Appendix

The University of California Has Not Fully Implemented Half of the Recommendations From the California State Auditor’s 2011 Audit

The University of California (university) has not implemented four of the eight recommendations we directed toward it in our July 2011 Report 2010-105 titled University of California: Although the University Maintains Extensive Financial Records, It Should Provide Additional Information to Improve Public Understanding of Its Operations. In the course of our current audit, we found that the university has not fulfilled the intent of two of the recommendations that it had previously reported as fully implemented, it has yet to implement one, and stated that it will not implement the remaining recommendation, as Table A shows.

The recommendations the university has not fully implemented include those designed to increase transparency in its budget process and expenditures. Although the university has implemented the recommendation that it create a budget manual outlining how it allocates state funding to the campuses, it has not yet fully implemented the recommendation that it provide the public with detailed information about the allocation amounts. Moreover, the university could do more to improve the transparency of its expenditures by identifying additional specific categories for expenses it records under its Miscellaneous Services accounting code.

Table A
Status of California State Auditor’s Report 2010-105 Recommendations
	Recommendation	Agency Response	Status Based on Follow-up Review
1.	To address the variations in per student funding of its campuses, the University of California (university) should complete its reexamination of the base budgets to the campuses and implement appropriate changes to its budget process. As part of its reexamination of the base budget, it should: Identify the amount of general funds and tuition budget revenues that each campus receives for specific types of students (such as undergraduate, graduate, and health sciences) and explain any differences in the amount provided per student among the campuses. Consider factors such as specific research and public service programs at each campus, the higher level of funding provided to health sciences students, historical funding methods that favored graduate students, historical and anticipated future variations in enrollment growth funding, and any other factors applied consistently across campuses. After accounting for the factors mentioned above, address any remaining variations in campus funding over a specified period of time. Make the results of its reexamination and any related implementation plan available to stakeholders, including the general public.	Not fully implemented	Not fully implemented
	The university has announced its rebenching process is scheduled to be fully completed in 2016–17; however, in Chapter 3 we identified issues with the university’s plan that would keep the university from equalizing per-student funding if left unchanged.

2.	To help improve accountability in the university’s budget process, and to help minimize the risk of unfair damage to its reputation, the university should take additional steps to increase the transparency of its budget process. Specifically, the Office of the President should continue to implement the proposed revisions to its budget process.	Fully implemented	Fully implemented
3.	To help improve accountability in the university’s budget process, and to help minimize the risk of unfair damage to its reputation, the university should take additional steps to increase the transparency of its budget process. Specifically, the Office of the President should update its budget manual to reflect current practices and make its revised budget manual, including relevant formulas and other methodologies for determining budget amounts, available on its website.	Not fully implemented	Fully implemented
4.	To help improve accountability in the university’s budget process, and to help minimize the risk of unfair damage to its reputation, the university should take additional steps to increase the transparency of its budget process. Specifically, the Office of the President should continue its efforts to increase the transparency of its budget process beyond campus administrators to all stakeholders, including students, faculty, and the general public. For example, the Office of the President could make information related to its annual campus budget amounts, such as annual campus budget letters and related attachments, available on its website.	Fully implemented	Not Fully implemented
	The university has not fully implemented this recommendation as it has not made the details of its campus allocation amounts available to the public. The university states that it has not published campus budget allocation letters because doing so would provide no public benefit. However, including how much the Office of the President allocates to each campus, how much it considers to be set-asides, and the state’s one‑time funding amounts would improve accountability in the university’s budget process.

5.	To increase the transparency of university funds, the Office of the President should make available annually financial information regarding its funds, including beginning and ending balances; revenues, expenses, and transfers; and the impact of these transactions on the balances from year to year.	Fully implemented	Fully implemented
6.	To ensure that the campus financial information published by the Office of the President can be better evaluated by interested stakeholders, the university should disclose instances in which campuses subsidize auxiliary enterprises with revenues from other funding sources and should disclose the sources of that funding.	Fully implemented	Fully implemented
7.	To improve the transparency of its expenses, the university should identify more specific categories for expenses that are recorded under the Miscellaneous Services accounting code and should implement object codes that account for these expenses in more detail.	Fully implemented	Not fully implemented
	While some campuses have reduced their use of the miscellaneous services code altogether, some campuses still report tens of millions of dollars in the category. Specifically, Santa Barbara, Berkeley, and Irvine all reported more than $10 million in expenditures as “miscellaneous services” and can therefore do more to increase the transparency of their expenditure reporting. The university asserted all campuses will be under the $10 million threshold for fiscal year 2015–16.

8.	To ensure that campuses do not inappropriately use revenues generated from student fees imposed by referenda, the university should ensure that it, the regents, and the campuses do not expand the uses for such revenues beyond those stated in the referenda.	Will not implement	Will not implement
	The university maintains its position that it disagrees with the recommendation, stating that it believes the president has the authority to impose or modify any and all student fees.

Sources: Recommendations made in the report by the California State Auditor (state auditor) titled University of California: Although the University Maintains Extensive Financial Records, It Should Provide Additional Information to Improve Public Understanding of Its Operations, Report 2010‑105, July 2011, and the state auditor’s analysis of the department’s actions related to the recommendations.