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Terry McLaughlin: Dramatic change needed in University of California system

A 2017 state audit of the University of California’s financial status revealed that the Office of the UC President, and former Secretary of Homeland Security, Janet Napolitano was harboring a surplus account with more than $175 million, while at the same time raising tuition for California’s students.

Unaware of this surplus, the UC Regents approved Napolitano’s request to increase tuition by 2.7 percent for the 2017-18 school year, despite the fact that University of California tuition has nearly doubled in the past 10 years.

The scathing State Auditor’s report bluntly states that the UC President’s office “did not disclose to the UC Board of Regents, the Legislature, and the public, $175 million in budget reserve funds” and “The reserve included $32 million in unspent funds it received from an annual charge levied on the campuses — funds that campuses could have spent on students.” The report continued to state that UC “spent significantly less than it budgeted for and asked for increases based on its previous years’ over-estimated budgets rather than its actual expenditures.”



The audit found that the University of California spent $32.5 billion on expenses during the 2015-16 school year to fund 10 campuses, five medical centers, and the headquarters for its Office of the President. Although the university system states that its “fundamental missions are teaching, research and public service,” they spent only 21 percent on teaching, 14 percent on research, and 2 percent on public service. As stated in the audit, the remaining 63 percent, or $20.6 billion, was spent on “non-fundamental activities,” such as $35.8 million over four years on travel, meetings, and related expenses.

In addition, the State Auditor found that the Office of the President used misleading budgeting practices, provided its employees with salaries and atypical benefits much higher than that of comparable state employees, and failed to satisfactorily justify its spending on system-wide university initiatives. The report added that “Auditing standards prohibited us from drawing conclusions from some of our work because the Office of the President intentionally interfered with our audit process.” The report stated that the President’s office also altered written responses from campuses which were critical of the office.




In response, Assemblywoman Catherine Baker (R-East Bay) has called for a subpoena of the UC Office of the President to learn why tuition was being raised at the same time Regents and staff were generously increasing their salaries and pension benefits. In response to the actual obstruction of the audit, Assemblyman Al Muratsuchi (D-Los Angeles) has proposed introducing a bill which would make it a crime to intentionally interfere with an audit.

UC President Janet Napolitano has disputed the findings of the state audit, claiming that her office has only $38 million in reserves and that it coordinated responses with the different campuses only to “ensure accuracy.”

CBS San Francisco reported that 25 UC retirees are currently each collecting pensions over $300,000, totaling more than $8 million annually. Director of Policy Research for the California Policy Center Marc Joffe said that eight of those 25 retirees not only receive their pensions, but also receive a salary for returning to work in the UC system after retirement. According to public documents, one of these “recalled retirees” Dr. Fawzy I. Fazwy, received over $650,000 in 2015. Fazwy actually held a lecture in 2016, instructing junior UC faculty on how they too can maximize their retirement benefits.

In 2016, University of California did implement a new employee retirement plan that places a cap on the pensionable earnings of future employees. Under California law, accrued pension benefits cannot be revoked or reduced, so the reforms only apply to those employees hired after July 1, 2016. In return for implementing the new plan, the UC system will receive $436 million of your taxpayer money as a resident of the state of California to help pay down its unfunded pension liability.

These revelations come on the heels of another critical audit in 2016 which found that the university “undermined its commitment to resident students” by manipulating admission standards for financial gain, and knowingly admitting out-of-state applicants with lower qualifications in an effort to boost income.

In academic year 2014-15, in-state applicants paid $12,240 a year for tuition, versus $37,000 for out-of-state applicants. The audit asserted that from the 2010-11 school year through the 2014-15 school year, out-of-state enrollment increased 82 percent, while in-state enrollment decreased 1 percent. The report concluded that “over the past several years … the university admitted nearly 16,000 nonresidents whose scores fell below the median scores for admitted residents at the same campus on every academic test score and grade point average that we evaluated.” For more astounding revelations, all California taxpayers should read the full text of both audits at http://www.auditor.ca.gov to see how their tax dollars are actually being used.

As a public institution, the University of California system was designed to serve and offer educational opportunities primarily to those who provide for its financial and civic support — California’s residents and their children.

This no longer appears to be the primary mission or the main priority of the UC system, once considered one of the premier public university systems in the nation. Dramatic changes in both policy and administrative leadership must take place before the University of California system will again be able to deserve that lofty reputation.

Terry McLaughlin, who lives in Nevada City, writes a twice monthly column for The Union. Write to her at terrymclaughlin2016@gmail.com.


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