By Riley McDermid
The University of California is swimming in $17.2 billion of debt after leveraging many of its assets to fund pensions, make necessary repairs to its buildings and infrastructure, and embark on a sweeping building boom.
That’s led regents to push the system to rethink its borrowing policy, something the UC has been arguing against, saying they would have been remiss not to take advantage of historically low interest rates and government programs to build during boom times.
“If we had not taken advantage of that and had to build buildings out of our operating budget, it would have been a risky or foolish way of doing it,” CFO Nathan Brostrom said in an interview this week with the Bay Area News Group.
The news group reports that the amount adds up to the UC system spending around $2,200 per student for $558 million on interest alone during the 2014/15 school year. On Wednesday, regents again voiced their worries about how much debt the system can really take on and said they hoped they wouldn’t have to dip in to the system’s pension fund, like they did during the recession.
“That’s still the major vulnerability for UC,” Regent Russ Gould, a partner at a financial services firm who serves on the regents’ new Finance and Capital Strategies Committee, said, according to BANG.
Governor Jerry Brown has also in the past expressed frustration with the amount of debt the system has been accruing, saying the UC system should take a careful look at adjustments.
For the full article, click on the link below.
[Source]: San Francisco Business Times