A request for a state audit of the University of California will be filed Wednesday in response to alleged financial mismanagement by the university administration.

California Senator Leland Yee, D-San Francisco/San Mateo, will file the request with the Joint Legislative Audit Committee, which will hear and vote on the request Wednesday, according to Adam Keigwin, chief of staff for Yee. UC officials have denied that funds have been mismanaged, adding that a financial audit of the 10-campus university's approximately $20 billion operating budget would not be plausible.

Among the issues cited by Yee as reason for his request is an alleged conflict of interest surrounding UC Regent Paul Wachter's stock investment in a mutual fund management company in which the university has a substantial financial interest.

According to a March 2009 Statement of Economic Interests, Wachter-who is the chair of the Regents' Committee on Investments-owns more than $1 million in stocks in Dimensional Fund Advisors Inc.

Wachter did not respond to a request for comment left at his Santa Monica office Friday.

Gov. Arnold Schwarzenegger-who appointed Wachter, a longtime friend, to the board in 2004-also has invested more than $1 million in the company, according to a March 2009 Statement of Economic Interests.

The university's retirement fund had $151,611,750 invested in the company, according to a Dec. 31, 2008 financial statement from the UC Office of the President.

According to UC spokesperson Steve Montiel, safeguards are in place to preclude potential conflicts of interest.

"The Regents' role is oversight," he said in an e-mail. "It's up to the Treasurer's Office to make decisions about specific investments, investment managers or investment management firms."

According to board policy, alleged conflicts of interest are referred to the Office of the President's General Counsel, who "shall immediately bring the matter to the attention of the Chair of the Regents' Committee on Investments."

Montiel added that given both the size of the company and the extent of the university's retirement fund investments, there was no reason to suspect undue financial practices on the board.

"It's worth noting that DFA has roughly $160 billion under management," he said in the e-mail. "It's not surprising to see the fund represented in part in any endowment or pension fund."

But Yee said the issue of Wachter's investments in the company was only part of an alleged long-term trend.

"Unfortunately, not even one month can pass without another scandal plaguing our university," Yee said in a statement Friday. "A comprehensive state audit will help further uncover the extent of the waste, fraud and abuse within the UC and finally hold university executives accountable."

Tags: UC BOARD OF REGENTS