Yudof on Budget, Privatization, Pensions

There is an interview in the LA Times today (1-15-11) of President Yudof by Patt Morrison. Below are excerpts.

…Morrison: You’ve used the Ed Koch line, “How’m I doing?” After 2 ½ years, how’re you doing?

Yudof: I think we’re doing well, and I don’t mean to be Pollyanna-ish. We have a $20-billion shortfall, long run, in the pension plan. I think it’s going to take 20 years to dig our way out, but we have a plan. We put the new [student] eligibility standard into effect; it’s going to be a less mechanical admission [process], looking at the whole student record. We’re putting in place a 10-campus payroll system. The faculty has been very loyal; we haven’t lost an untoward number of people…

Morrison: What do you think about Gov. Brown’s proposed cuts to UC’s funding?

Yudof: I don’t blame Gov. Brown. I don’t blame the Legislature. This is where we’ve been heading for a very long time, so it’s sadness more than shock. In spite of all we’ve done to save money, raise fees, restructure our debt, this is going to cut into the muscle and sinew. A lot of people think there’s a lot of fat. We don’t have enough fat left to absorb a budget cut like this. We will set targets for reductions, and in March I’ll present the whole thing to the Board of Regents. I’m not planning on asking for a fee increase, at least not at this time; I can’t rule it out forever. We’re probably looking at layoffs and program cuts and things like that.

Remember, it’s not $500 million, it’s really closer to a billion, because unlike community colleges and state colleges, the state doesn’t give us money for employer contributions to the pension plan, so that raises the real cost [of the cuts] to $700 million; then you have union contracts, energy contracts, inflationary increases — we really have a billion-dollar problem.

…Yudof: [Former Gov.] Schwarzenegger had a huge regard for higher education. He understood its role in economic development. Great research universities take a long time to build and can be destroyed in a very short period of time; he understood that.

Morrison: There’s talk of privatizing parts of the system, like UCLA’s Anderson School of Business.

Yudof: Well, I don’t like the privatizing. Frankly, internally there’s a lot of criticism of the proposal. But in this environment, if there were areas in which you could charge more to help balance the overall budget, it’s very tempting. But I’ve not signed off on it, [and] it hasn’t gone to the board.

Morrison: The governor once spoke of the “psychic rewards” of public service, as opposed to the dollar ones. That’s an old statement; I don’t know if the governor would stick by it. I think there’s something to it, but I would put it two ways. Many university professors could pursue more lucrative careers. It took me virtually 10 years of law teaching to match the highest offer I got from a law firm coming out of law school. I didn’t regret it; I’d made my choices. So there is psychic benefit. On the other hand we’re in a competitive business. Like any industry, [faculty] get [other] offers. Compensation is a significant factor. They say, “What am I doing here if I can get 50% more money from a private institution”? You have to be competitive. [In] the nation’s 62 top universities, our highest [paid] chancellor ranks 50th. And the chair of the group, from Santa Barbara, ranks dead last.

Morrison: Your predecessor resigned after accounts of secret bonuses and salary deals. Now some well-paid UC people claim they had a deal for bigger pensions. It’s complicated — a lot of the money wouldn’t come from public dollars but from profit-making parts of UC. What’s your stand on this? Isn’t the timing awful?

Yudof: I don’t do secret deals; everything’s in the paper! It is a complicated problem. When I arrived I had no idea we had a ruling [on the pension deal] pending. We looked at it and said, this resolution was never implemented. [The potential beneficiaries] disagreed. They’re not dishonorable people. That is a good-faith interpretation. We think it’s wrong, and we think under the current financial circumstances it’s difficult to justify. Perhaps it was the tone of [their] letter; I think that it hit overly hard.

Morrison: Is what we’re going through an aberration, or the new normal?

It’s probably the new normal. The truth is, the deterioration of [education] funding predates this horrendous Great Recession…

Full article at http://www.latimes.com/news/opinion/la-oe-morrison-yudof-20110115,0,4144979.column