Napolitano Addresses State Audit to Student Press

UC President Janet Napolitano spoke with UC student newspapers on a conference call this afternoon to respond to inquiries about State Auditor Elaine Howle’s report stating that the UC Office of the President has mismanaged its funds and failed to disclose $175 million in discretionary reserves. Napolitano addressed a number of issues regarding the report, including UCOP’s decision to evaluate the campuses’ survey answers, leading to the campuses altering their responses.

The report, released by the state auditor’s office on April 25, assessed the budget and spending of UCOP, concluding that in addition to the office’s lack of disclosure and interference with the audit, UCOP overpays its employees and overcharges the individual campuses for its services. As a result of its findings, Howle recommends the state legislature heighten its oversight of UCOP.

The audit states that Howle’s office requested that each campus not disclose its survey results to any individual outside that particular UC campus. Despite this, the UCOP deputy chief of staff organized a call with the campuses to review their responses before submitting them to the state auditor’s office, which resulted in a number of answers on the surveys being changed across the campuses.

In particular, UCSD’s statement that it was dissatisfied with the level of transparency regarding how UCOP spends the campus assessment funds provided by the campuses for systemwide efforts was modified to state that it was satisfied, and UCSD’s concerns with UCOP’s budget process were removed.

Addressing this interference, Napolitano noted that UCOP will not repeat this form of involvement with future surveys and explained that it occurred with this audit because UCOP felt the campuses needed guidance.

“We were initially contacted by some of the campuses to ask what they should do with [the surveys], and as a result, we inserted ourselves in a coordination role,” Napolitano said. “That’s what happened. The [UC Board of Regents] are going to take a separate look at our actions, and we welcome that.”

With any coming audits, Napolitano clarified that an order will be established directing to whom campuses should ask their questions.

“As we move forward, campus auditors will be in direct contact with the state auditor if there is a similar survey that’s ever distributed,” Napolitano stated. “If campuses have questions about what they should do as they did in this instance, we will refer those to the systemwide auditor and have the systemwide auditor then deal with the state auditor.”

At the beginning of the call, Napolitano repeated her criticism in her letter of response to Howle’s report that the state auditor’s office had inaccurately stated that the undisclosed amount was $175 million when the amount in the reserves was really $170 million and that most of that funding is allocated to specific initiatives which have been described to the Regents and the press.

When later asked why the auditor’s office did not account for restricted and allocated funds in their audit and why they were not specified in UCOP’s budget, Napolitano explained that her office presents its budget differently from how the auditors anticipated and “when we tried to persuade the auditor about the nature of those funds, we were clearly unsuccessful.”

Napolitano additionally noted that Howle suggested UCOP change the way its budget is displayed in order to be more transparent, and UCOP will comply with this proposal going forward.

On the call, Napolitano stated that UCOP will not accept the direction that the state legislature appropriate UCOP’s budget, but they will follow all of Howle’s other recommendations.

When the UCSD Guardian questioned her on what concrete steps UCOP has planned to comply with the suggestions, Napolitano repeated the statement that UCOP is opposed to increased oversight from the state legislature and explained the nature of the recommendations. She further stated that she has appointed a task force chair by UCOP’s chief operating officer to oversee the execution of the suggestions but did not specify what her intended changes will be.  

Napolitano testified before the state legislature on Tuesday regarding the audit where she first expressed her regret for UCOP’s involvement with the campus surveys. A number of legislators criticized UCOP and the Regents, calling UCOP “out of touch” and arrogant and suggesting that the Regents provided unsatisfactory oversight of the office.

Since the audit was released, Assembly Speaker and ex officio regent Anthony Rendon has expressed that he will propose a measure to undo the almost 3 percent tuition hike passed by the Regents for the 2017-18 academic year.