Report 2015-107 All Recommendation Responses

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

Recommendation #1 To: University of California

To meet its commitment to California residents, the university should replace its "compare favorably" policy with a new admission standard for nonresident applicants that reflects the intent of the Master Plan. The admission standard should require campuses to admit only nonresidents with admissions credentials that place them in the upper half of the residents it admits.

Annual Follow-Up Agency Response From October 2021

As previously reported, BOARS reviewed their Compare Favorably policy in 2017 and concluded no change in policy was needed. The conclusion of the BOARS review stated the following: In the face of increasing applications, budgetary pressures, and heightened public scrutiny, the Compare Favorably policy has held up well, providing flexibility for campuses while ensuring that the University's responsibility to California students remains paramount.

BOARS remains satisfied that campuses are meeting its compare favorably standard for nonresident admission, identifying and admitting students who demonstrate high levels of academic achievement and who are well-prepared to succeed at, and contribute to, the University of California. They do this work through a comprehensive review and, as of fall 2021, without standardized test scores. BOARS will continue to monitor campus practices and outcomes to ensure that California residents remain the first priority in the undergraduate admission process.

The 2017 policy review can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/Compare-Favorably-Report-to-President-July-2017.pdf

The 2021 Compare Favorably report can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/documents/2020-compare-favorably-report.pdf

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2020

Annual reports includes evidence that the degree of compliance across the University is very high, especially when one considers both the volume of applications that are received by the University, the extraordinary level of achievement presented by virtually all applicants, and the challenges of applying the complex Compare Favorably standard within the context of a competitive, internally-dynamic admissions process. BOARS will continue to monitor campus compliance with this policy, report outcomes on an annual basis, and could, as data warrant, suggest adjustments to the policy in the future.

The 2017 policy review can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/Compare-Favorably-Report-to-President-July-2017.pdf

The 2020 Compare Favorably report can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/documents/2019-compare-favorably-report.pdf

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The 2020 Compare Favorably report indicates that the university does not intend to replace its "compare favorably" policy as it discusses the campuses' compliance with that policy, which requires nonresident domestic and international students admitted to a campus to be at least as qualified, on average, as California residents admitted to the same campus. Therefore, we stand by our original recommendation that the university replace its "compare favorably" policy with a new admission standard for nonresident applicants that reflects the intent of the Master Plan.

Annual Follow-Up Agency Response From November 2019

The Compare Favorably report includes evidence that the degree of compliance across the University is very high, especially when one considers both the volume of applications that are received by the University, the extraordinary level of achievement presented by virtually all applicants, and the challenges of applying the complex Compare Favorably standard within the context of a competitive, internally-dynamic admissions process.

The 2019 BOARS report can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/documents/2018-compare-favorably-report.pdf

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

UC's Academic Senate, through its Board of Admissions and Relations with Schools (BOARS), completed an assessment of of the "compare favorably" policy outcomes for 2017. Based on the results of that assessment, UC determined that it will not replace its "compare favorably" policy. The 2019 Compare Favorably report further demonstrates that the UC does not intend to replace its "compare favorably" policy as it discusses the campuses' compliance with that policy, which requires nonresident domestic and international students admitted to a UC campus to be at least as qualified, on average, as California residents admitted to the same campus.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2018

During the 2017-18 academic year, UC's Academic Senate, through its Board of Admissions and Relations with Schools (BOARS), conducted its annual review of the Compare Favorably policy outcomes for 2017. On a systemwide basis, average SAT score and average high school GPA were higher for domestic and international nonresidents admitted for fall 2017 than for California residents. All but one UC campus met one or both traditional measures of academic standards for the Compare Favorably policy. As BOARS notes, GPA and test scores are important components of the University's comprehensive review policy, but are only two components, and as such they provide an incomplete picture of an applicant's academic achievements demonstrated through other non-quantifiable measures. While the Compare Favorably policy communicates a clear message to campuses about its expectation that nonresidents have stronger qualifications than residents, BOARS allows campuses to focus on aspects of the evaluation process they feel are most relevant to meeting the policy, and BOARS is confident that all campuses are making a concerted effort to do so.

The 2017 BOARS report can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/boarscomparefavorably2017.pdf

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

UC's Academic Senate, through its Board of Admissions and Relations with Schools (BOARS), completed its assessment of of the "compare favorably" policy outcomes for 2017. Based on the results of that assessment, UC determined that it will not replace its "compare favorably" policy.

Annual Follow-Up Agency Response From November 2017

At the request of President Napolitano, UC's Academic Senate reviewed the University's "compare favorably" policy to ensure that it remains in harmony with the institution's comprehensive review admission policy and the Master Plan. The Senate, through its Board of Admissions and Relations with Schools (BOARS), reviewed the policy during the 2016-17 academic year. That report, endorsed by UC's Academic Council on July 26, 2017, can be found here: http://senate.universityofcalifornia.edu/_files/committees/boars/Compare-Favorably-Report-to-President-July-2017.pdf

BOARS' report summarizes the Committee's work over the past year to grapple with the complex issues associated with comparing residents and nonresidents, and to analyze several alternate measures for the compare favorably evaluation. Ultimately, BOARS concluded that the existing policy maintains the University's primary responsibility to California students, which is to ensure that campuses admit nonresidents who perform at least as well—if not better—than California residents. Although BOARS does not recommend changing the policy, the Committee will continue to monitor campus compliance, report outcomes on an annual basis, and suggest adjustments as data warrant.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Per the Academic Senate's recommendation, the university will not change its nonresident admissions policy to one that more closely reflects the intent of the Master Plan. As we stated in our 2016 audit, the compare favorably nonresident admissions policy resulted in the university admitting nearly 16,000 nonresidents whose academic scores fell below the median for admitted residents at the same campus on every grade point average and admission test score we evaluated. By admitting nonresidents with lower academic qualifications on these key indicators than the median for residents it admitted, the university essentially deprived admittance to highly qualified residents. Thus, the compare favorably policy, which the university intends to keep in place, does not meet the intent of the Master Plan that stated nonresidents should demonstrate higher qualifications than the median for residents.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

In response to the CSA, the President requested that the Academic Senate review its "compare favorably" policy to ensure that it remains in harmony with University comprehensive review admission policies and the Master Plan. Since 2013, the Academic Senate annually has issued a public report regarding the degree to which campuses adhere to the compare favorably standard. These reports are posted on the Academic Senate's website. In light of the CSA's recommendation, however, the Senate's Board of Admissions and Relations with Schools (BOARS) is collecting additional data to determine if there are other measures of academic performance that better illustrate UC's commitment to California residents. BOARS will report its findings before the end of the current academic year (June 2017).

