By Derek Fleming, Courthouse News Service
California’s state auditor on Tuesday slammed University of California President Janet Napolitano, finding her office has $175 million in reserves they failed to disclose to stakeholders – and obstructed the audit besides.
According to state auditor Elaine Howle’s report, a significant portion of the reserves came from unspent money collected by Napolitano’s office through campus assessment fees, which campuses often pay from money they get from the state’s General Fund.
Furthermore, Howle said that despite the $175 million in reserves, Napolitano’s office has increased the fees campuses pay twice in the last four years.
Howle’s report comes as criticism of the University of California regents mounts. On Jan. 26, they voted to raise tuition fees for the first time since 2011.
“In effect, the Office of the President received more funds than it needed each year, and it amassed millions of dollars in reserves that it spent with little or no oversight from the regents or the public,” the audit states.
Napolitano refuted the findings in a six-page letter addressed to Howle, claiming that reserves were “wrongly stated” and are actually $38 million – “a reasonable amount to deal with unexpected expenses, like funding undocumented students,” she said.
In response, Howle told Napolitano, “We have not made assertions; we have developed conclusions based on evidence.”
While accepting some of Howle’s recommendations and stating that fiduciary responsibility is a high priority, two UC regents said the recommendations infringe on the constitutional autonomy of the UC system.
Among serious accounting errors and deceptive practices, the auditors found that executives in Napolitano’s office are paid significantly better than private-sector counterparts and receive benefit packages that are uncommon outside the office. In some cases, Napolitano’s executives are paid three times more than private-sector counterparts.
The auditors also questioned the efficacy of $280,000 in chief-of-staff expenses and $120,000 in consultant fees.
Even more damning, Howle said Napolitano’s office intentionally interfered with the audit process by inappropriately screening campus survey responses before they were submitted. Howle said campus statements that were initially critical of Napolitano’s office had been revised and made more positive.
That critical information was withheld from auditors, including actual costs of initiatives. Budget presentations changed in each of the four years audited, making comparisons difficult, and certain budget documents were deleted by Napolitano’s office when auditors requested them, according to the audit.
Assemblywoman Catharine Baker, R-Dublin and vice chair of the higher education committee, vowed to “get to the bottom of this.”
“The UC Board of Regents just raised tuition on students and has nearly doubled in-state student tuition over the last 10 years, while spending hundreds of millions of dollars on projects and administrative salaries,” she said in a statement. “Students and their families deserve confidence that their money is being spent wisely. The UC Office of the President acknowledges the need to address the auditor’s findings. I look forward to working with my Assembly colleagues, students, and the UC to get to the bottom of this and do all we can to help UC get its financial house in order.”
Auditors believe that more oversight by legislators is necessary because Napolitano’s office never implemented recommendations made over a year ago.
“We are hopeful that the Office of the President will engage in a genuine effort to change despite the fact that it fails to acknowledge many of our concerns and downplays the severity of the issues we identified,” the auditors stated.