State Auditor Blasts UC Budgeting Practices
Claims Office of the President Secretly Squirreled $175 Million in Reserves
This Tuesday, State Auditor Elaine M. Howle presented a striking 177-page report to the governor and legislative leaders on misleading and concerning spending practices her office discovered within the University of California’s Office of the President (UCOP) from 2012-2016.
The report found that UCOP had maintained $175 million in budget reserves this year without disclosing it to the University of California Board of Regents, the legislature, or the public. The office then went on to use the over-estimated budgets from past years to set the new budget, and it put the reserve funds into an undisclosed account that received zero oversight, Howle stated.
Some of these surplus funds came directly from the individual UC campuses. Each college must pay UCOP assessment fees for their operations; UC Santa Barbara ends up paying around $16 million each year. The report revealed that $32 million of the total $288 million in assessment fees UCOP received ended up in the undisclosed reserve budget when it could have been returned to students. Regarding the initiatives UCOP did end up paying for using these surplus funds, the State Auditor commented: “We question the Office of the President’s decision to prioritize them over other activities such as campus spending on students, especially given it has not sufficiently evaluated these initiatives’ purpose and intent.”
The report also revealed how UCOP directly interfered in a survey the State Auditor’s office conducted for its assessment. The survey was meant to evaluate the services UCOP performs on campuses, but the UCOP deleted and and changed answers that were critical of it.
“Significant change is necessary to strengthen the public’s trust in the University of California,” the report concluded. To achieve this, it provided a series of recommendations, including calling on the legislature to more closely manage UCOP funds, involving a third party to make needed reforms to the office, and initiating open hearings on system-wide initiatives.
UC President Janet Napolitano responded to the audit report in a six-page letter detailing why “the report fundamentally and unfairly mischaracterizes UCOP’s budget processes and practices.” She emphasized how many of the figures mentioned in the report are misleading and that UCOP’s budget and financial approaches were in fact transparent and dedicated to the UC mission.
