Audit: University of California President Hid $175 Million

by Austin Yack

In an interview last January with UCLA’s campus newspaper The Daily Bruin, University of California president Janet Napolitano was clear that there would be a 2.5 percent tuition hike this fall across the ten UC campuses. It is “a last resort,” she said, but it’s necessary to “maintain quality” across the statewide public-university system.

But according to an audit released on Tuesday by California’s state auditor Elaine Howle, the UC Office of the President has plenty of money to “maintain quality” across UC campuses; it just wants more. Howle found that Napolitano and her colleagues accumulated $175 million in reserve funds, all of which were concealed from the public, the California state legislature, and even the UC’s governing board, the UC Board of Regents.

“Why did we need to increase tuition if the Office of the President has $175 million in reserve that nobody knew about?” Howle asked.

Even California’s Democratic lieutenant governor Gavin Newsom, who is also a member of the the UC Board of Regents, decried Napolitano’s opaqueness. “It’s outrageous and unjust,” he said, “to force tuition hikes on students while the UC hides secret funds.” Newsom called on the UC Board of Regents to reconsider the tuition hike.

The UC Office of the President collected a surplus of $175 million quite easily, and it did so while paying its staff extravagant salaries. In fiscal year 2014-2015, Howle discovered that ten of Napolitano’s colleagues were paid a total of $3.7 million — “over $700,000 more than the combined salaries of their highest paid state employee counterparts.” The UC chief financial officer makes $412,000, for example, while the California State University’s chief financial officer — its counterpart — makes $341,000.

The Sacramento Bee nicely summarized Napolitano’s method behind the lucrative fund:

The Office of the President amassed $175 million in reserves by June 2016 by annually requesting approval from the university’s governing Board of Regents for budgets that significantly exceeded how much it was likely to spend. Those surpluses were carried over into funds that the president’s office subsequently spent on projects of its choice, without including them in the annual budgets it disclosed to the public and the regents.

Napolitano contends that Howle’s numbers are inflated and that she did no wrongdoing. Her office certainly had a surplus of funds, but it was only $38 million – “a prudent and reasonable amount,” she said, “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.”

If Napolitano had truly sought to use the surplus of funds to help students, it would have only made sense to halt the UC Office of the President’s annual charge to every UC campus — $32 million in total — that could have directly benefited students on campus. And she certainly wouldn’t have had to increase tuition.

No money will ever be enough for government bureaucrats, even when they are taking other people’s money faster than they can spend it.

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