Two weeks ago an audit of the University of California found that the UC pays its executives salaries and benefits significantly higher than those given to other state employees with similar roles, but of more concern is it failed to reveal up to $175 million in budget reserve funds as it recently proposed a raise in tuition.
“Our report concludes that the Office of the President has amassed substantial reserve funds, used misleading budgeting practices, provided its employees with generous salaries and atypical benefits, and failed to satisfactorily justify its spending on systemwide initiatives,” State Auditor Elaine Howle wrote to Governor Brown.
“It is shocking. It is disappointing, but it’s not totally unexpected,” said Assemblyman Kevin McCarty, who asked for the audit. “We’re jacking up tuition for middle-class families, we are squeezing access, and at the same time we are sitting on this $175-million suitcase in the corner.”
Last week, President Janet Napolitano apologized Tuesday for the way her office handled the investigation, but disputed several of the audit’s findings.
Students at UC Davis today will be protesting regarding the audit report. In a change.org petition, they write, “On April 25, 2017 the California state auditor released a ‘scathing’ report that revealed the University of California Office of the President (UCOP) keeping $175 million in a hidden fund and engaging in shady book-keeping practices. This report also highlighted that UC executive compensation is excessively high. This news is disturbing and betrays the public trust.”
The students are therefore making four demands.
First, rollback: “Given that in January the UC Regents voted to raise tuition for the first time in six years, because they claimed to need the $88 million this tuition hike would raise, when the whole time the UC system had more than double this sum, we call for an immediate rollback of the recent tuition hike.”
Second, redistribute: “In light of the UC continually not paying livable wages to its students and workers we demand that the UC pay a living wage to all of its workers – not just those working over 20 hours per week, and to not exempt contracted workers from this living wage. We also demand the UC build more affordable on-campus housing for both students and workers and lower class sizes. The UC can fund these demands with the remainder of the hidden $175 million, after the tuition rollback is paid for, and by cutting the excessive executive compensation.”
Third, responsibility: “We demand Janet Napolitano to resign for this mismanagement of funds, and for lack of transparency and loss of public trust.” As the Mercury News reported, “Napolitano’s office interfered in a survey of campuses. Campus statements that were initially critical of the Office of the President were revised, the auditor said, and quality ratings shifted to be more positive.”
Fourth, restructure: “This $175 million dollar question is the last straw in a long series of UC administrative scandals. Last year UC Davis Chancellor Linda P.B. Katehi resigned under pressure after a thirty-six day long student sit-in outside her office after news about excessive compensation from moonlighting on outside boards and conflicts of interest because of those boards.
“Despite this, the new UC Davis Chancellor, Gary May, will be making more money from his outside board positions than former Chancellor Katehi. There has also been a string of inadequately handled sexual harassment cases that have come to light recently, including top professors from Berkeley and UCLA, a Dean, a UC Regent, and many more.”
The students write, “We believe that the administration is incapable of holding itself accountable. Unfortunately when students try to hold it accountable, the administration has a history of repressing student activists, including but not limited to: beating them with batons, pepper spraying them, drawing loaded guns on unarmed peaceful students, and pressing trumped up charges on them.”
Therefore, they demand structural reform, including:
“More oversight power by students and workers – expand the number of student regents (students need more representation than just two representatives for the regents who aren’t even elected by the students) and add union representatives to the board, or abolish the regent system altogether and move toward a more democratic governance by students and workers
“No more outside board positions for chancellors. Our chancellors should be dedicated and focused to their single duty to the UC community, and not allowed to hold outside jobs that would compromise their jobs as chancellor.
“Better policies and procedures for preventing and handling sexual harassment.”
The students conclude, “Our school needs to be a place of higher learning rather than a place of higher profits. We must resist the growing administrative power and the incentive to run the UC like a corporation for their own profit. We call on all residents of California and students involved with the universities to sign this petition and support our efforts for a more equitable and democratic university.”
I feel the same way except they should refund the money to the taxpayer
Exactly
So, the tuition increases should remain and the money should be rebated to taxpayers in general?
I am highly sympathetic to the first point of the “demands”. Not so much the others…
Yup, that will lead to lower tuition costs in what world? Obviously these protesters aren’t Econ majors.
Maybe if the students showed they are equitable and democratic and didn’t shut down free speech on campus the residents of CA might get behind them.
It seems that you are injecting politics that do not belong in this discussion.
“No more outside board positions for Chancellors. Our chancellors should be dedicated and focused to their single duty to the UC community, and not allowed to hold outside jobs that would compromise their jobs as chancellor.”