Estimated Completion Date: December 2017
Response Date: March 2017

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

The status of this recommendation is pending the outcome of the academic senate's review. The Office of the President updated us on the status of this report and stated that it will be made public by mid-July 2017.

6-Month Agency Response

The University believes strongly that the "Compare Favorably" policy is fully compliant with both the letter and the spirit of the Master Plan. That this was the purpose and goal of the policy is well described in the documentation associated with its development. Nonetheless, the President has asked the Academic Senate to review current Senate policy with respect to nonresident admission, focusing on and clarifying (1) compliance with the Master Plan and (2) consistency with the University's overall freshman admission goals, the comprehensive review admission policy, and the holistic review process in place on most UC campuses. (A copy of the President's letter to the Academic Senate is attached.) It is anticipated that the Academic Senate will refer this request to the Board of Admissions and Relations with Schools (BOARS), the committee to which undergraduate admission policy is delegated. It is expected that BOARS will take up this task at its first meeting of the 2016-17 academic year in October and that it will take several months to develop any resulting recommendations. If BOARS proposes a formal change in policy, it would typically need to be reviewed by the Academic Senate and its relevant committees at both the campus and systemwide levels, which would take 3-4 months. If BOARS recommends changes that require revisions to Regents' policy, this would conceivably add up to two months of time.

Estimated Completion Date: December 2017
Response Date: August 2016

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

The status of this recommendation is pending the outcome of the academic senate's review.

60-Day Agency Response

As described in our response to the audit report, the University believes strongly that the "Compare Favorably" policy is fully compliant with both the letter and the spirit of the Master Plan. That this was the purpose and goal of the policy is well described in the documentation associated with its development. Nonetheless, the President will ask the Academic Senate to review current Senate policy with respect to nonresident admission, focusing on and clarifying (1) compliance with the Master Plan and (2) consistency with the University's overall freshman admission goals, comprehensive review admission policy, and the holistic review process in place on most UC campuses. It is anticipated that the Academic Senate will refer this request to the Board of Admissions and Relations with Schools (BOARS), the committee to which undergraduate admission policy is delegated. Because Academic Senate committees do not generally meet during the summer, it is expected that BOARS will take up this task in October 2016 and that it will take several months to develop any resulting recommendations. If BOARS proposes a formal change in policy, it would typically need to be reviewed by the Academic Senate and its relevant committees at both the campus and systemwide levels, which would take 3-4 months. If BOARS recommends changes that require revisions to Regent's policy, this would conceivably add up to two months of time.

Estimated Completion Date: December 2017
Response Date: May 2016

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

In a letter to the academic senate dated June 29, 2016 the president of the university noted that she believed the compare favorably standard was fully compliant with both the letter and the spirit of the Master Plan. Nonetheless, in the letter the president formally requested that the academic senate review the compare favorably admissions policy. The president also stated that she was not asking the academic senate to change the compare favorably policy unless the academic senate's review determined that changes were warranted. The status of this recommendation is pending the outcome of the academic senate's review.

Recommendation #2 To: University of California

To meet its commitment to California residents, the university should amend its referral process by taking steps to increase the likelihood that referred residents ultimately enroll.

Annual Follow-Up Agency Response From October 2021

UC maintains partial implementation as the final status on this recommendation as previously noted by the Agency.

UC continues to automatically redirect eligible applicants to campus(es) that are less impacted. As the newest campus in California's premier public university, UC Merced is rapidly growing and evolving. The campus welcomed its largest first year class ever this fall and continues to rise in various rankings. Merced will continue to be the referral campus for the freshmen admission process, and as Merced's stature continues to grow, we are hopeful that more residents referred to Merced will choose to enroll.

The annual BOARS reports have indicated while enrollment on our campuses has increased, the percent of eligible students is also rising and contributing to the growth in students in the referral pool. The state's Eligibility Study for the Class of 2015 confirmed that the eligibility rate for UC was higher than the 12.5% recommended in the Master Plan for Higher Education. While no immediate changes were made as a result of the eligibility study, UC recently eliminated the use of standardized tests in admissions and updated its statewide admission index for admission to fall 2022.

The 2021 Annual Report on Comprehensive Review can be accessed here:

https://senate.universityofcalifornia.edu/_files/committees/boars/documents/boars-2021-cr-report.pdf

Estimated Completion Date: Partial completion met in 2020 (aligned with Merced 2020 plan)

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's response indicates that it has not made any effort to amend its referral process, which is its process of referring California residents, who were denied admission to the campus of their choice, to admission at the Merced campus. As we have previously noted, only a small percentage--between 1 to 2 percent--of California residents that the university refers to the Merced campus actually accept admission. Specifically, as noted on page 5 of the link that the university provided: "Among students placed in the referral pool, 304 (2%) opted in for consideration to admission at Merced and about 13% of these students (39) ultimately enrolled at Merced (0.4% of the overall referral pool)." Therefore, the condition is unchanged from the time of our audit.

Annual Follow-Up Agency Response From November 2020

The 2017 policy review can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/Compare-Favorably-Report-to-President-July-2017.pdf

The 2020 Compare Favorably report can be found here:

https://senate.universityofcalifornia.edu/_files/committees/boars/documents/2019-compare-favorably-report.pdf

Estimated Completion Date: Ongoing

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2019

The demand for enrollment at the freshman level outpaces that of transfers. Freshman applications for 2018 increased by 7.3 percent over 2017. While total new student enrollment grew in 2018, the 9x9 eligibility structure overshot its original target for admission guarantees and, as a result, the overall eligibility pool was larger than expected. The total referral pool grew to 12,500 in 2018, a 14% increase.

Merced, however, continues to build its stature within the system; applications to the campus grew in 2018 reflecting a nearly three-fold increase since its opening in 2005. As the fastest growing campus in the UC system, more students are choosing to apply directly to the campus and ultimately enroll there, including a portion of the students who find themselves in the referral pool. According to the 2018 Annual Report on Undergraduate Admissions Requirements and Comprehensive Review, 168 students (1.3%) from the fall 2018 referral pool enrolled at Merced compared to 119 students (1.1%) in fall 2017.

The 2019 Annual Report can be accessed here: https://senate.universityofcalifornia.edu/_files/committees/boars/boars-2019-cr-report.pdf

Estimated Completion Date: 2020 - Aligned with UC Merced 2020 Project

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

The UC's response and 2019 annual report indicate that it is working to increase the appeal of its Merced campus, but that in 2018 only 1.3 percent of the applicants referred to the campus--just 168 students--ultimately enrolled there. This low enrollment rate is in the same 1-2 percent range that we reported on page 35 of our audit, which indicates any actions that the UC has taken are not working to improve resident referral enrollment at the Merced campus. This problem is likely to continue as Figure 2 in UC's 2019 annual report shows that overall admissions by campus have declined over the past 2 years. The UC has not indicated any other change to its referral process to implement the recommendation.

Annual Follow-Up Agency Response From October 2018

As stated in last year's response, the best way to serve students is to offer enrollment opportunities at the campus that they wish to attend and not refer them to a campus they never applied to. The demand for enrollment at the freshman level outpaces that of transfers. Freshman applications for 2017 increased by 6 percent over 2016. While total new student enrollment grew in 2017, the reduction in the freshman referral pool from enrollment growth experienced in 2016 could not be sustained at the same level.

Merced, however, continues to build its stature within the system; applications to the campus and yield of admitted students both increased in 2017. As the fastest growing campus in the UC system, more students are choosing to apply directly to the campus and ultimately enroll there, including a portion of the students who find themselves in the referral pool. According to the 2018 Annual Report on Undergraduate Admissions Requirements and Comprehensive Review, 119 students (1.1%) from the fall 2017 referral pool enrolled at Merced.

The 2018 Annual Report can be accessed here: https://senate.universityofcalifornia.edu/_files/committees/boars/boars-2018-report-to-regents.pdf.

Estimated Completion Date: 2020 - Aligned with UC Merced 2020 Project

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

Until the university is able to increase the proportion of students who ultimately accept offers to a referral campus, we will not consider this recommendation to be fully implemented.

Annual Follow-Up Agency Response From November 2017

The key to an effective referral pool for California resident is to make it smaller, not more attractive. When enrollment growth funding is provided, students are more likely to enroll at a campus they wish to attend rather than enroll at a campus for which they have no interest. The University's strategy in improving the referral pool for California residents is two-pronged: The first strategy is to shrink the number of students in the referral pool, which means more students are admitted to a campus of choice. President Napolitano's pledge to enroll an additional 10,000 more California resident students is advancing UC toward this goal. In 2016, when enrollment growth funding was provided by the State, the referral pool shrank by 25 percent from 2015 (the smallest referral pool in nearly a decade). The second strategy is to increase the attractiveness of the UC Merced, the campus which accommodates the most referral pool students in the UC system. In July 2016 the Regents voted to approve the Merced 2020 plan. This capital plan will make it possible for the campus to enroll significantly more undergraduate students as it also offers additional academic programs and majors. In addition, the plan increases the attractiveness of the campus by offering additional residential and student services space. . The best way to serve students is to offer them enrollment opportunities at campuses that they wish to attend. Indeed, the long-term goal of the 2020 plan is to accommodate an ever increasing number of California residents who wish to enroll at a campus having a broad array of majors and opportunities. Data indicate that this strategy is working. Since 2013, when the Merced 2020 plan was first announced, applications to the campus have increased 26 percent, the number of admitted students has increased by 43 percent and enrollment at the campus has increased by 23 percent. UC Merced is the fastest growing campus in the UC system.

Estimated Completion Date: Full implementation in 2020 with completion of UC Merced 2020 Project

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

While we agree that increasing overall resident admissions and improving the attractiveness of the Merced campus will likely increase the proportion of referred students who enroll, the vast majority of students referred to UC Merced continue to decline enrollment offers. Specifically, the university noted that 182, or 2 percent, of the 9,598 fall 2015 freshmen in the referral pool enrolled at Merced in academic year 2015-16. Until the university is able to increase the proportion of students who ultimately accept offers to a referral campus, we will not consider this recommendation to be fully implemented.

1-Year Agency Response

To increase the likelihood that referred students consider enrollment at Merced, UC continues to expand educational offerings and facilities at that campus. In July 2016 the Regents of the University of California voted to approve the Merced 2020 plan—an ambitious capital plan to build new academic, residential, and student services space that will greatly enhance Merced's desirability and its ability to offer a broader range of academic and co-curricular programs. UC's commitment to providing excellent facilities and programs at UC Merced sends a powerful signal to potential students that Merced is an excellent academic choice.

Estimated Completion Date: Full implementation in 2020 with completion of UC Merced 2020 Project
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

As we stated in our 60-day and 6-month public assessment, our recommendation indicates that the university should amend its referral process to increase the likelihood that referred residents ultimately enroll. The university's response highlights actions that it took prior to the release of our audit report--actions that did not notably increase the enrollment rates of referred residents.

