Recently, the California state auditor revealed that the office of the president of the University of California did not disclose to the University of California board of regents, to the Legislature or to the public that it was holding $175 million in reserve funds for fiscal year 2015-2016. The report reveals that the office of the president asked the board of regents for funding increases based on the previous years’ overestimated budgets rather than on actual expenditures. Furthermore, an undisclosed budget was created to spend the reserve funds, including $32 million in unspent funds received from charges levied on University of California campuses, money that should have been spent educating students.
This undisclosed budget was truly undisclosed – the board of regents, which is supposed to be running the University of California system, didn’t even know about it. In effect, the office of the president received more funds than it needed each year and amassed millions in reserves which it then spent with little oversight from anyone at a time when tuition was being raised.
University of California President Janet Napolitano appeared before a joint legislative audit committee May 2 and offered an apology about how her staff responded to the audit. Though she disputed the findings, she stated that she accepts budgeting recommendations made by the state auditor, which include requiring that actual past expenditures be used as a basis for future budgets, reserve amounts and reserve spending must be clearly defined and all expenditures must be approved and justified.
All state agencies must be fully transparent. With some of the highest sales, income and gas taxes in the nation, the existence of undisclosed budgets and slush funds simply cannot be tolerated.