Remedial accounting
State Auditor Elaine Howle says the University of California squirreled away $175 million in secret, discretionary funds. Not so, says UC President Janet Napolitano: $83 million of it was “restricted to a range of programs and initiatives,” $49 million was committed to other programs and initiatives, and the rest was for unanticipated spending and reserves.
In other words, the auditor says UC has a slush fund, and UC says it has a very useful slush fund.
None of which is to say that UC squandered all that money. As Napolitano points out, much of what the auditor calls its “undisclosed budget” has gone to worthy purposes such as health and nutrition research.
“The notion that we are sitting on an undisclosed $175 million is just wrong,” Napolitano said in an interview. She added that some of the budget “is discretionary, and for good reason. Needs arise.”
The problem is that much of the money in question could be spent as UC headquarters saw fit without Board of Regents oversight or public disclosure. Until now, there was little opportunity for anyone outside Napolitano’s office to question its spending on, say, brand management, nonresident recruiting or the president’s residence — some of the expenses UC didn’t highlight in its defense.
To accumulate its fiscal cushion, the university, which is about to raise tuition and fees 3 percent, repeatedly took in more money than it needed. Budget requests to the regents and assessments collected from campuses, and by extension from students and taxpayers, weren’t adjusted to reflect spending, augmenting the surplus. The audit also found that UC spends, pays and employs more than its counterparts. And Napolitano’s office came in for more deserved criticism for sanitizing responses to an auditor’s survey of campuses.
The audit’s call for direct legislative approval of UC’s budget goes too far. As Napolitano said, “The university has been served well for many years by having independence.” But without more transparency on her part and meaningful oversight by the regents, that independence is at risk.