Spending by UC Officials Questioned : Education: Audit finds that money was used for first-class air fares, expensive hotels and entertainment. A university statement says only minor policy violations occurred.

Top University of California executives spent university money for first-class air travel, unnecessary stays in expensive hotels, entertaining other UC employees and other questionable purposes, the state auditor general has found.

In a report to be made public today, acting Auditor General Kurt Sjoberg also challenged some retirement arrangements for UC officials and suggested that the UC Board of Regents might not have been fully informed when it approved executive pay raises six years ago.

The three-month audit was ordered by the Legislature in response to the controversy that began in March when the regents gave UC President David P. Gardner what critics labeled an outrageously large retirement package.

State Sen. Quentin L. Kopp (I-San Francisco), who called for the inquiry, said the report showed that “high officials of the university have played fast and loose with taxpayers’ money.” Kopp called for the “immediate firing” of Ronald W. Brady, UC senior vice president for administration, whom he described as the “architect and strategist” of UC’s executive compensation plans. Brady is scheduled to retire in July.

In a prepared statement to be issued today, UC President Gardner said he was “pleased that there are no observations of policy violations, except for minor omissions or errors which are being resolved, and no observations of unauthorized expenditures, although the university is reviewing some items.” He said UC will respond more fully within 90 days.

Meredith J. Khachigian, chairwoman of the UC Board of Regents, said she had not seen the full report but had been briefed on it. “I’m not overly concerned as long as we address any practices in the past that weren’t right down the line. There was nothing against policy . . . just things that can be tightened up and should be,” she said Tuesday.

Sjoberg’s report said $116,039 from the university’s Administrative Fund was used for entertainment by 12 of the 22 administrators included in the audit. Those expenditures included $2,628 for a 1990 wedding reception for a UC employee hosted by William B. Baker, vice president for budget and university relations, and a 1991 “holiday dinner” that Brady gave for William R. Frazer, UC’s vice president for academic affairs, at a cost of $2,377.

“We believe the UC would derive greater benefit from hosting academically related meetings or entertaining official guests or potential donors than from entertaining only individuals under its employ,” the report said.

The report also questioned the use of a Learjet and another airplane to transport UC administrators and regents around the state. The planes, bought by UCLA and subsequently sold, were supposed to move body organs quickly for transplant purposes, but more than half of the time were used instead to carry UC officials, Sjoberg said.

Auditors, in addition, criticized Gardner and other UC officials for staying at the expensive Clift Four Seasons Hotel in San Francisco during a regents meetings when they could have stayed at their homes nearby.

The report also questioned the use of the Administrative Fund to pay for first-class air tickets, limousine rentals and $73,501 in contributions and dues for top administrators. And it said Gardner once used frequent flyer miles earned on UC business for a round-trip ticket to Hong Kong, worth $3,880, for one of his daughters. In an attached reply, UC officials argued that the fund is not taxpayers’ money but comes from private endowments. But the auditor general replied that all UC “funds are state funds and should be expended with similar regard for UC’s responsibilities as a public trust.”

The audit report also said that Gardner advised the regents that 1984-85 pay raises for top administrators were within the 10.8% average that had been approved by the Legislature, but in fact the increases averaged 17.1%.

In a secret meeting in March, regents voted to help Gardner with pension vesting and deferred pay, granting him $857,000 that he otherwise would forfeit and hiking his expected annual pension from $104,000 to $126,000. In April, the regents reaffirmed the package, saying it was legitimately due Gardner, but promised to act more openly on such matters in the future. UC is now studying an overhaul of its pay and compensation policies.

Before the furor, Gardner announced he would retire Oct. 1 after nine years heading the nine-campus system.

Gordon reported from Los Angeles and Trombley from Sacramento.