UC campuses deemed at risk of financial unsustainability

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UC Berkeley is at risk of becoming financially unsustainable, while one-third of the colleges in the country are already “on a financially unsustainable path,” according to a study conducted by Bain & Company — the company previously hired by the campus to make it more cost efficient.

The study — a collaboration between global firms Bain & Company and Sterling Partners — declared UC Berkeley, UC Davis, UCLA and UC Santa Cruz, along with 28 percent of the nation’s colleges, at risk of becoming financially unsustainable.

According to the study, UC Santa Barbara, UC San Diego, UC Riverside and UC Irvine are not financially unsustainable, but are already trending toward financial unsustainability.

The study synthesized data from 2005 to 2010 to generate two ratios — one comparing the change in percentage of equity as a part of assets, and the second comparing expenses as a percentage of revenue — for each of the 1,692 colleges studied in order to determine their financial sustainability.

Despite none of the undergraduate UC campuses receiving a solid financial score, UC spokesperson Steve Montiel said he is not worried because he said the credibility of the study is “questionable,” as it is based on only two financial ratios.

“UC is a $23 billion enterprise that — unlike many other state-funded public universities across the nation — has other strengths from which it can draw,” Montiel said in an email. “These include its research enterprise, its medical centers and private philanthropy. And rating agencies thoroughly review UC’s financial prospects every year, finding our ratings ‘stable’ throughout the current financial crisis.”

However, the current financial crisis has precipitated issues such as steep state funding cuts and escalating fixed salary, benefit and energy costs, according to Montiel.

Consequently, Montiel added that the university instituted the Working Smarter Initiative in July 2010, which has given way to $289 million dollars in savings and new revenue since then and hopes to increase these savings to $500 million by 2015 by consolidating payroll and other administrative services.

According to the study, UC Berkeley specifically had a 4 percent drop in the equity ratio and a 13 percent drop in the expenses ratio over the five years studied — even though in 2009, the campus hired Bain & Company to diagnose the campus operational and financial environment and work on creative solutions to combat dwindling state support.

Bain & Company’s analysis in April 2010 helped UC Berkeley formulate plans for the campus Operational Excellence initiative — which aims to save the campus $75 million annually starting in 2016 by creating new processes for efficient administration — according to Melanie Hurley, communications coordinator for the Operational Excellence Program.

“Operational Excellence projects are a key part of making the University more financially sustainable but there are other strategies as well, including diversifying the University’s sources of revenue to lessen UC Berkeley’s reliance on state funding,” Hurley said in an email.

Representatives at Bain & Company could not be reached for comment as of press time.

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  • Bain of Our Existence

    One word: Bain. Any company who could make The Great Mormon a zillionaire is a company to be ignored. Romney has the brains of a fruit fly, and proves it every time he opens his mouth. In ONE trip overseas — and not even as an American official — he has managed to alienate not only all Arabs but the British as well; to say nothing, of course, about attempting to start a shooting war with Iran.

    And we’re gonna listen to the corporate sons of Romney, because …?

    • libsrclowns

      Because the leftist Tards running UC are as clueless as Moonbeam. Fiscal midgets all.
      But don’t worry, under Moonbeams policies Cali will be bankrupt soon.

    • Stan De San Diego

      Because Romney, however imperfect he may be, has a far better track record as a leader than the current occupant in the White House.

    • Stan De San Diego

      “In ONE trip overseas — and not even as an American official — he has managed to alienate not only all Arabs”

      Like anyone’s worried about the Arabs. Come on now, when are those people NOT offended by something?

  • Calipenguin

    While I agree that simply looking at Bain’s two ratios don’t give a complete picture, Montiel’s “the economy is just fine” attitude is truly alarming. What part of huge tuition increases and pending $125 million cut does he not understand? If anything Cal is already a living definition of “financial unsustainability”, lurching from one financial emergency to the next. Every Cal student that pays tuition knows we are already deep in the red zone.

    • libsrclowns

      Moonbeam and his leftist cabal in SACTO are clueless. Everyday more businesses leave the state. The residual, deadenders sucking the fiscal life out of our economy. Keep voting Lib and Cali will soon be bankrupt.

    • fredbo55

      He is just dreaming. The tuition increases are really straining the average family and it’s all to support research, research and more research. It’s sort of selfish if you ask me.

  • Matthew Weber

    How much did this study cost us? How many more such studies can UC afford at a time of “financial unsustainability”?

  • Current Student

    “the company previously hired by the campus to make it more cost efficient”

    I laughed at the irony of this so hard.

    The campus is already plenty efficient…it just actually needs some public support. You can’t just cut and cut and cut and expect everything to be fine, you need to put money into the system too.

  • berkeleyprotest

    Why are the UC Regents patronizing Mitt Romney’s vulture capitalists?

  • berkeleyprotest

    Why are the UC Regents patronizing Mitt Romney’s vulture capitalists?

    • Stan De San Diego

      I dunno. Why do you repeat every stupid left-wing talking point you hear?

      • berkeleyprotest

        oh BFD. the real problem is that Bain is charging 7.5 million to tell the University to shutter access to non-white ethnic courses, among other dangerous recommendations. where’s batman?

        • I_h8_disqus

          There are white ethnic courses at Cal?

        • Stan De San Diego

          If they are suggesting dropping classes and courses of study that requires neither academic rigor nor provides marketable skills in the workplace, then that would make perfect sense, since they don’t belong in a university to begin with.

          • http://twitter.com/akisma akisma

            well, why are you parroting every right wing sound byte?

    • JJMMC

      Bain & Company is not Bain Capital, you dummy.

      • Fed Up Alum

        The hell you say, liar

        From Wikipedia http://en.wikipedia.org/wiki/Bain_%26_Company#Relationship_with_Bain_Capital

        “Bain Capital was founded in 1984 by several former Bain & Co. partners that included Mitt Romney”

        I’m getting damn sick of Right Wing lies on the internet.

        • Calipenguin

          The right wing is not exactly throwing its support behind Romney you know.

        • JJMMC

          Dude, read your own link:

          “In spite of popular belief, Bain & Co. is an entirely separate entity from Bain Capital. Bain Capital is a private investment firm specializing in private equity (PE), public equity, leveraged debt asset, venture capital, and absolute return investments. Bain Capital does not provide management consulting services to its clients.”