I would agree with this if it was paired with
““No more outside groups for students. Our students should be dedicated and focused to their single duty to the UC community and the taxpayer, and not allowed to hold outside positions that would compromise their responsibilities as students.”
And
““No more outside groups for staff. Our faculty should be dedicated and focused to their single duty to the UC community and the taxpayer, and not allowed to hold outside positions that would compromise their responsibilities as researchers and educators.”
Yeah, that’s constitutional.
John
So you see no difference in a chancellor, who already makes a very good salary working an outside job, and a student who may not be able to attend school at all if they do not work, working an outside job ? Really ?
As for staff, for those making a high salary, I might agree to the limitation of their outside work. If they are not, then they should be allowed to moonlight. And no, I do not know what that cut off should be, but I am sure one of you good with numbers could come up with an equitable solution.
Jim: This is the wokest comment you have ever made.
“wokest” is a synonym for “dumbest”?
The way we fund higher education is exactly backwards. We have higher taxes to fund a near-free college education for what we define as “residents”. The logical outcome of this model is that students can get a great education at UCD and then they can go work for some place in North Carolina as that state has lower taxes that allows them to own a home and live a better lifestyle.
Imagine a system where nobody get’s a discount, UCD is $36K per year for everybody. If you are a resident you can finance the entree thing through the state. If you are non-resident you need to go commercial. When you graduate the state forgives your loan, if you remain a resident, at a rate that amortizes it after 8 years. If you want to go work in NC then you pay it off at the usual and customary rate.
This would incent people to stay in CA after graduation. If they want to go to NC they can but there is no reason for the CA taxpayers to fund their education. Companies start here because of the access to money and talent. We need to protect it.
John
I think that it is even more backwards than you have stated. If we adopted a universal UBI and included students as individuals who could obtain the benefit ( along with everyone else) we would do away with the need to worry about how each student was going to finance their education.
I honestly do not see why we separate out military, which most people believe that our taxes should go to support from other desired benefits of our society such as health care, education, legal representation… and I could probably draw up a host of others. I believe that as a society, rather than punishing behavior that we do not like, we should reward behavior that we do desire.
Tia,
What I am proposing to move Higher Ed funding from a benefit to an investment. Until the UBI moves into the realm of the possible I will not address it.
With my proposal everybody get a scholarship, as long as they stay in CA.
Hmmmmm, where have I heard that before?
How do you figure that $ 14,383 (estimated annual fees for CA residents for 2017-2018) is “near free”? CA taxpayers have in fact been paying a smaller and smaller percentage of student tuition as the years go on. We are getting to the point where the UC is public in name only.
From UC
“It costs less than you think
Most families pay less than the full price of attending UC. In fact, more than half of our undergraduate students pay no tuition at all. Over two-thirds of UC undergraduates receive grants and scholarships, with an average award of around $16,300.”
Yes, that’s what they say. The reality is that with housing, other course fees (books, lab fees, etc.), and other expenses, many students end up with huge loans and are working 2-3 jobs just to try to stay afloat.
Jim for President 2017.
I’m with Jim. There is definitely something amiss with California’s system of higher education. One of the truly troubling outcomes is California’s dismal ranking as only the 6th largest global economy. Why the heck aren’t we number one?
Uhm – perhaps because California is a state, and not a country (but nevertheless recently surpassed France to achieve the #6 spot).
http://fortune.com/2016/06/17/california-france-6th-largest-economy/
Honestly – you’re “troubled” by this?
Just a guess, but I think Michael was being sarcastic.
Back when Katehi and Napolitano were duking it out, I was rooting for a dual loss. How does one take sides on with those two as the contestants? The only reason I was rooting for Katehi is she was already five years overdue for departure. Napolitano is now, as Katehi was, a dead woman walking. I sincerely doubt she is able to pull the five years Katehi did, and I’m sure a statement of “wanting to spend more time with her family” is already in draft form on her assistant’s computer.
I thought the following was an interesting take on “account gate”
http://davidgcrane.org/?p=1980
Yes, interesting… those who read it should also look at this self-posted “creds”… I believe he comes to some ‘weird conclusions’, citing some facts, ignoring some facts/situations, glossing over others, but the overall take is that it should be read and considered, but with the caveat that there are some evident biases…
Thank you for the link, Leanna.
It indeed is good “food for thought”, but we also have to look at the nutritional label.
