Transparency is top priority for administration

University constantly strives to be efficient

UC
Jacob Wilson/Staff

Imagine the development of the University of California as a phenomenon of astrophysics. The first sparks of interest in creating a public university came amid the Gold Rush, California’s Big Bang if there ever was one. Out of those sparks, a small college was established, which in relatively short order evolved into UC Berkeley.

That campus spun off research stations, which grew into new campuses, and later a system, which created more new campuses, and national laboratories, and medical centers, and more research stations, and so on, with the university becoming ever more complex with each expansion.

The College of California, the university’s initial manifestation, opened in 1860 with a freshman class of 10 students; the university now enrolls roughly 240,000. Professor Henry Durant, the first institutional leader, was forced to dodge bill collectors in the street. Durant calculated the total of problematic unpaid bills, groceries, a college bell and other items to be a whopping $932; today, the UC system’s annual budget exceeds $24 billion.

The trajectory of the university, of course, reflects the parallel growth of California as a society. In the main, it is a positive reflection, underscoring the symbiotic relationship between the state and its public university. To put it most simply, they grew up together, fast and often in a trailblazing, distinctly Californian fashion, and one would not be the same without the other.

But expansion of this magnitude inevitably creates complexity. For the UC system, this is especially true when it comes to financial and budgetary matters. There are multiple sources of funds, many designated for distinct purposes. There are multiple credit accounts and investment pools to manage, along with multiple contractual obligations.

Expansion, if not properly managed, also can undercut efficiencies on the ground. For example, the university as a system currently operates 11 separate payroll systems, 10 separate financial accounting systems and six separate procurements systems: Clearly, an opportunity for consolidation and collaboration that can take advantage of our size and to drive savings into our core mission of teaching, research and public service.
This is where I come in. Four years ago, I became the university system’s first chief financial officer. It’s my job to ensure that the university is managing its financial resources in a prudent and proper fashion and also to be on the constant prowl for operational efficiencies that might be applied across the system.

In pursuing this mission, it is my responsibility as well to promote transparency and, along the way, to try to explain to the public and especially the UC community the often-complicated arrangements that come with the territory of managing billions of dollars in bonds, investment pools and the like.
This part of the job can become more difficult when critics, whether well-intentioned or not, put into public play misinformation about UC finances. The most recent example came in the form of a campaign of criticism about how three medical center construction projects were financed.

That these arrangements saved the university more than $40 million, without putting at risk a penny of tuition or taxpayer revenues, was a fact that either was not understood by those raising concerns or, worse, was ignored for strategic effect.

Of course, flaps like this are inevitable in my complicated corner of the UC cosmos. And I welcome the scrutiny. Financial dealings and the pursuit of administrative efficiencies might not radiate the luster of the university’s more laudable pursuits, like exploring the far edge of the universe or finding cures for deadly diseases.

But, as a financial steward of this public university, and also as a UC alumnus and the father of a UC student, I consider it my sacred duty to ensure that the system’s assets are well-managed and secure and also that they are being employed to maximum advantage. In the current fiscal era, this approach is essential as the university works to maintain its historic trajectory of academic excellence, affordability and access. That’s my job, and I am happy to talk to anybody who has questions and concerns about any aspect of it, however complex or arcane.

Back in his cash-strapped days, it’s said that Henry Durant would send students into the street wearing his signature top hat and overcoat. As the bill collectors converged on these decoys, he would duck safely out a side door. There is no side door to my office, and the front door is always open.

Peter Taylor, chief financial officer of the UC system, graduated from UCLA in 1980 and earned a master’s degree in public policy analysis from the Claremont Graduate School in 1988.

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  • BerkeleyFacultyMember

    Wonderful. Transparency is great!

    Where can I download the complete log of all financial transactions carried out by the University in the past years? Together with their classifications?

    I’d also like a copy of the amounts held in all accounts maintained by the University. Where can I download that?

    I’d also like a copy of the donation list — with all donations identified by common donor and donation target? No need to breach anonymity, I just want to know what the distribution of donation-targets is. e.g. People who donate to the Mark Twain project also tend to donate to what?

    It’s a public university so all this information should be available, as are all the salaries of everyone at the university. A quick estimate suggests that all this information should fit on a handful of DVDs or a single hard drive.

    Let’s call the above kinds of information the “firehose” level. What we really need is a way to understand things a couple of levels above that.

    So, I’d like to see the breakdown of where all the tuition paid by faculty members for our graduate students goes. Where do our taxes (the effective 55% consumption tax we pay whenever we pay a postdoc or student researcher or reimburse travel) go?

    From a student perspective, where do the tuition dollars actually paid by parents of undergrads go?

    For construction projects, what is the interest rate that we are paying on bonds? As compared to what we are earning on our massive cash reserves? What is the premium we’re paying to outsiders for insuring ourselves against the risk of interest rates going up or down? What is the estimated cost of self-insuring ourselves against that same risk? (I don’t buy extended warranties on items that I can afford to replace from my pocket. Does UC buy interest-rate insurance on loans it can afford to pay off in one fell swoop if needed?)

    What is the total amount of money that flows from UC to entities in which the Regents or their families have equity stakes or employment relationships with? To entities where senior management or their families have employment or prior employment? Besides having conflict-of-interest compliance mechanisms to catch abuse, are the Regents with substantial personal wealth willing to personally stake their wealth as a guarantee against any abuse or unfavorable terms that might occur in such relationships?

    The existing financial statements of UC make it impossible to actually understand what is going on at any level relevant for understanding the strategic tradeoffs involved.

    • Nunya Beeswax

      *crickets*

  • Calipenguin

    Efficiency and transparency are the enemies of the unions.

    • Nunya Beeswax

      Oh, how fascinating–apparently University VPs have a union.

  • Guest

    Peter Taylor, do support cutting the fluff like funding for ethnic studies bullshit?

  • Justin

    Mr. Taylor, there will always be the angry and confused that attempt to grow some great controversy out of thin air. Simply untrue allegations that usually have some sort of agenda or are calculated for attention or both, but fact is fact. Keep up the good work.

    • Tony M

      Justin, thanks for letting us know that you’re easily duped.