UC Audit Reveals $175 Million in Undisclosed Funds

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By Eliza Partika

The UC Office of the President reserved $175 million in excess reserve funds, paid faculty and staff atypically high wages and benefits and sanctioned misleading budgeting practices, according to an audit released last week by the California State Auditor’s Office.

According to the audit, released three months after UC Regents approved a systemwide tuition hike, the Office of the President failed to justify its spending on system-wide initiatives. The audit found that the Office of the President accumulated more than $175 million in undisclosed, restricted and discretionary reserves, with $83 million in its restricted funds and $92 million in discretionary funds as of the 2015 fiscal tax year. Most of the discretionary funds hidden by the University were “unspent funds from the campus assessment.” The campus assessment is money that the UC Office of the President requests from each UC campuses. The campuses are allowed to use any funding source to pay for this assessment. This budgeting practice particularly concerned the auditors, as although campuses paid up to $106 million into the assessment using their State allotted funding, the UC Office underspent their funds from the campuses by $32 million.

The Office of the President repeatedly requested and received approval from the UC Board of Regents for increased campus assessment funds, even though it had not spent all the funds it had received from the Board in previous years, the audit reported.

The Office of the President requested these increased campus assessments based on their previous year’s over-estimated budget.

UC Regents were reportedly never informed of the $175 million in reserve funds or the over-estimated, undisclosed budget which was used to amass these reserve funds.

The audit summary concluded that, “Had the Regents known about the Office of the President’s reserves, they could have potentially requested that the Office of the President use at least some of the funds to better meet students’ needs.”

The Office of the President was also found to be paying their executives a total of $700,000 more than their state counterparts, as well as funding unjustifiable “systemwide initiatives.”

The audit comes on the heels of the UC’s decision to raise fall tuition for the first time in six years, a decision now being called into question as the UC Office of the President has been found to have more than enough funds available.

It is outrageous and unjust to force tuition hikes on students while the UC hides secret funds, and I call for the tuition decision to come back before the Board of Regents for reconsideration and reversal,” said Lieutenant Governor Gavin Newsom, a long-time member of the UC Board of Regents.

The audit summary highlighted the fact that the Office of the President intentionally interfered with their audit process by screening campus survey responses and changed campus statements initially critical of the Office of the President to reflect more positive ratings. UC President Napolitano said in a statement that the audit “unfairly mischaracterizes her office’s budget processes and practices.”

Since the audit has become public, many organizations from UCI and other UC campuses have created petitions demanding the hidden funds that were supposed to be delegated to their organizations, such as the Black Student Union’s petition for UCI Chancellor Howard Gillman to fund their Marsha P. Johnson Resource Center, which has been an active petition on Change.org since 2015.

In January of 2015, the BSU released a list of demands calling for the Chancellor to “implement structural changes that redress the anti-blackness on campus” according to a recent newsletter from the BSU dated March of this year.  The newsletter details many of the same demands looking to be met by their 2015 petition, the first and most important of which was the funding of a new resource center for Black students on campus. Although students sought to name the center the Marsha P. Johnson Resource, Outreach and Retention Center, administration changed it to “Center for Cultures and Research,” a name that according to students, discounted the message of Black inclusion, success and retention students wanted to send to encourage success of Black students on campus.

They envisioned a center that would focus its attention on outreach to Black students, retention of Black students and the institutional resources Black students need to succeed while on campus. The changing of the center’s name and the underlying programmatic elements attached to the name is foreshadowing administration’s intentions of turning a center brought into fruition with the intention of being a lasting and legitimate resource for Black students on campus, into a multicultural capital generating center, one that will once again fail Black students.” says the newsletter. Although the resource center has been put into place, the BSU’s demands to improve the resource center including demands for hiring of Black professional academic counselors, psychologists, and other supporting staff have not been met.

   In a Twitter post on the heels of the audit which included a link to both NBC’s article on the audit and BSU’s Change.org petition, a student wrote, “So there’s funding for the Marsha P. Johnson Black Resource, Outreach, and Retention Center??? Who woulda known?”    

  Other organizations geared towards the inclusion of students from diverse cultures and help backgrounds have also been lacking resources to sufficiently students.

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