For three days running now, the state legislature has been trying to pass the latest version of the state budget, without success. The legislature has adjourned for the night. DFA chair Ian Kennedy asked me to investigate UC’s plans to maintain operations should the state’s budget stalemate continue. I asked Patrick Lenz, UC’s vice president for budget, and he promptly responded withthe following information:
First of all, this year (the 2008-09 budget finally signed in the fall) the state required UC and other state agencies to draw from other revenue sources before receiving state funding (in UC’s case this means using things like student fees first). According to Patrick Lenz, the state was going to keep UC’s state general fund revenue until the last 3 months of the fiscal year. This would indicate that UC has already assumed it would not get money from the state until April.
Should the budget impasse last long enough, UC would dip into its Short Term Investment Pool to finance the state’s obligation. Beyond that, Lenz pointed out that UC has a better credit rating than the state and continues to be able to get commercial paper financed at reasonable rates in the credit market.
Once the state has the ability to pay what it owes, it has promised to repay UC.