Editorial: UC’s $175 million in hidden funds might not be $175 million — and they might not be hidden


Has the University of California been overpaying many of its managers, as a new audit alleges? Should it reverse its planned tuition increase because it allegedly has tens of millions of “hidden” dollars, as the lieutenant governor proposes? Did UC President Janet Napolitano interfere with the campuses’ responses to the auditor’s work? Has she been misspending huge sums on amorphous priorities that have nothing to do with students? Yes, no, possibly, and this situation is far more complicated than the searing state audit might lead people to believe at first.

According to the report released by State Auditor Elaine Howle, the UC Office of the President has been hiding $175 million in surplus money while clamoring for bigger budgets. The audit raised immediate howls of protest against UC’s constitutionally protected independence from the Legislature; it also evoked memories of the scandalous 2012 revelation that the California parks system had secretly amassed $54 million in reserves while cutting park services and threatening to close parks for lack of money.

Lt. Gov. Gavin Newsom, also a UC regent by virtue of his state position, immediately leaped forward with a demand that UC rescind its recent, modest tuition increase, even though he has no way of knowing whether the $175 million is even available or adequate to cover looming costs. His remarks came off more like political pandering than thoughtful stewardship of higher education.


It’s naïve to read the audit without also considering the troubling political backdrop.

In fact, before state residents — or members of two committees that will hold a joint meeting on the audit this week — start screaming “Scandal,” they should take a closer look at where the ostensibly hidden funds come from and where they go. Most of the money, according to Napolitano, is restricted funding, such as grants for specific research at various campuses, that is funneled through her office, which must forward the money to the recipient; Napolitano says she can’t spend it for any other purpose. The audit committee needs to get to the bottom of that. If Napolitano is right, the audit is off base.

The audit puzzlingly implies that non-restricted funds are either being hoarded or misspent on illegitimate uses instead of direct student services. One of the supposedly problematic projects it names is UC’s Washington Center in the District of Columbia, where students from all campuses are eligible to live in a dorm and take courses. If this isn’t a direct student service, it’s hard to imagine what is. Other uses of the money include helping undocumented students who fear deportation and reducing UC’s carbon footprint.

What’s left over, according to Napolitano, is $38 million in actual reserves. Again, if she’s right, this would be a prudent sum to set aside for rainy days.

That’s not to say the audit is without potential value. UC acknowledged awhile back that it was overcompensating some managers, and Napolitano said she’s already in the process of fixing the problem. The audit also identified some funding streams that might be better spent on courses or libraries. Does UC really need partnerships with Mexican universities, to the tune of $3 million over two years?

UC has its own history of resisting change. It defended its high salaries, benefits and notoriously lush perks for years before conceding they were wrong. The university wisely admitted more out-of-state students during lean years; their higher tuition helped keep UC running. But once things got better, Napolitano was slow to make room for more in-state students. And if she interfered with campus responses to the audit, which Howle says suddenly got rosier after the president’s office reviewed them, that’s unacceptable.

Still, it’s naïve to read the audit without also considering the troubling political backdrop. This is the eighth audit of UC in just a few years, urged on by legislators who have their own vision of UC’s mission and their own political agendas. They have long hinted at — or openly advocated — giving the Legislature and governor more control over the university and its educational priorities. What’s stopping them? The California Constitution, which grants the regents that authority.

It was smart to give UC that autonomy. Politicians make notoriously lousy educators, and their handling of the state’s public schools should give no one any confidence in their ability to run one of the world’s great universities. The audit’s call for a tighter leash on UC’s operations seems unfounded at this point.


The joint committee meeting this week needs to be a genuine search for truth, not a stage for political rhetoric or unfounded attack.

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