Moody’S Resets The Uc Agenda
Sunday, May 22, 2022
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During a recent press conference discussing the changes inwards the UC post-retirement benefits, ane of the academy budget officers declared that the efforts to reshape the pension conception have got already been applauded past times Moody’s inwards their latest bond ratings. Looking at the investors’ service study dated (Sept. ix 2010) “MOODY'S ASSIGNS Aa2 RATING TO UNIVERSITY OF CALIFORNIA'S, LIMITED PROJECT REVENUE BONDS 2010 SERIES eastward AND F; UNIVERSITY'S OTHER RATINGS AFFIRMED WITH STABLE OUTLOOK,” nosotros notice the following: “The University's retirement wellness in addition to pension plans stand upwards for a pregnant in addition to growing liability in addition to expense of the System. We believe the University volition demand to accept pregnant steps to either curtail the benefits or meliorate ongoing funding of the costs inwards lodge to sustain its long-term credit quality. However, the University has been pro-active, creating a taskforce dedicated to render recommendations to modify the electrical current produce goodness blueprint that should effect inwards a reduction inwards the liability.” Here the bond raters clearly dot that if the academy wants to keep its high long-term credit rating, it must demo that it is willing to “curtail” or “modify” retirement benefits.
The force to drive downward the costs in addition to value of the UC retirement conception is coupled alongside the claim that the academy is soundless inwards a salubrious financial dry reason because it remains, “one of the premier higher instruction systems inwards the world, serving over 220,000 students, conducting over $3.7 billion of interrogation annually, in addition to generating inwards excess of $5 billion of internet patient revenue inwards financial twelvemonth (FY) 2009 at its 5 academic medical centers.” It is of import to annotation that piece the medical centers laissez passer on on to rake inwards huge profits, they are at nowadays plainly resisting contributing their total portion of the employer pension contributions. The PEP Task strength hints at this dot past times stating that, “if the University funds the State portion of PEB costs immediately, it cannot hold out assumed that other fund sources volition hold out able to afford their portion without some fourth dimension to revise their operating models in addition to assess the touching on of faculty, students in addition to staff.” The “other fund sources” mentioned inwards this study are the medical centers in addition to interrogation grants that should encompass 67% of the employer contributions.
Of course, Moody’s does non lift that the medical centers produce non desire to portion their profits, in addition to the interrogation grants may already hold out costing the UC money; instead, the bond raters stress how the UC is currently rolling inwards unrestricted funds: “Sizeable remainder canvas that remains highly liquid, alongside $3.5 billion of unrestricted financial resources ($5.9 billion excluding post-retirement wellness liabilities) in addition to active treasury direction monitoring a short-term investment puddle exceeding $10 billion.” Since the UC is entirely paying its retiree healthcare costs on a “pay-as-you-go” basis, the academy currently has closed to a combined $16 billion inwards its unrestricted funds in addition to short-term investment accounts, which is non bad for an establishment that is supposedly facing a financial crisis.
One of the things that is helping the academy to increment its revenue every bit it cuts costs in addition to benefits for workers is its powerfulness to purpose depression involvement rates to accept on a huge amount of debt: “Significant upper-case alphabetic character needs probable to effect inwards ascent borrowing levels; debt outstanding has grown from $8.3 billion inwards FY2006 to over $13.3 billion inwards FY2009 in addition to including novel borrowings since the terminate of the financial year, a 61% increase; nevertheless nosotros believe direction in addition to the board volition remain prudent in addition to focus on utilizing debt strategically inwards a challenging economical environment.” Like the ease of America, the UC is addicted to debt in addition to continues to increment both its financial holdings in addition to its demand for credit.
While the academy appears to have got unlimited access to cash, the bond raters ane time once again warn that the arrangement is plagued past times unionized workers, governmental regulations, in addition to high healthcare costs: “Substantial exposure to healthcare sector (29% of operating revenues) in addition to associated credit challenges, including by in addition to large to a greater extent than volatile operating performance, high susceptibility to regulatory in addition to authorities payor changes, coupled alongside unique stresses on California healthcare, including unionized labor, in addition to seismic requirements.” Here nosotros meet the underlying neoliberal agenda of the bond raters surface; according to this logic, the entirely matter belongings the academy dorsum from making to a greater extent than turn a profit in addition to taking on to a greater extent than debt is the fact that in that location are regulations, unions, in addition to employee benefits. If entirely the academy didn’t have got to worry almost pesky things, similar its employees, fifty-fifty to a greater extent than credit would hold out available.
