Public trust in the University of California system has been broken since an audit released on Tuesday revealed that former Department of Homeland Security chief Janet Napolitano, who heads up the universities, was overestimating budget needs and requesting more state funding while squirreling away the excess in a secret slush fund that had grown to more than $175 million, even as the board sought to raise tuition fees by 2.5 percent.
According to state auditor Elaine Howle, the University of California (UC), which operates 10 campuses across the state, from 2012 to 2016 took in excess funding by inflating estimates.
“In effect, the office of the president received more funds than it needed each year, and it amassed millions of dollars in reserves that it spent with little or no oversight,” she said, noting that a top staff member in Napolitano’s office “improperly screened confidential surveys that were sent to each campus,” and “answers that were critical of Napolitano’s office were deleted or changed before being sent to auditors.”
Howle commented, “I’ve never had a situation like that in my 17 years as state auditor. My attorneys are looking at whether any improper government activities occurred.”
Napolitano flatly denies the audit’s findings. “The true amount is $38 million,” she stated, “which is roughly 10 percent of (the office’s) operating and administrative budget, 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.”
Finding that Napolitano overcharged the UC’s 10 campuses to fund its operations, paid its executives significantly more than state employees, and interfered in the auditing process, Howle wrote in the report, “Taken as a whole, these problems indicate that significant change is necessary to strengthen the public’s trust in the University of California.”
The audit also showed that undisclosed funds included $32 million which was collected from campuses and could have been spent for other purposes.
The audit was requested by university employees and government officials, who suspected that something was wrong.
“Today, we learned that after squandering millions of public dollars on bloated management and unaccountable ‘initiatives,’ [the office of the president] has effectively been operating a slush fund that shields hundreds of millions of public dollars from public scrutiny,” stated Kathryn Lybarger, president of UC’s largest employee union.
The audit’s also found that 10 UC executives “were paid a total of $3.7 million in the 2014-15 fiscal year — over $700,000 more than the combined salaries of their highest paid state employee counterparts,” according to a report from Fox News.
Calling for the Board of Regents to reconsider and reverse its decision to raise this fall’s tuition for the first time in six years, board member Lt. Governor Gavin Newsom called the findings “outrageous.” California residents currently pay $12,294 a year. Next year’s tuition would be raised to $12,630.
“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 … for reconsideration and reversal,” he said.
Howle said that state lawmakers should increase oversight of the office, but expressed doubt in the ability to change the way UC officials interfered with the audit process.
Secret slush funds have been a problem for California’s state-run programs in the past. In 2012, an audit revealed that the California Parks Department hid $54 million in parks funding for more than a decade even while threatening to close dozens of parks to save money amid a state budget crisis. That program has since adopted new accounting methods.
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