Report 2015-107 Recommendation 19 Responses

Report 2015-107: The University of California: Its Admissions and Financial Decisions Have Disadvantaged California Resident Students (Release Date: March 2016)

Recommendation #19 To: University of California

To ensure that it spends state funds prudently for programs that do not directly relate to educating students, the university should explore whether the programs could be supported with alternate revenue sources.

Annual Follow-Up Agency Response From October 2022

At the request of President Michael V. Drake, UCOP staff are currently reviewing the University's methodology for allocating State General Funds to campuses (known as rebenching). The timeline for this review was extended to allow time for substantive consultation and input from campus leadership and the UC Academic Senate. (A workgroup of the Academic Senate, for example, released a lengthy assessment of rebenching on August 8, 2022.) A number of changes have been proposed and are under active consultation, including proposals to phase out State support for various programs and allocate those funds to campuses based on student enrollment. It is anticipated that any changes would be introduced beginning with the 2023-24 fiscal year.

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

Annual Follow-Up Agency Response From October 2021

At the request of President Michael V. Drake, UCOP staff are currently reviewing the University's methodology for allocating State General Funds to campuses (known as rebenching). The review includes assessing whether programs that currently receive a direct allocation of State General Funds under rebenching should continue to do so. Among other factors, the assessment will take into account whether the program could instead be adequately supported with alternative revenue sources. This review is expected to be completed by June 2022.

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

Annual Follow-Up Agency Response From November 2020

UC campuses already seek to maximize resources available from philanthropy, extramural contracts and grants, and other sources to support and enhance programs related to instruction, research, and public service. It is unclear why redirecting those resources to support programs that currently receive State support is preferable to identifying new sources of support for instructional programs from philanthropy and other resources, which campuses already do. As a result, we believe that the reviews that the University conducted in 2017 in partnership with legislative staff and staff from the Department of Finance represent full implementation of this recommendation.

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

Although the reviews the university references in its response are a positive step, they do not fully address our recommendation. Specifically, as part of its response to our April 2017 audit, the university reviewed all of its systemwide initiatives; however, the university has not fully implemented the above recommendation because it has not performed a review of whether programs can be funded with alternate revenue sources.

Annual Follow-Up Agency Response From November 2019

The University respectfully suggests that the underlying premise reflected in CSA's most recent assessment—that the University should explore whether State-supported programs that do not directly relate to educating students could be supported by alternative revenue sources—is at odds with many historical and recent instances in which the State has provided the University with funding specifically to support programs that do not directly relate to educating students but which are aligned with the research and public service components of the University's mission. Budget Acts passed since 2016-17 have designated State General Fund support for programs to maintain the Statewide Database (used for election redistricting), research firearm violence, identify best practices in faculty hiring, improve vector-borne disease surveillance, conduct studies related to Jordan's Syndrome and Valley Fever, and disentangle whales, among many other programs. UC campuses already seek to maximize resources available from philanthropy, extramural contracts and grants, and other sources to support and enhance programs related to instruction, research, and public service. It is unclear why redirecting those resources to support programs that the State has already elected to support is preferable to identifying new sources of support for instructional programs from philanthropy and other resources, which campuses already do. As a result, we believe that the reviews that the University conducted in 2017 in partnership with legislative staff and staff from the Department of Finance represent full implementation of this recommendation.

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

Although the reviews the university references in its response are a positive step, they do not fully address our recommendation. Specifically, as part of its response to our April 2017 audit, the university reviewed all of its systemwide initiatives; however, the university has not fully implemented the above recommendation because it has not performed a review of whether programs can be funded with alternate revenue sources. The university's suggestion that our recommendation is at odds with instances where the State has provided funding for certain programs overlooks the intent of the recommendation to ensure that the university spends state funds prudently.

Annual Follow-Up Agency Response From October 2018

The broad review of systemwide programs described in the University's previous response was completed in November 2017. The results informed the University's decision to redirect funding from selected programs to support the enrollment of an additional 1,500 California resident undergraduates in 2018-19. That review and decision are described in the materials available here: https://www.ucop.edu/operating-budget/_files/legreports/17-18/AB97RedirectionofFundsforEnrollmentGrowthLegRpt.pdf

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

Although the broad review of systemwide programs is a positive step, it does not fully address our recommendation. Specifically, as part of its response to our April 2017 audit, the university reviewed all of its systemwide initiatives; however, the university has not fully implemented the above recommendation because it has not performed a review of whether programs can be funded with alternate revenue sources.

Annual Follow-Up Agency Response From November 2017

The University developed a process to (1) solicit information about each program's alignment with the University's mission; (2) review the current State funding level for each set-aside; and (3) assess whether there are viable alternative sources of support for the program that could be used in lieu of State funds, such as extramural support. Under this process, each set-aside program was asked to complete a template requesting a description of the program and its contribution towards the University's mission. Additionally, programs were asked to provide budgetary information describing the current allocation of SGFs received by the program, to identify opportunities for support from alternative fund sources, and to describe the programmatic impact of the full or partial termination of SGF support. Upon template completion, the cognizant program and campus officials reviewed program submissions and provided them to UCOP for further review.

The information provided by this process will inform a broader review of systemwide programs, including but not limited to these "set-asides," which was prompted by recommendations in the Budget Act of 2017 (AB 97) and which is to be completed by December 2017.

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

1-Year Agency Response

UCOP initiated a review of all programs treated as "set-asides" under rebenching to reevaluate their importance to the University's mission and to assess the feasibility of using funds other than State General Funds to support these programs. A report that summarizes the findings of this review is being prepared and will be reviewed by the Provost and the CFO before being presented to the President. UC expects this to be complete by April 2017.

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

We look forward to reviewing the report when it is completed. As of early May 2017, we have not received this report.

6-Month Agency Response

For programs that are allocated a designated portion of State General Funds under rebenching (i.e., set-asides), the University will review each program to determine if changes in State funding are advisable and/or feasible.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Because the university did not provide any documentation to support when or how it will review these programs, we consider the university to have taken no action on this recommendation.

60-Day Agency Response

For programs that are allocated a designated portion of State General Funds under rebenching (i.e., set-asides), the University will review each program to determine if changes in State funding are advisable and/or feasible.

California State Auditor's Assessment of 60-Day Status: No Action Taken

We asked the university when this review would begin; however, the university stated that its initial 60-day response provided sufficient information. Because the university did not provide any documentation to support when or how it will review these programs, we consider the university to have taken no action on this recommendation.

All Recommendations in 2015-107

Agency responses received are posted verbatim.