This recommendation will remain as no action taken until the university provides specific actions that it will implement to increase the enrollment of referred residents above the 1 to 2 percent rate experienced over the past four academic years.

6-Month Agency Response

The University shares the goal of finding means to increase the number of students currently admitted through the referral pool who ultimately enroll at UC—either at Merced or on other campuses. The University does not agree with the auditor's assessment that no action has been taken on this recommendation since the date of the auditor's report. As noted in our 60-day response, admission offers made in April-June 2016 had the effect of reducing the size of the referral pool (an even better outcome than increasing the yield of those admitted through referral) by 20 percent. .

Furthermore (and also noted in the 60-day response), in July 2016 the Regents of the University of California voted to approve the Merced 2020 plan—an extremely ambitious capital plan to build new academic, residential, and student services space that will greatly enhance Merced's desirability and its ability to offer a broader range of academic and co-curricular programs. These buildings will begin coming on line in 2018—well within the enrollment period of students enrolling in Fall 2016. UC's commitment to providing excellent facilities and programs at UC Merced sends a powerful signal to potential students that Merced is an excellent academic choice.

Estimated Completion Date: Full implementation in 2020 with completion of UC Merced 2020 Project
Response Date: August 2016

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

As we stated in our 60-day public assessment, our recommendation indicates that the university should amend its referral process to increase the likelihood that referred residents ultimately enroll. The university's response highlights actions that it took prior to the release of our audit report--actions that did not notably increase the enrollment rates of referred residents.

60-Day Agency Response

The University shares the goal of finding means to increase the number of students currently admitted through the referral pool who ultimately enroll at UC. We already have programs in place to increase the enrollment rate of students admitted to UC Merced through this vehicle, including the campus's "Count Me In" campaign which targets referral students with information and encourages them to accept their referral pool offer. More important, UC Merced is embarking on an ambitious capital plan, Merced 2020, to build new academic, residential, and student services space that will greatly enhance Merced's desirability and its ability to offer a broader range of academic and co-curricular programs that attract the most talented California resident students. As a result, Merced will expand programs, hire new faculty, and increase enrollment over the next several years.

In addition, UC hopes that by increasing the number of students admitted to campuses they originally apply to, the number of students in the referral pool will decline. With increased State funding for enrollment, UC is adding 5,000 new California residents in Fall 2016. As a result, the proportion of California freshman applicants admitted to one of their campuses of choice has already increased from 56 percent to 63 percent and we expect the final admission rate for California residents to be even higher. We expect the number of students whose only offer of admission comes through referral to decline by several thousand.

Estimated Completion Date: Full implementation in 2020 with completion of UC Merced 2020 Project
Response Date: May 2016

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

Our recommendation indicates that the university should amend its referral process to increase the likelihood that referred residents ultimately enroll. The university's response highlights actions that it took prior to the release of our audit report--actions that did not notably increase the enrollment rates of referred residents.

Recommendation #3 To: University of California

To ensure that campuses' interpretations of admission standards do not adversely impact residents, the university should implement a thorough process to annually evaluate the qualifications of students who apply and students who are admitted. These evaluations should highlight instances when campuses admit nonresidents who are less qualified than residents and should include corrective action steps. Moreover, this evaluation should include resident and nonresident undergraduate enrollment in majors at each campus. The university should make the results of this evaluation—including details of the academic qualifications of students who applied and who were admitted—publicly available.

Annual Follow-Up Agency Response From October 2021

Characteristics of applicants, admits, and enrollees is available here and the weighted, capped GPA is one of the metrics provided:

https://www.universityofcalifornia.edu/infocenter/freshman-admissions-summary

As previously communicated, the results of the admission process and who is admitted is the outcome of the full evaluation of all applicants.

With no change to report for this period, UC maintains partial implementation as the final status on this recommendation.

https://ucop.edu/operating-budget/_files/legreports/20-21/data_on_nonresident_student_admission_legrpt.pdf

Estimated Completion Date: Ongoing

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

Annual Follow-Up Agency Response From November 2020

Characteristics of applicants, admits, and enrollees is available here and the weighted, capped GPA is one of the metrics provided:

https://www.universityofcalifornia.edu/infocenter/freshman-admissions-summary

As previously communicated, the results of the admission process and who is admitted is the outcome of the full evaluation of all applicants.

With no change to report for this period, UC maintains partial implementation as the final status on this recommendation.

https://www.ucop.edu/operating-budget/budgets-and-reports/legislative-reports/data_on_nonresident_student_admission_fall2019.pdf

Estimated Completion Date: Ongoing

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

The UC has only partially implemented this recommendation. In this response, the UC references its freshman admissions summary, which does not compare the qualifications of nonresident to residents, as we recommended. The UC also references its legislative report, which does not include several other aspects of the recommendation, including corrective action, enrollment in majors at each campus, or the academic qualifications of students who applied and who were admitted. In past responses to this recommendation, the UC has referenced its compare favorably report, which also does not include many aspects of this recommendation. This recommendation will not be fully implemented until the UC implements a process to evaluate the qualifications of students who apply and students who are admitted, including all of the elements of this recommendation.

