The Regents of the University of California

Financial UpdateJanuary 2011

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Working to serve California and the nation every year

UC Davis

UC Davis Medical Center

UC Berkeley

UCSF

UCSF Medical Center

UC Irvine Medical Center

UCLA Medical Center

UC San Diego Medical Center

UC Santa Barbara

UCLA

UC Irvine

UC Merced

UC Riverside

UC Santa Cruz

UC San Diego

EDUCATINGover 220,000

students

CONFERRINGover 40,000bachelor’s

degrees and3,800 PhDs

CONDUCTINGover $4 billion

in research

HANDLING3.7 million out-patient visits,

254,000 ER visits,and 142,000 in-

patient admissions

GENERATING$4 billion in

tax revenues

CREATING2.3 million

California jobsthis decade

EMPLOYINGover 180,000Californians

TRAINING40% of all interns andresidentsstatewide

GRADUATING60% of all medschool gradsIn California

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Two-year University budget picture

Add’l. State Funds, 65.4

Debt Restructuring, 75.0

Add’l. State Funds, 65.4

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UC management has responded swiftly to budgetary challenges presented by reductions in State funding

• Net reduction of more than $600 million in FY 2010 vs. FY 2008 was addressed by revenue increases & expense reductions– Student fee increases

– Two sequential 15% increases for undergraduate & professional students

– Curtailed freshmen enrollment by 2,300 in fall 2009 and 1,500 in fall 2010– Reduced enrollment not funded by the State

– Employee furloughs / salary reduction

– Campus and systemwide layoffs, programmatic reductions

– Restructuring of UC General Revenue Bonds– Targeted approximately $75 million in each of FY 2010 & FY

2011– Executed as a current refunding of debt service due May 15

• Mandatory State appropriation deferrals – Over $1 billion of mandatory deferrals in FY 2011– Bridge financing with CP borrowing and STIP liquidity

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“Working Smarter” towards administrative efficiencies

Keep the pipeline full on three levels of change:

• Campus restructuringinitiatives

• Regional centers ofexcellence

• Systemwide efficiencymeasures

Vision: 10 campuses using ONE administrative framework:

• Common, integrated financial and payroll systems

• Common, integrated time & attendance/HR systems

• Common, integrated extramural fund accounting

• Common, integrated data warehousing• Common, integrated asset management• Common, integrated strategic investment

program• Common, integrated e-procurement• Common, integrated energy solutions• Common, integrated approach to ICR

$500 million of positive fiscal impact

in five years

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UC Strategic Initiative Program (CAPEQUIP, C3, AND STARS)

• Strategic funds accumulated by the capital equipment segment would fund the interest costs of the other two segments

CapEquipSTARs (Strategic

Teaching Acquisition and Retention)

• Low fixed-rate loans for capital equipment acquisitions, in lieu of higher-rate third-party leasing)

• Goal: Cut costs through economies of scale inherent in UC debt program

• No-interest loans to fund regional centers of excellence and/or systemwide efficiency initiatives

• Goal: Cut duplication and increase systems commonality

• No-interest loans to fund lab renovations and lab equipment for star faculty recruits

• Goal: Maintain competitive research and academic excellence

• Internal-loan financing program would leverage the University’s high credit rating to make low borrowing costs available to the campuses for a broader range of purposes beyond solely capital construction

• Encourage strategic investments and partnerships across the system through three segments of the program:

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Rating (Moody’s/

S&P)Par Amount Security Pledge

General Revenue Bonds Aa1/AA $5.87 Billion General revenues of the Regents, excluding state

appropriations and medical center revenues

Limited Project Revenue Bonds

Aa2/AA- $1.85 Billion Auxiliary project gross revenues, subordinate to

General RevenuesMedical Center Pooled Revenue Bonds

Aa2/AA- $2.30 Billion Gross academic medical center revenues

Tax-Exempt & Taxable Commercial Paper

P-1/A-1+ $713 Million($2 Billion

authorized)

Project revenues

The Regents of the University of CaliforniaDebt Portfolio

* As of 12/1/10. Excludes State Lease Revenue Bonds and campus-originated leases.

UC Credits

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Deb

t Se

rvic

e in

$00

0’s

* As of 12/1/10. Excludes capitalized interest payments, campus-originated leases and State Lease Revenue Bonds.

UC Debt Service Restructuring for Cash Flow Relief