State audit of UC calls for more financial transparency

Persia Salehi/Staff

A report issued by the California state auditor on Thursday suggested that the University of California should be more willing to make more of its financial information open to the public, though the report did not find cases of wasteful spending, as had been previously suggested by a state lawmaker.

The audit began last year following a request from state Sen. Leland Yee, D-San Francisco, who had alleged that the university was plagued with “waste, fraud and abuse.”

“The UC administration expects taxpayers and students to foot the bill without asking any questions,” Yee said in a statement when the audit was approved in February 2010. “It is long overdue for the UC administration to start acting like a public institution and not a private country club.”

Though the audit did not find excessive spending on the part of the university, it did find a “lack of specificity” in the university’s expense records as well as a discrepancy in the distribution of funds to each campus.

The report states that through reviewing the university’s accounting records, the state auditor found that the UC Office of the President uses a single accounting code — “miscellaneous services” — to account for more than $6 billion, or about 25 percent, of the university’s annual public noncompensation expenses for the five years that the audit reviewed.

“This lack of specificity prohibits meaningful analysis of a significant portion of the university’s expenses at a systemwide level and limits the ability of stakeholders to understand how the university uses these funds,” the report states.

Additionally, the report found that there is a significant difference in the amount of funds distributed to each campus.

For the fiscal year 2009-10, for example, UC Santa Barbara received $12,309 per student while UC Berkeley received $17,010 per student and UC San Francisco received $55,186 per student.

“Although we understand that differences in funding among the campuses can exist because the (UC Office of the President) does not distribute all funding to campuses on a per-student basis … we would expect that the university would be able to identify the reasons for any differences and be able to quantify them,” the report states.

However, UC President Mark Yudof said in a letter to State Auditor Elaine Howle that the findings had no basis.

“The University adamantly disagrees with the (Bureau of State Audits’) analysis and comments inferring an inequitable distribution of funding across campuses,” Yudof said in the letter. “There is absolutely no basis — statistically, historically, or ethically — for drawing such a connection. Furthermore, the BSA makes no investigation into or observation of disproportionate or inequitable treatment or outcomes for students at different campuses.”

According to the report, UCOP provided four examples of factors that contributed to the differences: specific research and public service programs that are budgeted separately from instruction, the size of a campus’s health sciences program, historical variations in the amount of support provided for graduate students and historical variations in the level of state support.

“Although the Office of the President has taken steps to make its budget more transparent in recent years, it could do more to improve the transparency of the processes it uses to determine annual budget amounts for the campuses,” the report states.

Though the auditor’s office found no evidence that the university considered the racial or ethnic makeup of the student populations at different campuses as part of its budget process, it did find that the four campuses with an above average percentage of students from “underrepresented” groups — UC Merced, UC Riverside, UC Santa Barbara and UC Santa Cruz — received less funding than they would have if each campus received the same amount per student.

According to the report, because the per-student amounts vary so much between campuses and have not been quantitatively explained, UCOP runs the risk that stakeholders may view the amounts as unfair.

According to a UCOP statement, the university has been developing a more transparent funding streams initiative prior to the audit that is now being implemented. The office also launched a systemwide task force to examine the relationships among “campus instruction, research and public service programs, student populations, campus costs and the distribution of funds to campuses,” the statement reads.

“We are proud of the fact that we have come through this review with validation of so many of our procedures and policies … But, at what cost?” Yudof said in the statement.

Allie Bidwell is the news editor.