Annual Follow-Up Agency Response From November 2019

Characteristics of applicants, admits, and enrollees is available here and the weighted, capped GPA is one of the metrics provided:

https://www.universityofcalifornia.edu/infocenter/freshman-admissions-summary

The results of the admission process and who is admitted is the outcome of the full evaluation of all applicants. The weighted, capped GPA referenced in the CSA response is used for UC eligibility purposes. For a more fair comparison of residents to nonresidents, the unweighted GPA is the appropriate measure as nonresidents do not have A-G approved course lists and may not have access to or adoption of honors and advanced placement courses that are comparable to the California context. At the request of the legislature, additional metrics on median statistics were also included for the legislative report that are not part of the annual BOARS report referenced in #1.

https://ucop.edu/operating-budget/_files/legreports/18-19/data_on_nonresident_student_admission_legrpt_071519.pdf

Completion Date: July 2019

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

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2018

The applicants are evaluated for admission based on a wide range of academic and contextual indicators. The Academic Senate provides an annual outcomes report with the academic qualifications of resident and nonresident students admitted to UC by campus. Where available, measures of student academic success (first year GPA, retention rates, and probation rates) are also provided. The report can be found here: https://senate.universityofcalifornia.edu/_files/committees/boars/boarscomparefavorably2017.pdf

Under the University's "comprehensive review" policy, students applying to UC campuses are assessed for admission using multiple measures of achievement and promise while considering the context in which each applicant demonstrated academic accomplishment. No criterion, including high school GPA or standardized test score is given a specific weight in the decision process, nor is any criterion considered sufficient to appropriately admit or reject an applicant's request for admission. Assessment of qualifications for admission go beyond relying exclusively on GPA and test scores. Comprehensive review provides campuses with the latitude to conduct a more thorough review of every freshman, both resident and nonresident. With this in mind, the GPA most appropriate for comparison purposes of these two populations is the unweighted GPA given the educational context and availability, or lack thereof, of courses granted extra points in the GPA calculation for statewide eligibility.

As noted in the response to item #1, GPA and test scores provide an incomplete picture of an applicant's academic achievements demonstrated through other non-quantifiable measures. While the Compare Favorably policy communicates a clear message to campuses about its expectation that nonresidents applicants who are admitted have stronger qualifications than residents, BOARS is confident that all campuses are making a concerted effort to comply with this policy.

Completion Date: June 2017

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

The university has only partially implemented this recommendation. Specifically, our recommendation stated that the university should evaluate the qualifications of students who apply as well as students who are admitted. The BOARS report referenced in the response only includes the qualifications of admitted students. Further, the BOARS report only includes unweighted GPAs, rather than weighted GPAs. As we stated in our 2016 audit, when evaluating applications, the university uses weighted GPAs that give students extra points for grades C or better in honors or advanced placement courses. Thus, we would expect the BOARS report to include weighted GPAs. Finally, even though the BOARS report highlights several instances where campuses have admitted nonresidents with lower GPAs than residents, the report includes no corrective action steps.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

In June 2017, the UC Academic Senate posted a revised report on its website that presents the relative, average academic qualifications of resident and nonresident students admitted to UC by campus. In addition, this new report provides, where available, measures of student academic success (first year GPA, retention rates, and probation rates), categorized by residency status and campus. This report applies to Fall 2016 admissions cycle, the last year for which data are available. This new report can be found on the Academic Senate at the following address: http://senate.universityofcalifornia.edu/_files/committees/boars/BOARS-2016-Compare-Favorably-Report.pdf. The Academic Senate will continue to report these data on an annual basis.

Completion Date: June 2017

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

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

The University and its Academic Senate are committed to ensuring that no campus admits nonresidents who are—on average and when evaluated across the broad set of criteria UC uses—less qualified than residents admitted to that campus. Compliance with this policy is evaluated each year by the Academic Senate and the results of that compliance review are posted publicly on the Academic Senate website.

Recognizing the desirability of even greater transparency in this area, the University administration is developing a new report that displays the relative qualifications of admitted resident and nonresident applicants, disaggregated by campus. The University plans to issue its first report (covering admitted students for Fall 2016) when final enrollment data for the 2016-17 academic year are available—most likely by June 2017. Moreover, as described in UC's response to Recommendation 1, the President requested that the Academic Senate review its "compare favorably" policy to ensure that it is consistent with the University comprehensive review admissions policies and the Master Plan. The Senate's Board of Admissions and Relations with Schools (BOARS) is collecting additional data to determine if there are other measures of academic performance that better illustrate UC's commitment to California residents.

Estimated Completion Date: June 2017
Response Date: March 2017

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

The university advised that it is continuing to develop a new report to display the relative qualifications of admitted resident and nonresident applicants, disaggregated by campus. The university's previous response noted a likely completion date of February 2017; however, this date was revised to June 2017.

As noted previously, the status of this recommendation is pending until the university issues the first report that displays the qualifications of admitted resident and nonresident applicants.

6-Month Agency Response

See attached

Estimated Completion Date: Spring 2017
Response Date: August 2016

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

In its attachment, the university stated that it will develop a new report that displays the relative qualifications of admitted resident and nonresident applicants, disaggregated by campus. The university stated that it plans to design this new report over the coming months and to issue its first report (covering admitted students for Fall 2016) when final enrollment data for the 2016-17 academic year are available—most likely by February 2017.

Therefore, the status of this recommendation is pending until the university issues the first report that displays the qualifications of admitted resident and nonresident applicants.

60-Day Agency Response

Sent as attachment

Estimated Completion Date: Spring 2017
Response Date: May 2016

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

The status of this recommendation is pending until the university issues the first report that displays the qualifications of admitted resident and nonresident applicants.

Recommendation for Legislative Action

To ensure that it has accurate information upon which to make funding decisions, the Legislature should consider amending the state law that requires the university to prepare a biennial cost study. The amendment should include requirements for the university to differentiate costs by student academic level and discipline and to base the amounts it reports on publicly available financial information. In the absence of legislative action, the university should conduct a cost study every three to five years and ensure that it is based upon publicly-available financial information. The university should use the results of the cost studies as a basis for the tuition it charges and for the proposed funding needs that it presents to the Legislature.

Description of Legislative Action

As of March 29, 2022, the Legislature has not taken action in the 2021-2022 legislative session to address this specific recommendation.

