After State Audit, UC President Napolitano Discusses Budget Practices and Tuition Hike

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By Megan Cole, with additional reporting by Eliza Partika

 

In the wake of a state audit alleging the University of California’s mishandling of funds, including $175 million in “undisclosed” funds and administrative salaries notably higher than those of comparable state employees, UC President Janet Napolitano held a press conference call with newspapers from all nine undergraduate UC campuses last Friday. During the call, accompanied by UC Student Association President Ralph Washington Jr., Napolitano defended the UC’s autonomy and “disagreed with the characterization of [the UC Office of the President]” in the report.

The audit, released by California State Auditor Elaine Howle last Tuesday, reported that UCOP failed to disclose to the public, or to UC Regents, that it had amassed $175 million in undisclosed funds. Napolitano acknowledged the fund’s existence, but said that it was being used for student-based programs, including $83 million in restricted funds used for “administering national labs and research grants.”

According to Napolitano, an additional $49 million is allocated to systemwide initiatives, including undocumented student programs, carbon neutrality initiatives and programs to combat sexual violence. Another $38 million serves as a reserve fund, which Napolitano called a “small fraction” of the UC’s budget, and “a prudent reserve, given the contingencies and emergent circumstances that can arise  between the time the annual budget is seen and has been approved by the Regents.” The $38 million fund is approximately 10 percent of the UC’s core operating budget of $31 billion, she noted.

Additionally, Napolitano addressed the audit’s allegation that UC administrative employees are paid significantly more than comparable public employees. For instance, UC’s Chief Financial Officer makes an annual $412,000, while CSU’s Chief Financial Officer makes $341,000.

According to Napolitano, comparing UC employees to other California employees and university employees nationwide is “like comparing apples to oranges.” UC employees have responsibilities that similar employees do not, including managing medical centers, an internal retirement program and “different markets, the size, scope and scale of which is not comparable,” she said, noting that UC’s CFO manages $31 billion, while CSU’s manages $6 billion.

“We currently calculate salaries using market reference zones, and we try to hit [UC salaries] at  right about the middle. That is how we get and retain really good employees,” Napolitano said.

In the week since the audit was released, students and public figures have criticized UCOP for its lack of transparency and for not using its funding to make tuition more affordable amid frequent hikes.

As a result of the audit, UC Regent Tom A. Perez, as well as ex-officio Regent and current Lieutenant Governor Gavin Newsom, have called for the UC to rescind a recently-approved 2.5 percent tuition increase. The increase, which is set to begin this fall quarter, would increase in-state tuition by $282 per year and would generate an annual $74 million for the UC system.

Napolitano argued that the tuition increase is still necessary, as it provides “continuing funding versus one-time funding.” If UCOP were to rescind the tuition hike next year and use its reserve funds to cover the remaining deficit, tuition would still have to increase soon and UCOP would be left with no contingency fund, she argued.

Napolitano said that college affordability and retaining the trust of UC students are top priorities for UCOP when considering tuition increases and budget management.

“College affordability is one of the real concerns that we have. It is one of the  reasons why we have one of the most robust — if not the most robust — financial aid programs in the country,” she said.

UC Student Association President Ralph Washington Jr. asked Napolitano how the UC can be better accountable to its students following the audit.

Napolitano replied that ongoing meetings between students and Regents, as well communication between UCOP, student newspapers and student governments will be prioritized in the future. She also recommended that “student organizations themselves are organized so that [UC Regents] can meet with them, and we’re happy to do so.”

Napolitano noted that UCOP is working on implementing all of the audit’s suggestions to increase transparency and accountability, but UCOP contests the appropriation of their budget by state legislature. “It interferes with the constitutional autonomy of the University and that they as Regents are better positioned to ensure that we are implementing the audit’s recommendations,” Napolitano said.  

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