State Auditor Releases Report on UC's use of Public Funds

The California State Auditor released their audit of UC this morning.  The UC Union Coalition lobbied for the audit, and it was supported by State Senator Leeland Yee.  

The report confirms several things we already knew.  

1.  There continue to be real problems with transparency and accountability around UC finances.  

2.  Over 60% of UC's public funds are not restricted.  

3.  UC pools 25% of its annual publicly funded budget into one account, and it doesn't itemize expenses from that account. This means that UC is totally unaccountable for a huge portion of the public funding it receives.

One big thing we didn't know:

1.  Campus auxiliaries no longer need be self-supporting.  This means that the administration can take student fees, or funds generated from a student referendum, and use them to support athletics, new construction, or any other project they deem worthy.  

This change apparently happened with the bailout of UCB athletics, when UCOP also created the hybrid auxiliary and student services designation, which smoothed the way for campus funds to pay for athletics. 

Here's how UC-AFT President, Bob Samuels, responded to the report, "This audit shows that the university has been covertly redistributing tuition dollars and state funds from smaller campuses to larger campuses.  In other words, without the knowledge of parents and students, undergraduate students on the smaller campuses have been subsidizing medical students on the larger campuses. Moreover, while the UC claims that it has a transparent budgetary process, the audit reveals how hard it is for people to trace how the UC spends its funding. We hope that a more transparent budget will push the state to increase funding for the UC system."

Here are links to the audit documents:

Fact Sheet:  http://www.bsa.ca.gov/pdfs/factsheets/2010-105.pdf

Highlights:  http://www.bsa.ca.gov/reports/highlights/2010-105

Summary:  http://www.bsa.ca.gov/reports/summary/2010-105

Full Report:  http://www.bsa.ca.gov/pdfs/reports/2010-105.pdf

Supplemental Information:  http://www.bsa.ca.gov/reports/2010-105/index.html

From the Audit-

Recommendations on General Funds and Tuition Budget Revenues

To address the variations in per‑student funding of its campuses, the university should complete its reexamination of the base budgets to the campuses and implement appropriate changes to its budget process. As part of its reexamination of the base budget, it should:

• Identify the amount of general funds and tuition budget revenues that each campus receives for specific types of students (such as undergraduate, graduate, and health sciences) and explain any differences in the amount provided per student among the campuses.

• Consider factors such as specific research and public service programs at each campus, the higher level of funding provided to health sciences students, historical funding methods that favored graduate students, historical and anticipated future variations in enrollment growth funding, and any other factors applied consistently across campuses.

• After accounting for the factors mentioned earlier, address any remaining variations in campus funding over a specified period of time.

• Make the results of its reexamination and any related implementation plan available to stakeholders, including the general public. To help improve accountability in the university’s budget process, and to help minimize the risk of unfair damage to its reputation, the university should take additional steps to increase the transparency of its budget process.

Specifically, the Office of the President should:

• Continue to implement the proposed revisions to its budget process.

• Update its budget manual to reflect current practices.

• Make its revised budget manual, including relevant formulas and other methodologies for determining budget amounts, available on its Web site.

• Continue its efforts to increase the transparency of its budget process beyond campus administrators to all stakeholders, including students, faculty, and the general public. For example, the Office of the President could make information related to its annual campus budget amounts, such as annual campus budget letters and related attachments, available on its Web site.