Legislative Action Current As-of: April 2022

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2021, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: March 2021

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

Legislative Action Current As-of: March 2019

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

Legislative Action Current As-of: March 2018

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation for Legislative Action

To ensure that the university does not base future admission decisions on the revenue that students generate, the Legislature should consider amending state law to limit the percentage of nonresidents that the university can enroll. For example, the Legislature could require that the university limit nonresident enrollment to 5 percent of total undergraduate enrollment. To accomplish this, the Legislature should consider requiring that the university's annual appropriations be based on enrolling agreed-upon percentages of residents and nonresidents.

Description of Legislative Action

AB 128 (Chapter 21, Statutes of 2021) states legislative intent to reduce the number of nonresident undergraduate students at UC Berkeley, UCLA, and UC San Diego such that nonresident undergraduate enrollment at each campus comprises no more than 18 percent of total undergraduate enrollment by the 2026-27 academic year. The statute further states legislative intent to provide ongoing resources to offset the associated decrease in nonresident tuition and fee revenues, beginning in 2022-23.

AB 1624 (Ting, 2022) and SB 840 (Skinner, 2022) would enact the Budget Act of 2022 and state legislative intent to reduce the number of nonresident undergraduate students at UC Berkeley, UCLA, and UC San Diego such that nonresident undergraduate enrollment at each campus comprises no more than 18 percent of total undergraduate enrollment by the 2026-27 academic year. These budget bills would appropriate $31 million on an ongoing basis to offset the decrease in nonresident tuition and fee revenue associated with a target reduction for the 2022-23 academic year of 902 nonresident undergraduate students enrolled at the three campuses, and enrollment growth of an equal number of California resident undergraduate students at these three campuses. If the actual reduction in nonresident undergraduate enrollment for the 2022-23 academic year is less than the specified reduction, the Director of Finance may reduce the UC's appropriation by the portion of the appropriation that is attributable to each student under the target reduction level.

Legislative Action Current As-of: April 2022

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Proposed But Not Enacted

Description of Legislative Action

As of March 29, 2021, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: March 2021

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

Legislative Action Current As-of: March 2019

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

Legislative Action Current As-of: March 2018

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation for Legislative Action

To ensure that the university meets its commitment to residents and to bring transparency and accountability to admission outcomes, the Legislature should consider excluding the students who the university places in the referral pool and who do not ultimately enroll at the referral campus when calculating the university's Master Plan admission rate until the percentage of students who enroll through the referral process more closely aligns with that of the other campuses.

Description of Legislative Action

As of March 29, 2022, the Legislature has not taken action in the 2021-2022 legislative session to address this specific recommendation.

Legislative Action Current As-of: April 2022

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2021, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: March 2021

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of March 29, 2020, the Legislature has not taken action to address this specific recommendation.

Legislative Action Current As-of: April 2020

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

Legislative Action Current As-of: March 2019

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

Legislative Action Current As-of: March 2018

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation #7 To: University of California

To improve its internal operations and promote cost savings related to the nearly $13 billion it spent on employee salaries in fiscal year 2014-15, the university should conduct a systemwide assessment to identify ways to streamline and reduce its employee costs.

Annual Follow-Up Agency Response From October 2018

As part of its response to the 2017 audit, UCOP conducted an evaluation of its employee reimbursement policies, which resulted in several changes.

Policy revisions to SMG policies for car allowances, employer contributions toward a Retirement Savings Plan, relocation allowances and moving reimbursements were approved by the Regents in March 2018.

http://regents.universityofcalifornia.edu/regmeet/mar18/g1.pdf

Revised and approved stipend procedures and policies at the Office of the President were published here:https://www.ucop.edu/local-human-resources/_files/policies/ppsm/PPSM30_stipend.pdf

https://www.ucop.edu/local-human-resources/_files/policies/ppsm/ppsm30.pdf

UCOP revised its policy to lower the daily maximum for business meeting meals and require that meetings be a minimum of three hours. Revised business meeting and entertainment policies and procedures for UCOP were published here:

https://www.ucop.edu/business-resource-center/policies-and-guidance/guidelines/new-restrictions-on-use-of-ucop-funds.htm

With the completion of this analysis and resulting changes to reimbursement policy changes, UCOP believes it has fully implemented this recommendation. However, UCOP intends to continue to explore additional opportunities to streamline and reduce employee costs. For example, the University convened a working group to explore strategies and develop options for consideration to ensure the long-term financial viability of the retiree health benefits program. The President accepted several recommendations of the working group and will continue to work with members through 2019 to review additional options for reform. The working group's preliminary report is available at https://ucnet.universityofcalifornia.edu/_files/pdf/Retiree-Health-Letter-Report-July-2018.pdf and the President's response is available at https://ucnet.universityofcalifornia.edu/_files/pdf/rhbwg_retiree_health_benefits_letter_071918.pdf.

Completion Date: April 2018

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

As part of its response to our April 2017 audit, the Office of the President conducted an assessment related to employee costs and implemented several policy changes.

Annual Follow-Up Agency Response From November 2017

Employee and retiree benefits represent nearly one-third of all employee-related expenditures from core funds. Because the level and cost of these expenditures are directly influenced by systemwide programs, policies, and contracts, employee and retiree benefits are an appropriate area of focus for systemwide review to achieve future cost savings or cost containment.

In March 2016, the Board of Regents approved a new retirement program for future employees that will bolster the long-term financial stability of UC and its retirement program and should, over time, reduce the cost of funding the University's retirement program compared to what would have otherwise been required under the current retirement program. Among other changes, the new plan caps Pensionable earnings at the Public Employees' Pension Reform Act (PEPRA) limit.

In June 2017, the Board authorized an increase in the University's employer contribution rate and additional contributions to UCRP, which will improve the plan's funded status and reduce the need for additional UCRP contributions in the future.

In addition, implementation activities resulting from the recent audit of the UCOP budget have the potential to reduce employee costs through changes to salary setting processes, changes to employee reimbursement policies, and implementing a more structured approach to workforce planning.

Estimated Completion Date: Ongoing

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

The Office of the President intends to conduct an evaluation of employee benefit policies as part of its response to our 2017 audit.

