So I will list what he writes and then translate that into economic reality, as seen by people who actually live here but are not employed by the state.
Our pension and retiree health programs were exposed to billions of dollars of unfunded liabilities. A 20-year cycle of underfunding by the state had weakened our financial underpinnings. The administrative culture was sorely in need of modernization and transparency, and the level of pay for faculty and staff had been allowed to fall behind that of their peers.To put this in context, let's talk about "underfunding" - underfunding sounds like the state knows what things cost and they intentionally choose to not provide money. In reality, taxpayer-funded organizations build in increases to their budget and if they do not happen, they call that being underfunded. California itself has the same problem - during the "Dot Com" boom, the California legislature saw all the capital gains taxes coming from stock sales and, instead of regarding that as an extraordinary event and building roads or paying down the deficit with it, they built more costs into the annual budget - including rewarding the California university system with a lot more employees. If I give you $100 for Christmas, you should not then incur $100 of annual expenses and build that into your annual budget, much less project that it will grow.
The first job was to close an immediate $1 billion hole in our budget, created by cutbacks in state support.This is fairly subjective language. A large part of the expenses California is burdened with were a large part of why Gov. Gray Davis was recalled mid-term, though in fairness the legislature was just as much to blame. The University of California is the biggest employer of state workers with 24%, followed by corrections with 17% and California State University with 14%, and they vote Democrat every election. So 'cutbacks' really mean that employment had along ago increased far ahead of enrollment needs and when the budget - unsustainable in 2004 and worse now - reaches crisis levels they regard that as Californians not caring about education. In the period he is talking about the California university system has tripled the number of employees but neither quality nor enrollment are 3X so it has to be considered politically rewarding the people who vote for the right party.
Solid progress has been made; we are, for instance, embarked on a campaign to wring $500 million out of administrative expenses by initiating a series of practical but long overdue efficiency measures. This is money that will be put toward our core mission of serving students. We also have been gaining political allies in Sacramento, where the latest state budget didn't deliver all that we sought, but at least restored one-half of the cuts made in the prior year.The $500 million in "practical but long overdue efficiency measures" couldn't be bothered with before the shortfall was $1 billion - which means the UC system was not concerned about taxpayers money as long as it rolled in but when it stops it is time to write an open letter to taxpayers to complain they have less budget. In other words, had they implemented the savings earlier, there wouldn't be a budget shortfall today.
The University of California faces a $21 billion unfunded liability for its retiree pension and health programs. For 20 years the university, its employees and the state enjoyed a "holiday" from contributions to what by any measure is a generous defined benefits program.We have to give Yudof credit for plain language here, even if he is being diplomatic. State employees across the board get a benefits package no one outside government gets. They have to pay nothing toward their retirement and retire at an age and a pay rate that makes European government workers envious. His solution is to make people start paying something toward their own retirement but this liability is unsustainable- California literally cannot now nor in any projected future meet these obligations. If California declares bankruptcy, it will be because of pensions.
They're also going to raise student fees by 8%, $822 per year but that small amount tells you most of what you need to know; the bulk of the money needed by the UC system is not needed for students - and it's sure not needed for either athletics or science, both of which generate more revenue than they cost - it's needed because they added far too many employees they didn't need and now, because they are state employees and can't fire them, they have to furlough everyone.
How expensive has California become due to the inflationary spiral of adding state-funded workers and driving out private sector businesses with the resulting taxes?
I am proposing that we expand our middle-income grant program to cover the full amount of the fee increase for one year for financially needy California undergraduates with family household incomes of less than $120,000.Poor people in California are those making under $120,000.
Obviously it isn't just the UC system at fault, Yudof just happened to write the letter. The Cal State system is bloated as well and the prison guard contract mentioned above will be taught in labor negotiations classes for decades because, thanks to Gray Davis again, that contract has been widely hailed as the best union contract in history.
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