Report 2016-130 Recommendation 42 Responses

Report 2016-130: The University of California Office of the President: It Failed to Disclose Tens of Millions in Surplus Funds, and Its Budget Practices Are Misleading (Release Date: April 2017)

Recommendation #42 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2020 the Office of the President should report to the regents on the amount of funds reallocated to campuses.

Annual Follow-Up Agency Response From November 2019

The CSA assessed UCOP related Recommendations #18, #19, #28, and #29 as fully implemented. As a result of reviewing systemwide and presidential initiatives and administrative costs, UCOP directly reallocated $9.6M in funds to the campuses. These reallocations have been reported in the annual FY17-18, FY18-19, and FY19-20 UCOP budget presentations to the Regents. Total direct and indirect reallocation activity over the past three years of the audit, $166.3M, is being reported in Schedule G of the November Regents item, which has been provided to the CSA.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We are assessing this recommendation as fully implemented. According to the November 2019 Office of the President Budget to Actual Expenditures presentation, the Office of the President indirectly reallocated $10.9 million in funds to campuses between fiscal years 2017-18 and 2019-20 as a result of implementing our recommendations related to re-evaluating their systemwide and presidential initiatives and administrative cost savings. The indirect reallocations include $1.3 million in savings due to position reductions, $1 million in savings due to program reductions, and $8.6 million in savings due to its implementation of AB 97, which redirected Office of the President fund balances to campus enrollment growth.

Annual Follow-Up Agency Response From April 2019

The Office of the President has initiated efforts to implement this recommendation and will provide a status update on its progress at the next reporting milestone.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

The status of this recommendation is pending the Office of the President's report to the Regents regarding the amount of funds reallocated to campuses. The impact of this recommendation will vary based on whether the Office of the President is funded via a direct appropriation from the State or the campus assessment in April 2020.

1-Year Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2019 recommendations.

California State Auditor's Assessment of 1-Year Status: Pending

The status of this recommendation is pending the Office of the President's implementation of our systemwide initiative, administrative cost, and presidential initiative recommendations due April 2019. The impact of this recommendation will vary based on whether the Office of the President is funded via a direct appropriation from the State or the campus assessment in April 2020.

6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 and 2019 recommendations. Furthermore, the UCOP resources available to fund these activities may depend on the outcome of other recommendations, including those relating to fund restrictions, budget process and reserves.

The Executive Budget Committee, consistent with its charter, will continue to serve in its campus-input role of making recommendations on resource allocations.

California State Auditor's Assessment of 6-Month Status: Pending

The status of this recommendation is pending the Office of the President's implementation of our systemwide initiative, administrative cost, and presidential initiative recommendations due April 2018 and April 2019. The impact of this recommendation will vary based on whether the Office of the President is funded via a direct appropriation from the state or the campus assessment in April 2020.

60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Included in our research and evaluation of Best-Practices, UCOP will develop a comprehensive budget check-list to be submitted annually with budgets. We will include the requirement to report amounts reallocated to campuses or used for programs and areas that further support and benefit the campuses.

California State Auditor's Assessment of 60-Day Status: Pending

The status of this recommendation is pending the Office of the President's implementation of our systemwide initiative, administrative cost, and presidential initiative recommendations due April 2018 and April 2019. The impact of this recommendation will vary based on the Office of the President's funding situation in April 2020; however, we are still concerned that the Office of the President indicates in its response that it does not plan to directly reallocate these funds to campuses. We look forward to the Office of the President's 6-month response to determine the level of campus input on these spending decisions.

All Recommendations in 2016-130

Agency responses received are posted verbatim.