UC President Janet Napolitano will face questions from legislators after a state audit found that her office had squirreled away $175 million, then raised student tuition.
Days after a state audit found that her office had squirreled away $175 million, then raised student tuition, University of California President Janet Napolitano will face skeptical lawmakers in Sacramento on Tuesday and try to repair the damage.
“What’s at stake is the relationship between the Legislature and the UC,” said Assemblyman Jose Medina, D-Riverside, chairman of the Assembly Higher Education Committee, one of three committees holding a joint hearing focused on the audit.
The erosion of that relationship could result in a partial loss of autonomy that the public university has enjoyed for nearly 150 years.
The audit studied the president’s office and its $686 million annual budget from 2012 to 2016 and uncovered troubling issues, including these:
• The president’s office collected at least $175 million in secret reserve funds — including $32 million that could have been spent on students. The office neither revealed how it spent the money nor that it had the money in the first place, the audit found. Meanwhile, UC raised annual tuition for next fall by $336, nearly 3 percent, to $12,630.
• The office presented “inconsistent and misleading” budgets to the regents that changed in format in each of the four years, making them hard to compare and to hold the president’s office accountable.
• Salaries in the office are “significantly higher” than those of comparable state employees.
• The president’s office tampered with campus responses to the auditor’s questions to make the university look better.
“What we’d really love to hear — and what we have been hearing — is that this is being taken very seriously” by UC, said Assemblyman Phil Ting, D-San Francisco, one of two lawmakers who requested the eight-month, $418,000 audit. Ting chairs the budget committee and Kevin McCarty, D-Sacramento, chairs the budget subcommittee on education finance, another of the three hosting Tuesday’s hearing in Sacramento.
State Auditor Elaine Howle made 33 recommendations for improved accountability and efficiency at the UC Office of the President, and a timeline to complete them over the next three years.
“We’re going to enact all 33 of them,” Dianne Klein, Napolitano’s spokeswoman, said Monday.
Klein said Napolitano has already convened a group led by Chief Operating Officer Rachael Nava to begin implementing them.
But simply promising to do better may not be enough to convince the lawmakers that UC should retain total autonomy. Howle also recommended that the Legislature take over the job of allocating much of the president’s annual budget, suggesting that lawmakers would then have more oversight of the funds. Currently, the president’s office gets that money from the 10 campuses.
The audit revealed, however, that the office overestimated how much it needed from the campuses to run the university — then spent less than was budgeted.
“It will be a steep road for Napolitano to redeem her credibility,” Medina said. “I’m not sure what’s going to come out of tomorrow’s hearing will be able to put everything back together and for us to regain our confidence in her.”
Assemblywoman Catharine Baker, R-San Ramon, vice chair of the Assembly Higher Education Committee, pointed to another audit of UC last year that showed it had admitted thousands of students from out of state with lower grades and test scores than state residents as a way to raise cash.
On top of that, Baker said, the new audit has made it hard to trust UC leadership.
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“We need to hear no more tone deafness and absolute denials about the problems with their budgeting and spending,” she said.
All of the lawmakers interviewed said they were shocked at the audit finding that campus answers to the auditor’s survey had been changed after being reviewed by the president’s office — a level of tampering that rendered responses useless for the audit.
In one example, UC Irvine responded to a question this way: “The Information Learning and Technology Initiative is an example of a systemwide program that has a number of challenges …”
The audit says that was changed to say, “The Office of the President organizes regular peer group discussions that focus on review of systemwide policy and practice. These are extremely useful …”
Assemblymember Al Muratsuchi, D-Torrance, who chairs the Joint Legislative Audit Committee — the third committee holding the hearing Tuesday — has called the audit “deeply troubling.”
The public hearing will be at 2:30 p.m. in room 4202 of the State Capitol. The hearing will be livestreamed on Facebook.
Napolitano will testify, as will Monica Lozano, chairwoman of the UC regents.