1-Year Agency Response

UC has assessed the workforce trends noted by the auditor. The assessment showed that nearly all of the increase in headcount was attributable to (a) campus medical centers, where the increase was in response to increased patient demand, and (b) student workers, which is to be expected due to increased enrollment during that period. The assessment found that the number of general campus staff supported by core funds actually had actually declined during that period.

UC is pursuing a variety of cost-saving efforts that are designed to control employee-related expenses. These include, but are not limited to, sustained efforts to control health care expenditures for current employees and retirees and strategies to reduce the unfunded liability of the UC Retirement Plan - which will, over time, lead to lower required employer contributions and a corresponding reduction in UCRP costs paid from the University's operating budget compared to what would otherwise be required.

Estimated Completion Date: Ongoing
Response Date: March 2017

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

The university does not indicate in its response that it has conducted a systemwide assessment to identify ways to streamline and reduce its employee costs. Rather, its response indicates that it is pursuing a variety of cost-saving efforts, but that appear limited to certain benefits rather than a more global review of all employee costs, including compensation. Thus, we consider this recommendation to be partially implemented until the assessment is complete.

6-Month Agency Response

The University will continue and expand a variety of efforts that began under the Working Smarter initiative to improve efficiencies and to achieve cost savings in multiple areas of the University's budget.

The annual budget plan developed by UC as the basis for its request for State funding will build projections of savings, new revenue, or other positive fiscal impact into its estimates as a way of helping to meet its cost increases. Identifying opportunities to reduce costs, to increase productivity, or to identify new revenue is a continuous and ongoing effort. As a result, the implementation status of this recommendation is most accurately characterized as "Not Fully Implemented."

Estimated Completion Date: Ongoing
Response Date: August 2016

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

As we stated in our 60-day public assessment, the university does not indicate in its response that it plans to conduct a systemwide assessment to identify ways to streamline and reduce its employee costs, therefore it has taken no action at this time to address our recommendation. Furthermore, as noted in our report, we were unable to substantiate any of the savings or new revenue from the working smarter initiative.

60-Day Agency Response

Within the context of continued growth in the number of students that the University enrolls, the number of patients that we serve, and demand for other UC services provided by UC, reducing employee costs below 2014-15 levels is not a realistic objective. However, the University will continue and expand a variety of efforts that began under the Working Smarter initiative to improve efficiencies and to achieve cost savings in multiple areas of the University's budget.

Through Working Smarter, the University implemented new ideas for cost savings, revenue generation, and efficiencies. Across its five-year program timeline, Working Smarter tracked significant savings from all fund sources, including core-funded programs. Much of this work continues to reap benefits—both savings and new revenue—which allow programs to meet their mandatory cost increases despite the lack of adequate funding available from the State or tuition sources. The Working Smarter initiative has more than achieved its goals and has completed its five-year time frame. Though many systemwide and campus-specific projects continue to contribute to efficiencies and savings within the University, more recently the University is refining its focus on a smaller group of higher yield administrative projects. The annual budget plan developed by UC as the basis for its request for State funding will build projections of savings, new revenue, or other positive fiscal impact into its estimates as a way of helping to meet its cost increases. Identifying opportunities to reduce costs, to increase productivity, or to identify new revenue is a continuous and ongoing effort. As a result, the implementation status of this recommendation is most accurately characterized as "Not Fully Implemented."

Estimated Completion Date: Ongoing
Response Date: May 2016

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

The university does not indicate in its response that it plans to conduct a systemwide assessment to identify ways to streamline and reduce its employee costs, therefore it has taken no action at this time to address our recommendation. Furthermore, as noted in our report, we were unable to substantiate any of the savings or new revenue from the working smarter initiative.

Recommendation #8 To: University of California

To ensure the reasonableness of the compensation the university pays its executives, it should include—to the extent possible— all items of compensation when setting or adjusting salaries and benefits, when conducting surveys and studies, and when comparing the compensation packages of its executives to those in similar positions outside the university.

Annual Follow-Up Agency Response From October 2022

Executive Compensation is reviewing the timing, cost and feasibility of completing a total remuneration study focused on executive level positions to better address the state audit recommendation. The study itself will take several months to complete.

Estimated Completion Date: TBD

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Annual Follow-Up Agency Response From October 2021

Estimated Completion Date: TBD

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

The university provided the same status in its previous response in November 2020.

Annual Follow-Up Agency Response From November 2020

Estimated Completion Date: TBD

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

Annual Follow-Up Agency Response From November 2019

Estimated Completion Date: December 2020

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

Annual Follow-Up Agency Response From October 2018

Executive Compensation will determine if the executive benefits survey that was performed prior to the earlier response should be updated and/or if investing in a total remuneration study, which would incur significant costs, would be a preferred method to compare the university to its peers in terms of all items of compensation.

Estimated Completion Date: June 2019

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

We will evaluate the university's response to this recommendation after it has determined whether the executive benefits survey that was performed prior to the earlier response should be updated. Until that time, we have assessed this recommendation as no action taken.

Annual Follow-Up Agency Response From November 2017

The University has made and continues to make substantive changes to its benefits programs, including a new tier to its pension plan which reduced the level of covered compensation used in the calculation of benefits and adding a defined contribution plan which reduces the University's level of contribution to retirement benefits. Additional changes to benefits for all SMG new hires and appointees include elimination of car allowances, elimination of the senior management supplemental benefit contributions, and elimination of cash relocation allowances. A total remuneration study, while very expensive and time consuming, is still being contemplated for the future.

