Someone has now forwarded the email to yours truly.* It's not clear why I didn't get it directly; perhaps it wasn't sent to emeriti. But, in any case, the surmise was correct. The only number cited in the email is the deficit figure, without definition. From the email:
Based on approved spending plans and current planning assumptions, UCLA’s closing deficit on central accounts for FY26 is projected at approximately $220 million. You may have seen previous references in the media to a higher deficit figure. That projection included uncommitted funds: spending requests that had not yet been approved and did not therefore reflect UCLA’s projected closing deficit on central accounts.
The email came with an FAQ attachment.** In it, there is a question about the former CFO's deficit estimate of $425 million:
Where did the $425 million figure come from?
You may have seen previous references in the media to a higher deficit figure. That projection included uncommitted funds: spending requests that had not yet been approved and did not therefore reflect UCLA’s projected closing deficit on central accounts.
So what do we learn? It appears that it isn't the case that the CFO gave out a false number. It is common practice in public sector budgeting to make what-if projections, i.e.. what would happen to the budget if all planned spending were to occur and nothing was done to change inflows of revenue. For example, at the state level, the Legislative Analyst's Office (LAO) typically releases a workload projection of this type before the governor releases his budget proposal.
If you look at the budget book the former CFO Agostini provided just before he was fired, it contains a breakdown by academic unit.*** You will find a footnote for the units that indicates the projections for the current year 2025-26 were as of September 2025. So it appears the figures in the budget book were really starting numbers for the year. Between September 2025 and February 2026 when the budget book was released, the powers-that-be at UCLA (probably including the CFO) had made some course corrections, bringing down the starting projection from $425 million to $220 million.
It remains the case, as we have repeatedly pointed out, that precise definitions remain elusive. And there is no information on reserves. If an organization is spending more than it is taking in, it has to be pulling the difference from somewhere. And what you have in reserve matters.
Let's take a simple example. If you have an ongoing deficit of $220 million and you have only $100 million in reserve, you have an immediate emergency. Drastic and quick action must be taken. If you have a billion dollars in reserve, you have a problem, but you also have some time - about four and a half years - to correct that problem.
In short, what is needed remains the same. When we talk about UCLA running a deficit, what portion of UCLA are we talking about? Is it everything including the hospitals? Is it some carved out sector? When we talk about a deficit, are we talking about the difference between revenue and expenditure in a specified fiscal year? And what are the reserves which have been financing the deficits?
===
*The email is at https://ia803207.us.archive.org/35/items/ucla-budget-book-v-final-feb-2026/Interim%20CFO%20message%20to%20campus%203-26-2026.pdf. As blog readers will know, we are preserving all budget documents on the Internet Archive in case any of them disappear. The complete collection is at https://archive.org/details/ucla-budget-book-v-final-feb-2026.
No comments:
Post a Comment