University of California students have to dig deeper to pay for tuition, thanks to a large increase approved by the Board of Regents this year. Taxpayers also are continually pressed to cough up more money to help fund the 10-campus university system, which depicts itself as a fiscally strapped institution that barely has enough funds to keep offering high-quality education programs.

Yet the California state auditor just released a report that tells a far different story. It documents a university system that spends money in outrageous ways — and lacks appropriate accountability and oversight. It also alleged some troubling budget practices, too, but let’s first deal with some of the spending questions.

For instance, UC compensates its executives “significantly more than their public sector counterparts,” according to the audit. The system, it said, spent $21.6 million on benefits that go above and beyond those typically offered in the public sector, including a supplemental retirement benefit. That’s absurd, given UC employees already receive some of the most generous benefits in the country.

The university’s response is almost as shocking as the audit and it reveals the mindset in Janet Napolitano’s Office of the President. The office seemed shocked at the auditor’s call for reducing or eliminating a number of programs. Napolitano’s office was incredulous the auditor would question its $25.2 million three-year program to provide counseling and aid to undocumented students, or $2.5 million on its “carbon neutrality” initiative, or a $4.6 million wetlands project or $5.2 million spent on the Global Food Initiative.

These people are clueless — and pernicious.

The big news was the audit accuses Napolitano’s office of failing to disclose to the public, media and the Legislature $175 million in reserve funds — and of creating an undisclosed budget to spend as much as $114 million of that reserve over a four-year period. That’s an interesting backdrop to the UC’s recent push for tuition increases.

And the audit alleges that UC officials were evading proper accountability: “Its budgets were inconsistent and misleading — budget presentations changed in all four years we reviewed making it difficult to compare budgets from year to year, to hold the Office of the President accountable for its spending plans, and to understand how spending decisions were made.”

Napolitano’s office denied the allegations, argued that these funds were not undisclosed and said the actual surplus is $38 million — a “prudent and reasonable amount for unexpected expenses such as cybersecurity threat response and emerging issues like increased support for undocumented students and efforts to prevent sexual violence and sexual harassment.” At least you know what those extra tuition dollars help fund. The auditor, understandably, was unimpressed with UC’s denials. State Auditor Elaine Howle’s office wrote that UC officials provided no evidence to refute their conclusions.

Some observers found this situation reminiscent of the 2012 state parks scandal. As Gov. Jerry Brown proposed closing 70 state parks because of a lack of funding, the media reported on a large pot of undisclosed funds that could have been used to serve the public.

California state auditor reports typically investigate and chasten various agencies in understated tones. But this University of California audit was a humdinger. It was widely described as “damning” or “scathing,” and for good reason. The information uncovered in its 168 pages is not unsurprising given what we’ve known about the UC’s politically correct and spendthrift leadership, but it is particularly disturbing given all of UC’s poormouthing.

No wonder Lt. Gov. (and UC regent) Gavin Newsom and some legislators called for UC to rollback its tuition hikes. That’s a good starting point, but it’s going to take tight reins of the purse strings (the state general fund accounts for about $3 billion of UC’s annual budget) to coerce meaningful reforms. Coerce is the right word, given the auditor accuses the UC administration of “interfering with our audit process,” something that “casts doubt on whether it will follow through on its intentions” to implement many of the audit’s recommendations. Ouch.

Newspaper editorials have been appropriately hard hitting. The East Bay Times argued, “It’s time to rein in the free-spending of Napolitano’s office. It’s time to ask whether she has the inclination to do so, or should be replaced.” The Register pointed to regents who argued that the auditor’s call for legislative approval of the president’s budget threatens UC’s standing as a constitutionally autonomous agency, but rightly called for the Legislature to insist that UC leaders “clean up their own fiscal house as they seek bigger slices of the state budget.”

As the dad of a UC student, I’m impressed by the quality of education at one of the nation’s pre-eminent institutions. But the real threat to education quality comes not from a lack of money, but from poor priorities by the university’s leadership. California leaders should indeed use this audit — and their control of state funding — to develop a blueprint for reform.


Image by TypoArt BS

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