UC criticized by state auditor for secrecy in spending

SCOTT MARTINDALE / THE ORANGE COUNTY REGISTER

The University of California declines to explain to state auditors how it doles out funding to each of its 10 campuses, despite dramatic differences in per-student spending.

SACRAMENTO – The University of California is being criticized in a new state-commissioned audit for failing to release detailed financial information about how it spends taxpayer dollars and tuition money, including some $6 billion spent over the past five years that UC officials classified simply as “Miscellaneous services.”

The audit, released Thursday by state auditor Elaine Howle, also expresses disapproval over UC’s decision to dole out funding to each of its 10 campuses using a secret formula that UC officials would not explain even to auditors. The lack of transparency raises questions about whether funding is equitably distributed, Howle said.

“Because the university has not quantified the differences in the base budget provided per student among the campuses and does not have an agreedupon methodology for comparing perstudent calculations, stakeholders cannot be assured that the state funding that is the primary component of the base budget is being equitably distributed to the various campuses,” Howle wrote in her 92-page report.

By auditors’ calculations, the four UC campuses with the highest proportions of underrepresented racial groups received “far less” funding per student than the systemwide average, Howle wrote.

The four campuses – Merced, Riverside, Santa Barbara and Santa Cruz – enroll higher-than-average proportions of Latino, black, American Indian and Alaskan native students, yet on average they receive $3,337 less per student than the systemwide average, according to the report.

UC officials, in a written response, agreed on the general need for improved financial transparency, but sharply rebuked suggestions that funding allocations among campuses were imbalanced.

Calling the racial link in the report “unwarranted and inflammatory,” UC President Mark G. Yudof stressed that different campuses have different funding needs, with graduate students in the sciences and health professions, for example, necessarily requiring a larger slice of the pie.

“The university adamantly disagrees with the Bureau of State Audits’ inference … that there is potential for inequity because we cannot quantify essentially 150 years of strategic funding choices,” Yudof said in a response letter published with the audit. “The BSA’s expectation that per-student funding be formulaically distributed among the campuses appears to rely on a premise of uniformity that has never been the state’s expectation, nor part of the university’s history.”

Even so, UC officials already have been evaluating funding differences among the campuses, and “may or may not” make adjustments pending that internal review, Yudof said.

Among the key findings of the audit were that the UC Office of the President used a single accounting code, Miscellaneous Services, to categorize more than $6 billion in expenditures over a five-year period ending in 2010. Those funds make up about a quarter of all of UC’s non-compensation expenses, Howle said.

Also in Thursday’s report, state auditors concluded that a much-publicized UCLA plan last year to divert student fees to renovate the Pauley Pavilion basketball arena was indeed improper.

UCLA officials at the time insisted the funds were being lawfully spent, arguing that when students voted in 2000 to increase their campus fees to upgrade two aging campus buildings, the understanding was that any excess proceeds could be used to upgrade other facilities of the university’s choosing, including Pauley.

Shortly after the story broke last year, though, UCLA announced it was abandoning its plan to divert $15 million in student fees to renovate the arena.

“Our legal counsel stated that neither the policies in place when students approved the referendum, nor the regents’ approval of the referendum’s results, provide a sufficient basis for expanding the uses of the revenue beyond the purposes stated in the original referendum,” Howle said in her report.

The UC audit was championed by state Sen. Leland Yee, D-San Francisco, who last year charged that it would help uncover “the waste, fraud and abuse within the UC.” At the time, Yee cited media reports indicating potential conflicts of interests by UC Regents, and a recent decision by UCLA to hire a consulting firm with a spotty past.

Yudof noted in his reply letter that the audit uncovered “only minor issues” that UC officials already had been working to address.

“I cannot help but comment on the extraordinary time and effort – and considerable expense on the part of the BSA and the university – that went into this audit,” Yudof wrote.

“We are proud of the fact that we have come through this review with validation of so many of our procedures and policies which in recent years have come under considerable public scrutiny.”

[ Source: OC Register ]