence should be posted on the Academic Senate Web site soon.

Click here to download the materials from the presentation (tables, graphs, etc.)

What the talk was about:

Associate Vice Chancellor Erin Gore gave a 30-minute power point presentation about UC Berkeley’s financial model, where the university gets its money and how it spends it. She spoke at length about how the financial situation of the university has changed since the 2001-02 fiscal year. Here is a Daily Cal article about the presentation.

According to the data Gore presented, UC Berkeley received $390 million from the state during the 2008-09 school year, compared to $497 million in 2001-02, the year UC Berkeley received the most it has ever received from the state. When you adjust for inflation, that amounts to about a $100 million decrease in state funding. While state funding for the university decreased, the student population increased by about 3,600 full time equivalent students. (Two part-time students count as one of the 3,600 full time equivalent students.)

Gore said the combination of decreased state funding and increased student population has led to students receiving 33% less resources per capita than they did in 2001-2, though students now pay 150% more in student fees than they did then.

Gore also explained the differences between certain types of funding, such as restricted and unrestricted, and she talked about the relationships between some UC financial documents, like how data from UC Berkeley’s financial schedule 1A feeds into its financial statements. I’m not completely clear on all the definitions of types of funding or relationships between documents; those are things I’ll need to ask someone from the Campus Budget Office about.

Who was at the presentation, what they said:

A question and comment period followed Gore’s presentation.

Stanley Klein, a UC Berkeley optometry professor, announced a faculty seminar in which members would outline what parts of the UC’s finances they don’t understand as well as they would like and work on fully understanding the UC financial records. (It’s sort of a similar idea to this site.)

Charles Schwartz, who writes University Probe and is a UC Berkeley professor emeritus, had a lot to say. During the presentation, he commented that people should always be asking what numbers mean, where they come from, and whether there is any controversy about them. He was responding to a line in the table, “Berkeley’s Current Funds Revenues, 2008-09.” I think it was the line titled, “Sales and Services of Educational Activities.” He said he didn’t know what the line specifically referred to.

Schwartz made the following claims during the question-and-answer period:

1. UC President Mark Yudof lied about some data or made a false statement. (I didn’t catch what.) Either Yudof or someone from UCOP acknowledged that Yudof had lied, but the incorrect data or statement remains on the UCOP Web site.
2. There is no way to find out how education fees are spent.
3. The number of management positions in the UC has grown disproportionately more than the total number of positions.

Points of confusion:

I have some lingering questions about content from both the Budget Primer and the presentation. You may be wondering why I would list questions I have instead of just finding the answers and posting them when I get them. Well, (1) I think the process of finding out is a valuable thing to show and (2) I think questions can be informative themselves, in a way. One question might make someone think of another question or another type of information to look for.

First, I’ll list the questions I had after reading the Budget Primer:

• Why is UC Berkeley’s spending reported as static? “The University of California, Berkeley spends approximately $1.8 billion per year to fulfill its teaching, research, and public-service missions.”
• “Though unrestricted funds may be spent for any mission-related purpose, all funds, including unrestricted funds, must be spent in ways consistent with regular University accounting and purchasing policies.”  (1) What funds are unrestricted? (2) Where can one find the accounting and purchasing policies?
• Does UC Berkeley always budget for an increase in funding? Why or why not?
• One of the “budget principles” is: “Ensure sufficient ongoing funding is available to support ‘common good’ priorities.” How is “common good” defined?
• Another budget principle is: “Increase financial flexibility that promotes fungibility [replaceability] of funding sources.” I’d be interested to see an example of that to illustrate exactly what it means.
• What sort of activities does “activity” refer to, as in activity-based budgeting? (Activity-based budgeting is mentioned on the Berkeley Campus Budget Office Web site.)

Questions I had after the presentation:

• Why is the Hepi Index controversial? What other indexes for calculating inflation are there?
• How can I find numbers related to bonds in financial records such as the UC’s financial statements?
• What is the definition of a financial statement and what part of the budget setting process does it represent? (See “Posted public records” for the financial statements.)
• What is the definition of a financial schedule? (See “Posted public records” for the financial schedules.)
• What are the differences between financial schedules, i.e. “Schedule A” vs. “Schedule B?”
• What are administrative units? How do they work?
• Why are there both general and designated unrestricted funds? Are all unrestricted funds designated in some sense, or only the “designated” ones?

In general, the financial organization of the UC reminds me of this really complicated tape dispenser I use at work: whoever came up with it must be really proud of himself for being an inventor, but everyone who tries to work with it is super peeved. Anyway, that was some food for thought.