Report 2016-130 - UC Office of the President: Status of Actions Taken

Auditees must provide the State Auditor with information regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year. Additionally, Senate Bill 1452 (Chapter 452, Statutes of 2006), requires auditees who have not implemented recommendations after one year, to report to us and to the Legislature why they have not implemented them or to state when they intend to implement them.

To inform discussions about the Governor's Proposed Budget and the Legislature's deliberations on the state budget we are providing information at-a-glance about the University of California Office of the President's (Office of the President) progress in implementing those recommendations. Outlined below are the 33 recommendations which we made to the Office of the President in our report, The University of California Office of the President: It Failed to Disclose Tens of Millions in Surplus Funds, and Its Budget Practices Are Misleading (Report 2016-130: April 2017).

Overall Assessment

This graphic provides an overall assessment for the status of the Office of the President's implementation of our recommendations which are due in April 2018, April 2019, and April 2020. For the recommendations due in April 2018, we determined that the Office of the President fully implemented nine of the ten recommendations or 90 percent. The Office of the President partially implemented the other recommendation. For the recommendations due in April 2019, we determined that the Office of the President fully implemented eight of the eleven recommendations or 73 percent. The Office of the President partially implemented the other three recommendations. For April 2020 we determined that 8 percent, or one of twelve recommendations is fully implemented. The remaining recommendations are pending.

Based on our analysis of the Office of the President's fiscal year 2019-20 budget, it has over $18.5 million in fund balances and excess reserves that are potentially available for reallocation to campuses for the benefit of students. The budget forecasted that the Office of the President had a total of $214 million in fund balances and reserves, including $12 million in unrestricted and undesignated fund balances that could potentially be reallocated as we discuss in more detail in recommendation 22. Additionally, $6.5 million in three reserves exceeded the Office of the President's reserve target maximums. Moreover, the amount potentially available for reallocation could be higher as the Office of the President and the Regents continue to evaluate their spending decisions related to the $85 million in unrestricted funds designated for certain purposes. The remaining funds are restricted fund balances or under the Office of the President's reserve target maximums.

Furthermore, we have concerns that the Office of the President did not present its annual budget by April 2019, as specified by our recommendations. The failure to present the budget by April of each year may hinder the Department of Finance, the Legislature, and the Governor when making decisions regarding the UC's portion of the state budget. This is a critical recommendation that, if successfully implemented, will improve stakeholders' ability to hold the Office of the President accountable.

Additionally, we have concerns related to the Office of the President's implementation of our salary recommendations. In our 2017 report, we noted that opportunities existed for the Office of the President to reduce its salary costs by giving a greater weight to public sector positions when it set its salaries. However, the Office of the President applied an 8 percent market adjustment to its salary ranges that negated the effects of its new weighting methodology. Because of the 8 percent salary range increase, the Office of the President asserts it did not realize any salary savings from implementing this recommendation. Thus, we believe the Office of the President's implementation of our recommendation falls short.

Overall, the Office of the President fully implemented nine of the 10 recommendations that were due by April 2018 and nine of the 11 that were due by April 2019. We recognize the Office of the President's resource investment and progress made thus far in implementing our recommendations by improving its fiscal, staffing, and systemwide initiative processes. However, the Office of the President still needs to fully implement key recommendations to successfully address the concerns we identified in our report.


To access all recommendations, responses, and our assessment: