UC budget lacks transparency, state audit says

By Jill Tucker, Chronicle Staff Writer

SAN FRANCISCO — The University of California should justify to the public why it spends thousands of dollars more per student at four of its 10 campuses and also do a better job of explaining how it spends more than $1 billion it allots annually to “miscellaneous services,” state auditors said Thursday.

The audit found no major malfeasance in the university system’s budgeting or spending, but noted a lack of transparency in the way it handles its finances that could erode public trust.

For example, $6 billion was budgeted for the UC president’s office over five years, all of it falling under a line-item category called miscellaneous services.

Without offering specific detail, there is no way for the public to know what the money is used for, even if the purpose is for legitimate expenses such as office furniture, food, travel or the hiring of consultants, the report said. And that could lead to confusion and mistrust, the auditors said.

State Sen. Leland Yee, a frequent critic of UC, called for the audit early last year after several tuition increases led to student protests sparked by criticism of executive compensation and administrative spending. The San Francisco Democrat said he believed the audit would help uncover waste, fraud and abuse within the UC system.

The 15-month audit analyzed UC finances from 2005 to 2010.

On Thursday, UC President Mark Yudof noted that the “exhaustive audit” found no evidence of such problems.

“We are proud of the fact that we have come through this review with validation of so many of our procedures and policies,” he said.
Confirmed criticisms

Still, the audit echoed long-standing concerns among UC students and workers.

Even before the report’s release, UC officials began efforts to assess the system’s accounting practices.

Among other things, the audit released Thursday also highlighted significant disparities in the amount spent on students at each of UC’s campuses.

On average, the UC budget allocated $19,529 to each UCLA student while UC Santa Barbara received $12,309 per student. UCSF, which offers only graduate programs in health services, got more than $55,000 per student.

In addition, three campuses with a greater ratio of minority students – Riverside, Santa Barbara and Santa Cruz – received far less per student than the other campuses, the audit found.

Those disparities can be partially explained by the costs associated with the health science programs, medical schools and number of graduate students at some of the schools, auditors said.

Even so, UC officials fail to provide those details to justify the differences, the audit found.

UC students applauded the audit’s call for putting more detailed information into the public’s hands.

“University of California students are excited to finally see where our tuition and fee dollars are going,” said UC Santa Cruz student Claudia Magana, president of the UC Student Association for 2010-11, in a statement. “The university has not been fully transparent with its budget and fiscal policies, while making students pay more to only receive less.”
Yee not mollified

Yee said the audit confirmed his belief that UC has a problem with openness.

“While the UC Office of the President knows how to pay lip-service to the goals of accountability and transparency, the state audit demonstrates how UC is falling down on the job in practice,” Yee said in a statement Thursday. “It is clear that there remains many significant problems with the way UC operates, and this audit clearly illustrates both new and ongoing problems.”

In addition, the amounts allocated to each campus are based on a formula that hasn’t been adjusted or analyzed for 20 years, the report said.

UC officials have only recently created a committee to reevaluate the formula.

In 2009-10, the 10 campuses served 232,613 students and employed 134,410 full-time employees.

During that time, the university’s revenue went up 25 percent to $11.3 billion last year, thanks mostly to four separate tuition and fee increases over the five-year period.

At the same time, pension and retirement costs soared to $3.2 billion from $211 million – an increase related to changes in accounting rules and retiree obligations.

State funding during the five years declined by 9 percent to $2.3 billion.

To see the complete audit, go to links.sfgate.com/ZLBD.

Spending per pupil

Average per-pupil share of the general fund and tuition budget for each UC campus.

Source: California State Auditor

[ Source: SF Gate ]