UC campuses deemed at risk of financial unsustainability

http://www.dailycal.org/2012/07/29/uc-campuses-deemed-at-risk-of-becoming-financially-unsustainable/

UC Berkeley is at risk of becoming financially unsustainable, while one-third of the colleges in the country are already “on a financially unsustainable path,” according to a study conducted by Bain & Company — the company previously hired by the campus to make it more cost efficient.

The study — a collaboration between global firms Bain & Company and Sterling Partners — declared UC Berkeley, UC Davis, UCLA and UC Santa Cruz, along with 28 percent of the nation’s colleges, at risk of becoming financially unsustainable.

According to the study, UC Santa Barbara, UC San Diego, UC Riverside and UC Irvine are not financially unsustainable, but are already trending toward financial unsustainability.

The study synthesized data from 2005 to 2010 to generate two ratios — one comparing the change in percentage of equity as a part of assets, and the second comparing expenses as a percentage of revenue — for each of the 1,692 colleges studied in order to determine their financial sustainability.

Despite none of the undergraduate UC campuses receiving a solid financial score, UC spokesperson Steve Montiel said he is not worried because he said the credibility of the study is “questionable,” as it is based on only two financial ratios.

“UC is a $23 billion enterprise that — unlike many other state-funded public universities across the nation — has other strengths from which it can draw,” Montiel said in an email. “These include its research enterprise, its medical centers and private philanthropy. And rating agencies thoroughly review UC’s financial prospects every year, finding our ratings ‘stable’ throughout the current financial crisis.”