One surface area where Moody’s thinks the academy tin flame meliorate is inwards its powerfulness to extract to a greater extent than coin from students: “The University has implemented pregnant tuition increases inwards the terminal twelvemonth in addition to is probable to laissez passer on on to implement substantial increases. We believe constraints on time to come growth inwards this surface area volition largely hold out mission-based in addition to politically driven every bit marketplace position drivers would probable allow the University to grow tuition revenues at high rates, specially if the University was willing to attempt out a greater proportion of out-of-state students.” According to this neoliberal logic, the entirely matter preventing the academy from charging to a greater extent than is politics. While nosotros mightiness await bond rates to brand this type of political anti-political statement, it is of import to stress that the to a greater extent than the academy relies on debt in addition to high finance, the to a greater extent than it has to follow the volition of the raters.
One of the fundamental demands of Moody’s, which is matched past times the UC administration, is the demand to wean the academy off if its reliance on world funds. This motility for privatization is related to an updated accounting of the lack of dry reason funding: “Funding from the State of California (debt rated A1) is probable to remain rattling challenging for the adjacent several years. The State's back upwards accounted for 14% of operating revenues during FY2009, reflecting a reject inwards dry reason appropriation revenue of $561 meg or 18%. In FY2010, the reduction is estimated to hold out an additional $637 million.” While it looks similar the academy lost $1.2 billion dollars during the terminal ii financial years, it is of import to stress that much of this coin was replaced past times federal recovery money: “As of May 26th, direction reports that the arrangement has received $837.8 meg inwards ARRA funding.” I desire to emphasize that this ARRA coin is non federal grant money; rather, these funds were used to trim down the overall dry reason reduction for the terminal ii years to nether $400 million. In other words, during each twelvemonth of its financial crisis, the UC lost almost 1% of its total $20 billion budget. However, it is virtually impossible to draw concern human relationship for how much coin the UC receives each twelvemonth from the dry reason because of the means California has been paying its bills: “In FY2010, the State deferred $250 meg from July until Oct in addition to an additional $750 meg was deferred until the terminate of the financial year. The University has used its ain liquidity in addition to borrowings nether taxable commercial newspaper to span this funding gap.” In other words, UC is non able to draw concern human relationship for how much coin it gets from the dry reason each twelvemonth because it is involved inwards a complicated arrangement of lending in addition to borrowing dry reason funds.
While nosotros soundless produce non know just how much coin the academy has lost from the state, nosotros produce know that fifty-fifty during the financial crisis, which justified furloughs in addition to layoffs, the UC continued to increment its revenue in addition to profits: “Moody's believes that the University's demonstrated powerfulness to grow financial resources through operating performance, investment returns, in addition to philanthropy should back upwards planned strategic upper-case alphabetic character investments in addition to additional leverage. UC's financial resources have got grown from to a greater extent than or less $11 billion inwards FY2002 to nearly $13 billion inwards FY2009, including the recognition of over $2.3 billion of post-retirement wellness obligations.” Due to the diversified nature of its funding streams, the UC is able to claim poverty, piece it brings inwards tape profits.
One house where the academy has performed good is inwards its powerfulness to remain highly liquid: “The University's policy is to non allow to a greater extent than than $200 meg of CP [commercial paper] to mature on whatsoever given day, hence limiting maturities inside a given calendar week to $1 billion. The University retains pregnant liquid investment holdings, including $630 meg of United States of America of America Treasury in addition to Agency securities non on loan every bit of June 30, 2010. The University likewise holds additional United States of America of America Treasuries in addition to Agency securities on loan ($2.0 billion). In addition, the University holds over $6 billion inwards corporate commercial newspaper in addition to other investment degree fixed income securities that could hold out liquidated inside a week.” The academy thus has a high bird of debt but likewise a high bird of assets it tin flame cash inwards at a relatively small notice.
