Reports Say CSU Has $1.2 Billion in Reserves
CFA Points to Reports for Salary Increase
March 21, 2007 7:37 PM
The California Faculty Association argued Monday that a recent financial assessment shows top California State University officials have tucked away over $1.2 billion. They said the CSU is in a strong enough financial position to increase faculty salaries and settle on a contract.
“The report is a serious financial analysis of the California State University’s management practices,” CFA president John Travis stated in a press release. “It reveals some of the half-truths and evasion used by the CSU administration as it manipulates its public pronouncements on its financial status.”
But the CSU budget director warned that the numbers are deceiving to the CFA, and that most of the money is already set aside for such obligations as financial aid or sick leave.
In a press release, CSU maintained that the CFA’s assertion is “inaccurate and misleading,” and that the funds in question cannot be used for salary purposes. Spokesperson Paul Browning said that a lot of the funds are already accounted for.
“Basically, the money cannot be used to support a faculty salary increase because the funds are already obligated to serve specific purposes,” said Browning. “I have no idea why either of the financial analysts would make that assertion.”
The CFA and its financial analyst say that the CSU’s cash flow has been consistent for the past five years, allowing the funds that are not earmarked for specific uses to grow considerably. Based on the fact that the system’s average operating margin has improved each year, they expect the reserve base to continue to grow.
CFA sought the help of independent financial analyst Randy Barber after a report from Moody’s Investor Services revealed that the CSU’s bond rating had been raised to “excellent” based on the university’s unrestricted access accounts. The accounts increased 45 percent during the past five years to about $1.2 billion.
“CSU needs to recognize that it’s not just us, the CFA, saying they have money,” said CFA spokesperson Alice Sunshine. “We were prompted to have someone analyze the cash flow of the university after we learned Moody’s snapshot report of their assets.”
Sunshine said they were concerned when the report revealed that CSU was in good financial shape because of a large reserve and a “steady stream of student fees that could be used to pay back interest on bonds.”
Both Moody’s Investor Service and Barber's analysis reports concluded that the magnitude of the positive cash flows provide CSU management with “sufficient financial flexibility to fund the salary increases that the CFA has proposed.” Barber's report highlighted the fact that the cash flows are not captured in any public budget document.
Moody's report also stated that the CSU could spend more on instruction of students than it does now.
CFA president Travis said that the CSU clearly has the money to return to bargaining.
"The administration's statement that they do not have the funds is dispicable," said Travis. "We are convinced there are sufficient resources to afford to raise our salaries and not raise student fees."
Sunshine said the CSU needs to operate in the interests of the university rather than the administration.
“I think it’s a question of priorities and will,” Sunshine said. “They (CSU) want to use the money for other things. When they have things they want, they always find the money. “
Barber’s report was released just one day before the CFA voted overwhelmingly in support of a first-time ever strike.
“We need to return to negotiations,” said State Senator Gloria Romero (D-Los Angeles), who is also a CFA member, at the conference announcing the vote. “We asked, how do we explain the greed and the gluttony of the Chancellor and the Board of Trustees? Until we revealed the truth and showed the world that they were sitting on $1.2 billion, they were able to say they couldn’t afford it.”
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