HP, Crane is not dismissing a UC problem. What he is doing is asking the obvious question: Why is the State auditing the 1% of the problem when there are other entities that make up 20, 30, 40% of the problem? The answer of course is politics.
So he’s admitting he’s overseeing a problem.
And deflecting, “Look at them, they’re worser!”
What is “the problem”, Michael? PERS has been audited… CalSTRS to a lesser extent… the UC/SSU system? DJUSD?
All public agencies need to be audited, on a regular and reasonable basis. True of all “businesses”… including private/503 ones…
Perhaps you’re right. Counter intuitive as it maybe, the gravy must be in the 1%.
Cut 1% of the budget by 20% = 0.2% savings
Cut 10% of the budget by 20% = 2% savings
Cut 20% of the budget by 20% = 4% savings
Cut 30% of the budget by 20% = 6% savings
And so forth.
Clarification.. all agencies/businesses need audit… operationally and long-term obligations… realized I was not clear on that…
What percentage of UC’s budget is equal to $175 million?
I can’t find a more recent figure off hand, but in 2011, the UC budget was over $22 billion, so less than one percent.
Leanna
I am confused about part of the article you cited. You may not know, which is fine. But I am wondering what he is considering “auditing”. I only have knowledge to two of the other areas he cites, medical costs and corrections costs, and to the best of my knowledge, both are audited periodically. So do you suppose he means that they are not being audited at all or that he means that they are not currently under audit ?
I have the same opinion about Napolitano that I had about Kathi. Investigation which should be as independent and neutral as possible is needed. If Napolitano has knowledge of her own behavior that would warrant her leaving the position, either voluntarily or not, I would hope that unlike Katehi, she would take the high road and resign. If an investigation were to warrant her removal, I hope that she would go without a fight and without maximization of personal enrichment as she leaves.
Ruth Coleman was pushed out at State Parks, and she claimed (and I don’t dispute) that she didn’t even know about the $54M slush fund that caused all the ruckus and brought about her resignation. I don’t know why Napolitano should be left standing when a $175M goody jar is found on her watch.
The students have every right to be angry about this $175 million hidden funding by UC. I understand their demands but I am really surprised that there was no mention of the need for some of this funding to be put towards student housing.
That’s an interesting point you bring up – can that money be applied to housing?
David,
I don’t know of any reason why it can’t be used for housing.
Housing in UC is an auxiliary expense which cannot be funded from some sources of revenue. Auxiliary enterprises are supposed to be self supporting. The importance of these points is that it means that enrollment is almost certain to precede construction. But I believe chancellors have some discretion about the use of funds for auxiliary enterprises.
Funding for the capital part can come from excess revenues from running the operations; i.e., housing construction could be funded by using income from student rents. Otherwise, they can borrow from the university, or borrow commercially, either of which presumably require regent approval.
But it’s important to note that there are regent committees that are dealing with local housing issues caused by the UC President’s enrollment and housing initiatives. That’s where the action is. The main committee for which you can find minutes online is the Committee on Grounds and Buildings. Relevant staff appear to be Executive Vice President and Chief Financial Officer Brostrom and Associate Vice President Sandra Kim.
http://regents.universityofcalifornia.edu/minutes/2016/gb3.pdf
Don, having dug into this some I think you are exactly right that the regents and their subcommittees are an important part of the equation for getting more housing built on the Davis Campus. That is exactly why I would expect students to start applying pressure there if they are serious about the UC Davis housing situation.
Most of the money is dedicated already to some other projects. It would require a move by the Regents to dedicate it elsewhere. They are on long terms and might be more immune to pressure of any kind. Worth the fight, though.
Actually, I just re-read their demands and I am glad to see that they did mention the need for more on-campus housing and smaller classes (since their classes are so over-crowded now at UCD) in the second, redistribute point.
I agree with Colin’s comment and I think it would also be important for follow-up with an action now by having a demonstration at Mrak so that their voices are heard by the UCD administration while also getting the attention of the Regents and UCOP. The media covering such an event is the best way to get their message to those with the power at the top who have the ability to help remedy these problems at UCD and UC.
Would be better if faculty/staff showed up, as well… lest it be perceived they are ‘spoiled brats’ acting out… the concerns are real and valid… where are the faculty/staff?
I think you have a fair point Howard, and I would certainly be willing to show up with the students myself.
“UC audit reveals president’s office has extravagant taste”
http://www.sfchronicle.com/bayarea/article/UC-audit-reveals-president-s-office-has-11131371.php