UC’s extravagant habits
Audit reveals president’s office spent freely on parties, perks
SACRAMENTO — University of California President Janet Napolitano’s office spent more than $4,000 on one employee’s retirement party and thousands more on other goingaway, staff-appreciation and holiday parties, perks that are not typically seen in the public sector and that raise questions about lavish spending practices as the university increases tuition and fees on students.
The new details come after state auditors found $175 million in secret reserves in the office of the president, money that lawmakers said should have been disclosed to the public and the Board of Regents, which oversees the 10-campus university system.
Financial records obtained by The Chronicle through the state auditor’s office Monday give some insight into spending habits in the UC president’s office, but the auditor’s office warned that the records it received from the university are incomplete. Auditors who examined the finances of Napolitano’s office said they were blocked from accessing many documents they say would have shed light on how some of the $175 million was spent.
The itemized records that were produced show that Napolitano’s office spent generously on employee retirement parties — including more than
$4,200 on a retirement party in 2015 for Laine Farley, who was then the director of the UC’s California Digital Library. The Chronicle identified 20 parties for departing employees that cost more than $500 between 2014 and 2016. Ten of those were more than $1,000.
Also included in the itemized spending was a dinner tab worth more than a year of tuition. The president’s office paid $13,000 for dinner and security at the Palace Hotel in San Francisco for 86 people in January 2016 to honor two departing members of the Board of Regents, Fred Ruiz and Paul Wachter. Dianne Klein, a spokeswoman for Napolitano, said the regents dinners are paid for through a private endowment, not state funds.
The January 2016 dinner was one of many the president’s office hosted for governing board members and guests, which were usually tied to regents meetings, Klein said. From November 2015 to May 2016, for example, the president’s office paid $36,400 to host the regents dinners, as they are called in the itemized records.
Other spending highlighted in the audit was $862,000 spent on Napolitano’s Oakland apartment over the past four years. That cost includes the $11,500 monthly rent for the 3,400square-foot apartment, which is also paid through endowment funds. Klein said Napolitano, as part of her employment, is required to live in a university-owned or -leased home, and that the apartment is used for official university business.
Among the documents the auditor says UC never fully produced were those detailing foreign and out-of-state travel, catering, airfare and entertainment expenses. UC said auditors failed to ask for the right budget codes in making their request. The records that were turned over to auditors show that the president’s office paid for employees to attend meetings and conferences in Bermuda, Iceland, Germany, China, India, Australia, France, Italy, Mexico and many other destinations.
Auditors said that even when they did receive financial records, vague information on other spending left them unable to determine the appropriateness, such as at least $2 million spent on cell phones and iPads over four years.
The number of cell phones and other devices issued by the president’s office increased 29 percent from 2012 to 2016 . During the same period, under orders from Gov. Jerry Brown — who was working to decrease state costs — the state was drastically cutting the number of cell phones issued to state workers by an estimated 30 percent.
“This is really a punch in the gut,” Assemblyman Dante Acosta, R-Santa Clarita (Los Angeles County), said on Monday. “We need to ensure money is being managed correctly.”
Acosta and other GOP lawmakers sent a letter to legislative leaders urging them to subpoena financial records from Napolitano’s office. Assembly Speaker Anthony Rendon, D-Paramount (Los Angeles County), declined their first request. On Monday night, the Republican lawmakers sent a second letter asking Rendon to reconsider in light of The Chronicle’s story that raised questions about the accuracy of Napolitano’s testimony to state lawmakers.
State Auditor Elaine Howle charged that the president’s office interfered with the audit and tampered with surveys intended to provide independent opinions from the 10 campuses.
“In my 17 years as state auditor, we have never had a situation like this,” Howle told lawmakers during a 4½-hour hearing last week in the state Legislature to go over the findings.
Napolitano said campuses asked her office for help with the survey and apologized that the actions were seen as obstruction. However, emails released by the auditor’s office, including a new batch of emails released Friday to The Chronicle, show that Napolitano’s office went far beyond offering guidance, instead editing surveys and emailing campuses that they expected to see the final draft before surveys were sent to auditors.
“The only way we will get candor is if there is a legal order in terms of subpoena,” said Catharine Baker, R-San Ramon, who sent the first request to Rendon. “That’s the most thoughtful and disciplined way to get to the bottom of this.”
Monica Lozano, chairwoman of the Board of Regents, said a third party will review the possible tampering.
“I hope this is a wake-up call to the Board of Regents to provide greater oversight,” said Assemblyman Phil Ting, D-San Francisco, who originally asked for the state audit of Napolitano’s office.
Ting and Assemblyman Al Muratsuchi, D-Torrance (Los Angeles County), plan to introduce a bill that would make it a crime to intentionally interfere with an audit in California.
“There appears to be a culture of arrogance and the need for frugality in spending state dollars,” Muratsuchi said.
The audit’s findings come as UC will raise annual student charges beginning this summer by $336, or nearly 3 percent, to $12,630. That includes tuition and a student services fee, which are expected to generate $143 million next year for the UC system.
Critics of the UC administration say it’s tone-deaf to ask students and their parents to pay more when spending in the president’s office has been steadily rising in recent years. Auditors said administrative spending in the president’s office increased by 28 percent, or $80 million, from fiscal years 2012-13 to 2015-16.
“Tone-deaf is a good way of describing it,” said Assemblyman Jose Medina, D-Riverside.
Napolitano’s office has 60 days to provide written documentation to the auditor’s office on how it is implementing recommendations from the audit. Napolitano said her office will accept all 33 recommendations from the state auditor on improved accountability and efficiency. Progress updates are also required in six months and a year.