The state auditor prepares a kind of balance sheet for the state as a whole and for individual components of the state such as UC. For the year ending last June 30, the accounts show that UC had assets of $58.0 billion (including buildings – construction costs minus depreciation) and liabilities of $34.6 billion for a net asset total of $23.4 billion. (pages 58-60)
There is an ongoing issue of the degree to which the state is responsible for the UC pension. The report indicates that $6.4 billion of the liabilities of UC are “net other postemployment benefits obligations” which probably comes from the pension. UC is described in the following language:
From page 70: The University of California was founded in 1868 as a public, state-supported, land grant institution. It was written into the State Constitution of 1879 as a public trust to be administered by a governing board, the Regents of the University of California (Regents). The University of California is a component unit of the State because the State appoints a voting majority of the Regents and because expenditures for the support of various university programs and capital outlay are appropriated by the annual Budget Act. The University of California offers defined benefit pension plans and defined contribution pension plans to its employees through the University of California Retirement System (UCRS), a fiduciary responsibility of the Regents. The financial information of the UCRS is not included in the financial statements of this report due to its fiduciary nature.* Copies of the University of California’s financial statements may be obtained from the University of California, Financial Accounting, 1111 Franklin Street, 10th Floor, Oakland, California 94607-5200.
Component units are organizations that are legally separate from the State but for which the State is financially accountable or organizations whose relationship with the State is such that exclusion would cause the State’s financial statements to be misleading or incomplete. The decision to include a component unit in the State’s reporting entity is based on several criteria, including legal standing, fiscal dependency, and financial accountability.
If it ever came to a court determination of state liability for the UC pension, such language would come into play. We’ll leave it to legal types take this matter further.
The audit report is at: www.bsa.ca.gov/pdfs/reports/2012-001.pdf