SAN FRANCISCO — Mark Yudof never planned to leave the University of Texas System.

As chancellor of one of the leading university systems in the country and one of the best-paid educators in America, why, at the age of 63, would he want to?

Only for the challenge of turning around financial and leadership problems at what's widely considered the most prestigious university system in the world.

"It took me a very long time to decide I was interested in the job, to be candid about it," Yudof said Thursday after being named president of the University of California system by its Board of Regents. "I just wasn't looking for another job."

The appointment, which was expected in light of a search committee's recommendation last week to hire Yudof, comes at a time of daunting problems in Texas higher education as well.

Yudof testified at a Texas Senate hearing Monday that the state's two public flagships, UT-Austin and Texas A&M University, aren't adequately funded, with per-student revenues running $4,000 to $5,000 a year below that of University of California-Berkeley, the University of Michigan and other top public schools.

In addition, Yudof said, Texas needs to develop more public flagships after it ensures that the existing two are flourishing. The California system has six flagships, or top-tier research universities.

The chancellor also told senators that the state needs to ensure that students in community colleges — increasingly the entry point to post-secondary education for Texans — can transfer to four-year schools with adequate financial aid. He said proposals to link some of the funding for colleges and universities to course completion rates, graduation rates and other benchmarks have merit but would need to be phased in gradually and carefully.

Yudof said at a news conference in San Francisco that he had planned to remain as chancellor "for another couple of years" and then teach at UT-Austin's law school. But then California came calling.

With wife Judy looking on, he said, "I guess I just felt like it would be great fun if we had one more mountain to climb."

He will be well-paid for his exertions.

His total annual compensation package will be about $828,000 in his first year, up from the $775,000 he makes in Texas.

The new package includes a base salary of $591,084, supplemental pension contributions that average $241,880 annually, an $8,900 annual car allowance and other perks. He'll also get free housing, as he does now from the UT System.

Yudof said an exact start date has not been determined, but the California system's current president is expected to step down at the end of June. H. Scott Caven Jr., chairman of the UT System Board of Regents, said a national search for a replacement would be conducted.

"No one is irreplaceable, but finding someone of his caliber is not going to be easy," Caven said.

California Gov. Arnold Schwarzenegger, who called Yudof on Thursday morning, said in a statement that he was "a fantastic choice."

Charles Miller, a Houston investor who was chairman of the UT regents when they hired Yudof, said California is getting a seasoned administrator who was especially impressive in overhauling and reinvigorating the UT System's top management.

"It didn't create a lot of tremors, but that was a remarkable transformation," Miller said. "We weren't in deep trouble, but we were in a puddle."

California, by contrast, is drowning in problems.

Chief among them is a systemwide financial crisis stemming from a projected $16 billion state budget gap. The state once supplied about half the California system's operating budget; today it's closer to 20 percent.

Last week, university officials announced plans to cut $52 million and more than 400 jobs from the 1,750-employee president's office — cuts Yudof will have to oversee. He also is likely preside over other cutbacks as well as tuition increases across the system.

Yudof succeeds Robert Dynes, who has been president since 2003. Three years ago, Dynes became embroiled in controversy over his handling of executive compensation after an audit uncovered millions in questionable and sometimes unreported pay to university employees. Dynes, 65, whose annual compensation was about $421,000, just over half what Yudof will get, announced last year that he would step down.

Marye Anne Fox, a former vice president of research at UT-Austin who's now the chancellor of University of California-San Diego, said in an interview last week that Yudof, a longtime friend and colleague, is more than up to the job.

"He has a lot of energy — and a lot of aspirations," said Fox, who has been mentioned as a possible successor to Yudof in Texas.