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UC President Janet Napolitano questioned by legislators at joint legislative hearing on state auditor's findings

University of California President Janet Napolitano has defended her office's handling of its budget against a critical audit. (Marcio Jose Sanchez / Associated Press)
University of California President Janet Napolitano has defended her office's handling of its budget against a critical audit. (Marcio Jose Sanchez / Associated Press)

Summoned to a legislative hearing to explain the negative findings of a recent audit, University of California President Janet Napolitano said that the report’s allegations of excessive salaries and tens of millions of dollars in hidden reserves distorted the operations of her administration.

But Napolitano said the the auditors' 33 recommendations were "helpful and constructive." 

"We have agreed to implement all of them," she told legislators.

The audit accused her office of interfering with auditors' surveys of the UC system's 10 campuses. Napolitano said she regretted how the issue was handled, but wanted to make sure the auditors' surveys of campuses were accurate.

Board of Regents Chair Monica Lozano said she would ask the board to conduct a review of how the surveys were handled by the president's office to make sure actions were proper.

Meanwhile, UC Board of Regents member John A. Perez on Tuesday joined the growing chorus of officials calling for UC to cancel a 2.5% tuition increase set for this fall in light of the audit findings.

The report last month by State Auditor Elaine Howle concluded that the UC Office of the President did not disclose to the University of California Board of Regents, the Legislature and the public $175 million in budget reserve funds, and paid salaries and benefits higher than the amounts received by comparable public sector workers.

Napolitano told legislators Tuesday that only $38 million of the $175 million identified in the audit is an actual reserve, which she said is a reasonable amount. The rest of the money is committed to various programs to improve the university system, including an effort to reduce its carbon footprint, develop a new medical school and provide internships for law students, she said.

“In fact, UCOP’s budget and financial approaches reflect strategic, deliberate and transparent spending and investment in UC and state priorities,” Napolitano said in a letter to state officials when the audit was released.

On Tuesday, she was called on to appear before a hearing convened by the chairmen of the Joint Legislative Audit Committee, the Assembly Budget Subcommittee on Education Finance and the Assembly Higher Education Committee.

The tuition increase, which most students won’t have to pay, would generate about $74 million annually for the University of California system, an amount that some opponents note is less than half of the $175 million identified as a “reserve.”

As a result, Lt. Gov. Gavin Newsom and Assembly Speaker Anthony Rendon (D-Paramount), both ex officio members of the Board of Regents, have also called for cancellation of the 2.5% tuition increase scheduled to take effect in the fall.

"I opposed the tuition increases in the first place,” Rendon said this week. “They make even less sense given recent events."

Board member Perez, a former Assembly speaker who voted against the tuition increases earlier this year, said Tuesday that the audit “reinforces the questions” he has about the possibility that there are other options in the budget to raising fees.

“I support repealing the fee increase, but I don’t think we should look at the amount found as reserves [by the audit] as a way to pay it down because that is onetime money that we’ve got to figure out the best policy for,” Perez said.

In addition, Sen. Cathleen Galgiani (D-Stockton) has introduced a ballot measure that would prohibit the University of California from raising tuition in any year that it pays more than 600 employees a salary above $190,103, which is paid to the governor.

In 2015, UC paid 719 managers and administrators more than the governor made that year, according to state records.

“UC’s finances are woefully unbalanced favoring top administrators at the expense of long-time workers and students,” Galgiani said.

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