California Governor Jerry Brown hailed his signature tax-hike to fund education—known as Proposition 30—as a towering achievement that will ensure educational excellence in higher education and spare those trapped in poor and failing K-12 California public schools from budget cuts.From the student report:
"I know a lot of people had some doubts and some questions: Can you really go to the people and ask them to vote for a tax?'' said Mr. Brown on election night. "Here we are...We have a vote of the people, I think the only state in the country that says let's raise our taxes, for our kids, for our schools, and for our California dream.''
But a new study by five UC Berkeley doctoral students titled “Swapping Our Future: How Taxpayers And Students Are Funding Risky UC Borrowing and Wall Street Profits” says that millions of dollars of the freshly raised revenues won’t go to California’s school children
UC is currently losing about three-quarters of a million dollars each month on interest rate swaps associated with debt issued for two of its medical centers. Since 2003, UC’s swap agreements have cost the university nearly $57 million and could cost the university another $200 million.Why is UC playing in the rate swap market? The California Political Review writes:
An increasing number of posts in top UC management and on the Board of Regents have been filled by former Wall Street bankers...including a new CFO position created in 2009 and filled by Peter Taylor, who was the Managing Director of Public Finance for Lehman Brothers before he found himself out of a job following the firm’s spectacular collapse.
Monica Lozano, a UC Regent, also serves on the Board of Bank of America, a position for which she has received approximately $1.5 million. Bank of America stands to make as much as $28 million from an interest rate swap at UC San Francisco.