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University of California has been hiding $175 million surplus from the public, says audit

We need this money for sexual assault

Even if California manages to secede from the union, it still might face the wrath of taxpayers for its shady ways.

A state audit blasted the University of California System for keeping secret $175 million in “budget reserve funds” – from not only the public and the Legislature but its own board of regents.

That’s only one among many findings of bad behavior by the Office of the President – that would be Janet Napolitano, the former secretary of homeland security:

In each of the four years we reviewed, the Office of the President spent significantly less than it budgeted for and it asked the regents for increases in future funding based on its previous years’ over-estimated budgets rather than its actual expenditures. Consequently, it accumulated significant annual budget surpluses, which it maintains in two reserves: restricted and discretionary. Furthermore, it not only failed to disclose the existence of these reserves to the regents, but it also failed to inform them of the annual undisclosed budget it created to spend the reserves. This undisclosed budget ranged from $77 million to $114 million in the four years we reviewed.

It is actively withholding money from individual campuses – “$32 million in unspent funds it received from an annual charge levied on the campuses,” which could have instead been spent on students.

Employees in Napolitano’s office also make “significantly higher” salaries than comparable state employees and they got “at least” $21.6 million in perks that are “atypical” for the public sector.

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Both her office and campus administrative “budget and staffing levels” are higher than comparable public universities, said the audit, which alleges malfeasance:

The Office of the President has failed to satisfactorily justify its spending on systemwide initiatives, and it does not evaluate these programs’ continued priority or cost. …

Auditing standards prohibited us from drawing conclusions from some of our work because the Office of the President intentionally interfered with our audit process.

It inappropriately screened the campuses’ survey responses before campuses submitted the surveys to us.

The audit said the original campus statements intended for delivery to the state auditor’s office were “initially critical” of Napolitano’s office but were “revised” and “quality ratings shifted to be more positive.”

It called for “significant reforms” to her office and recommended the UC System develop a new reserve policy that decides how large they can be and for what purpose they can be used, and then reallocate everything above that back to the campuses.

The Daily Californian reports that the administration has flatly denied it has such a giant surplus, pegging the actual figure at $38 million:

“(This) amount is … a prudent and reasonable amount for unexpected expenses such as cybersecurity threat response and emerging issues like increased support for undocumented students and efforts to prevent sexual violence and sexual harassment,” the press release stated.

In response, California Lt. Gov. Gavin Newsom has called for the reversal of a tuition hike scheduled for the next academic year, approved by the regents in January:

“The audit must serve as a wake-up call for the Board of Regents, as a catalyst for serious soul-searching within the U.C.’s administration, and demands a reboot of the relationship between the system and its governing body,” Newsom said in his statement.

Read the audit report and Daily Cal story.

MORE: Students at wealthy colleges demand reparations

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IMAGES: Paolo Schorli/Shutterstock, Senate HELP Committee screenshot

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