While the academy clearly does non confront a financial crisis, it does have got a rattling high bird of debt due mostly to ongoing structure projects, in addition to piece the bond raters are pushing the UC to trim down its retiree liabilities past times reducing benefits, this study likewise shows that the unfunded liabilities are mostly an accounting figure used to justify farther reductions inwards employee costs. If the academy wants to trim down its debt in addition to its reliance on the neoliberal investment services, it is clear that it has to alter its focus from structure to instruction.
The force to drive downward the costs in addition to value of the UC retirement conception is coupled alongside the claim that the academy is soundless inwards a salubrious financial dry reason because it remains, “one of the premier higher instruction systems inwards the world, serving over 220,000 students, conducting over $3.7 billion of interrogation annually, in addition to generating inwards excess of $5 billion of internet patient revenue inwards financial twelvemonth (FY) 2009 at its 5 academic medical centers.” It is of import to annotation that piece the medical centers laissez passer on on to rake inwards huge profits, they are at nowadays plainly resisting contributing their total portion of the employer pension contributions. The PEP Task strength hints at this dot past times stating that, “if the University funds the State portion of PEB costs immediately, it cannot hold out assumed that other fund sources volition hold out able to afford their portion without some fourth dimension to revise their operating models in addition to assess the touching on of faculty, students in addition to staff.” The “other fund sources” mentioned inwards this study are the medical centers in addition to interrogation grants that should encompass 67% of the employer contributions.
Of course, Moody’s does non lift that the medical centers produce non desire to portion their profits, in addition to the interrogation grants may already hold out costing the UC money; instead, the bond raters stress how the UC is currently rolling inwards unrestricted funds: “Sizeable remainder canvas that remains highly liquid, alongside $3.5 billion of unrestricted financial resources ($5.9 billion excluding post-retirement wellness liabilities) in addition to active treasury direction monitoring a short-term investment puddle exceeding $10 billion.” Since the UC is entirely paying its retiree healthcare costs on a “pay-as-you-go” basis, the academy currently has closed to a combined $16 billion inwards its unrestricted funds in addition to short-term investment accounts, which is non bad for an establishment that is supposedly facing a financial crisis.
One of the things that is helping the academy to increment its revenue every bit it cuts costs in addition to benefits for workers is its powerfulness to purpose depression involvement rates to accept on a huge amount of debt: “Significant upper-case alphabetic character needs probable to effect inwards ascent borrowing levels; debt outstanding has grown from $8.3 billion inwards FY2006 to over $13.3 billion inwards FY2009 in addition to including novel borrowings since the terminate of the financial year, a 61% increase; nevertheless nosotros believe direction in addition to the board volition remain prudent in addition to focus on utilizing debt strategically inwards a challenging economical environment.” Like the ease of America, the UC is addicted to debt in addition to continues to increment both its financial holdings in addition to its demand for credit.
While the academy appears to have got unlimited access to cash, the bond raters ane time once again warn that the arrangement is plagued past times unionized workers, governmental regulations, in addition to high healthcare costs: “Substantial exposure to healthcare sector (29% of operating revenues) in addition to associated credit challenges, including by in addition to large to a greater extent than volatile operating performance, high susceptibility to regulatory in addition to authorities payor changes, coupled alongside unique stresses on California healthcare, including unionized labor, in addition to seismic requirements.” Here nosotros meet the underlying neoliberal agenda of the bond raters surface; according to this logic, the entirely matter belongings the academy dorsum from making to a greater extent than turn a profit in addition to taking on to a greater extent than debt is the fact that in that location are regulations, unions, in addition to employee benefits. If entirely the academy didn’t have got to worry almost pesky things, similar its employees, fifty-fifty to a greater extent than credit would hold out available.
