The whole issue of the auxiliary finances is quite interesting. The signatories of the IA Resolution did study all of the auxiliaries to some extent as part of our evaluation of campus funding for them. Again, they are supposed to be self-supporting, using no State funds.

UCOP required that the auxiliaries return an increased percentage of their profits to the campus to cover the current budget crisis. Before they were allowed to keep a larger portion of their profits to tide them over for lean future years.

We have recently been told that the source of the IA loan for the deficit spending of approximately $6M for the 2008-09 academic year came from “Printing Auxiliary Funds, Parking Auxiliary Funds, University Opportunity Funds generated from reimbursement of federal overhead, University Registration Fee Funds, UCB Foundation Short Term Investment Pool Income, Federal Overhead, and Gift Fee Funds”.

So it looks like profit generated by Printing in 2008-09 was given back to the campus and used for the IA auxiliary. The Printing Auxiliary had to close, as they had no fall back with the budget crunch and decrease in market demand.

Parking and Transportation tells me they had to return $1.9M to the campus which appears to have been used for IA funding as well.

How using grant overhead for IA is legal, I don’t know. The Vice Chancellor for Research has told us that our grant overhead rates do not cover the full cost of research and thus some research activities, like libraries and museums, were disproportionately cut as federal agencies were discounting them in the grant overhead rates. So how can we justify using these funds to pay the IA deficit?

We have tried to keep up the data on subsidies and deficits on the IA blog site in preparation for the report of the IA task force at the Spring Division meeting. I note that the IA FAQ numbers for the 2008-09 academic year drastically changed in the official NCAA report for last year. After our Resolution calling for a cessation of subsidies and debt, it appears that the Chancellor increased the subsidy to $9M, up an additional $4M from the $5M reported in the IA FAQ provided by IA for the Senate meeting. Reg fees were also increased. See: http://budgetcrisis.berkeley.edu/?page_id=16

Funding IA subsidies and debt forgiveness does mean less money is available elsewhere and we are now seeing some of the direct consequences of this. As some of the profits generated by these sources came from State funds, it also means that IA is indirectly getting subsidized by State funds. (Not to mention our own pockets in the case of the parking permits). I am not clear on the legality of this, but the intent of the law does seem to be violated. Although the Chancellor is calling the payoff of the IA deficit a loan, I note that these deficits have never been paid off and have been regularly forgiven in the past. The cumulative “cost to campus” since the 1991 Smelser report is now estimated to be $171.6M.

I look forward to hearing the recommendations of the IA Task Force and hope that a prudent solution to this situation will be outlined. At a minimum I would hope to accelerate the Senate’s previous glide path, even if absolute zero subsidies and deficits are not possible this year.