One surface area where Moody’s thinks the academy tin flame meliorate is inwards its powerfulness to extract to a greater extent than coin from students: “The University has implemented pregnant tuition increases inwards the terminal twelvemonth in addition to is probable to laissez passer on on to implement substantial increases. We believe constraints on time to come growth inwards this surface area volition largely hold out mission-based in addition to politically driven every bit marketplace position drivers would probable allow the University to grow tuition revenues at high rates, specially if the University was willing to attempt out a greater proportion of out-of-state students.” According to this neoliberal logic, the entirely matter preventing the academy from charging to a greater extent than is politics. While nosotros mightiness await bond rates to brand this type of political anti-political statement, it is of import to stress that the to a greater extent than the academy relies on debt in addition to high finance, the to a greater extent than it has to follow the volition of the raters.
One of the fundamental demands of Moody’s, which is matched past times the UC administration, is the demand to wean the academy off if its reliance on world funds. This motility for privatization is related to an updated accounting of the lack of dry reason funding: “Funding from the State of California (debt rated A1) is probable to remain rattling challenging for the adjacent several years. The State's back upwards accounted for 14% of operating revenues during FY2009, reflecting a reject inwards dry reason appropriation revenue of $561 meg or 18%. In FY2010, the reduction is estimated to hold out an additional $637 million.” While it looks similar the academy lost $1.2 billion dollars during the terminal ii financial years, it is of import to stress that much of this coin was replaced past times federal recovery money: “As of May 26th, direction reports that the arrangement has received $837.8 meg inwards ARRA funding.” I desire to emphasize that this ARRA coin is non federal grant money; rather, these funds were used to trim down the overall dry reason reduction for the terminal ii years to nether $400 million. In other words, during each twelvemonth of its financial crisis, the UC lost almost 1% of its total $20 billion budget. However, it is virtually impossible to draw concern human relationship for how much coin the UC receives each twelvemonth from the dry reason because of the means California has been paying its bills: “In FY2010, the State deferred $250 meg from July until Oct in addition to an additional $750 meg was deferred until the terminate of the financial year. The University has used its ain liquidity in addition to borrowings nether taxable commercial newspaper to span this funding gap.” In other words, UC is non able to draw concern human relationship for how much coin it gets from the dry reason each twelvemonth because it is involved inwards a complicated arrangement of lending in addition to borrowing dry reason funds.
While nosotros soundless produce non know just how much coin the academy has lost from the state, nosotros produce know that fifty-fifty during the financial crisis, which justified furloughs in addition to layoffs, the UC continued to increment its revenue in addition to profits: “Moody's believes that the University's demonstrated powerfulness to grow financial resources through operating performance, investment returns, in addition to philanthropy should back upwards planned strategic upper-case alphabetic character investments in addition to additional leverage. UC's financial resources have got grown from to a greater extent than or less $11 billion inwards FY2002 to nearly $13 billion inwards FY2009, including the recognition of over $2.3 billion of post-retirement wellness obligations.” Due to the diversified nature of its funding streams, the UC is able to claim poverty, piece it brings inwards tape profits.
One house where the academy has performed good is inwards its powerfulness to remain highly liquid: “The University's policy is to non allow to a greater extent than than $200 meg of CP [commercial paper] to mature on whatsoever given day, hence limiting maturities inside a given calendar week to $1 billion. The University retains pregnant liquid investment holdings, including $630 meg of United States of America of America Treasury in addition to Agency securities non on loan every bit of June 30, 2010. The University likewise holds additional United States of America of America Treasuries in addition to Agency securities on loan ($2.0 billion). In addition, the University holds over $6 billion inwards corporate commercial newspaper in addition to other investment degree fixed income securities that could hold out liquidated inside a week.” The academy thus has a high bird of debt but likewise a high bird of assets it tin flame cash inwards at a relatively small notice.
While the academy clearly does non confront a financial crisis, it does have got a rattling high bird of debt due mostly to ongoing structure projects, in addition to piece the bond raters are pushing the UC to trim down its retiree liabilities past times reducing benefits, this study likewise shows that the unfunded liabilities are mostly an accounting figure used to justify farther reductions inwards employee costs. If the academy wants to trim down its debt in addition to its reliance on the neoliberal investment services, it is clear that it has to alter its focus from structure to instruction.