Completion Date: March 2017

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

The university has not taken any further action since we deemed this recommendation partially implemented as of its one-year response. As we stated in our evaluation of the university's one-year response, the university participated in a national survey of executive benefits and provided a six-page document detailing the results of that survey as part of its response to our recommendation. This survey included data on nine institutions, five of which were private. Contrary to the university's assertions, the results of the survey do not indicate a position to market that is generally within or slightly below prevalent competitive practices. For example, university benefits were not identified independently from the general percentages. A total remuneration study would better address our recommendation and, as the university indicates, it intends to conduct one in the future.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

UC participated in a national survey on executive benefits and received the results in early March. Those results are attached and confirm that the University's position to market is generally within prevalent competitive practices or slightly below, in some areas. The University intends to conduct Total Remuneration studies in the future, and executives will be included in those efforts. Cash compensation surveys are updated annually to ensure that UC understand its position to market for base salaries and total cash compensation.

Completion Date: March 2017
Response Date: March 2017

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

The university participated in a national survey of executive benefits and provided a six page document detailing the results of that survey as part of its response to our recommendation. This survey included data on nine institutions, five of which were private. Contrary to the university's assertions, the results of the survey do not indicate a position to market that is generally within or slightly below prevalent competitive practices. For example, university benefits were not identified independently from the general percentages. A total remuneration study would better address our recommendation and, as the university indicates, it intends to conduct one in the future.

6-Month Agency Response

The University participated in a national survey on executive benefits and is awaiting the data and results from the survey consultant. When newhire or appointment actions are presented to the President or Regents for approval, all elements of compensation, including benefits, are itemized and disclosed. Consistent with our past practices, we continue to disclose all elements of compensation, including all benefits, for individual executives in our Annual Report on Executive Compensation, posted on our public website. We also provide detailed compensation information in our public annual All Wage Database and in the details reported to the State Controller's office.

Estimated Completion Date: September 2016
Response Date: August 2016

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

This recommendation is pending the data from the university's recent executive benefit survey. Furthermore, although the university indicates that it discloses all elements of compensation, it does not always include all of these elements when comparing compensation packages of its executives to those in similar positions outside the university, which we recommended.

60-Day Agency Response

The University already conducts annual studies of our cash compensation. General benefits reviews also occur annually. In May of 2016, UC will begin participation in a national survey focused on executive benefits offered at higher education institutions.

Estimated Completion Date: September 2016
Response Date: May 2016

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

The university did not provide documentation to support its participation in a national survey. Furthermore, the university does not address whether it plans to include all items of compensation--not just cash compensation--when conducting future surveys and studies.

Recommendation #9 To: University of California

To ensure that its process for establishing and revising salaries for its top executives is documented, thorough, and consistently applied, the university should implement the five outstanding recommendations from its 2013 internal review report by August 2016.

Annual Follow-Up Agency Response From October 2018

Based on recent communications with CSA, UCOP understands that the remaining outstanding action required to fully implement this recommendation is to ensure that the Guidelines to apply adjustments to Survey Matches include a soft cap of 5% on the aging factor. These guidelines have now been updated to reflect a soft cap of 5% as an aging factor to be applied to survey data. The update also addresses the need for further analysis if an aging factor of more than 5% is proposed to determine that the survey source is appropriate to be used in refreshing the market data matches, as well as the criteria under which an aging factor of more than 5% might be considered.

Completion Date: October 2018

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

We reviewed the documentation provided by UCOP and determined that it addressed the outstanding recommendations from its 2013 internal review report.

Annual Follow-Up Agency Response From November 2017

Documentation was finalized on July 20, 2016 and submitted to our internal audit group for their records and to the State Auditor. On November 1, 2017, UC submitted additional information in response to questions received from the State Auditor.

Completion Date: August 2016

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

One of the five outstanding recommendations from the university's 2013 internal review has not been fully implemented. Therefore, the status of this recommendation is partially implemented.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

Documentation was finalized on July 20, 2016 and submitted to our internal audit group for their records and to the State Auditor.

Completion Date: August 2016
Response Date: March 2017

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

One of the five outstanding recommendations has not been fully implemented. Therefore, the status of this recommendation is partially implemented.

6-Month Agency Response

Documentation was finalized on July 20, 2016 and submitted to our internal audit group for their records.

Completion Date: August 2016
Response Date: August 2016

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

The documentation the university provided did not address two of the recommendations from the internal review. Therefore, the status of this recommendation is partially implemented.

60-Day Agency Response

A draft of this documentation is under review and will be finalized by August 2016.

Estimated Completion Date: August 2016
Response Date: May 2016

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

This recommendation is pending until the university finalizes the implementation of the five outstanding recommendations from its 2013 internal review report by August 2016.

Recommendation #10 To: University of California

To improve the transparency and timeliness of its annual compensation report, the university should streamline the process it uses to prepare the report so it can be issued by April of each year.

Annual Follow-Up Agency Response From November 2017

As previously communicated, the University will target release of this report and all other compensation information and disclosures no later than July of each year, consistent with reporting practices for state agencies. UC's IT group and others are working to identify ways in which to automate these efforts, extracting information from payroll and other databases. If these efforts prove successful, then the report could be produced more expeditiously.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

As previously communicated, the University will target release of this report and all other compensation information and disclosures no later than July of each year, consistent with reporting practices for all state agencies. UC's IT group and others are working to identify ways in which to automate these efforts, extracting information from payroll and other databases. If these efforts prove successful, then the report could be produced more expeditiously.

Estimated Completion Date:
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Will Not Implement

Although the university indicates that it is working to identify ways in which it could automate efforts related to its annual compensation report, it has not set a target of issuing the report by April of each year. Therefore, the recommendation status remains as will not implement.

6-Month Agency Response

As previously communicated, the University will target release of this report and all other compensation information and disclosures no later than July of each year, consistent with reporting practices for all state agencies. We are in the process of reviewing this report to be much more of an automated payroll/system generated report, and not the manual data collection effort as it is today, which should make it easier to comply with this requirement in future years.

Response Date: August 2016

California State Auditor's Assessment of 6-Month Status: Will Not Implement

As we noted in the 60-day public assessment, the university indicates that it will issue its annual compensation report no later than July of each year, which is currently the required date under the Regents' bylaws. Therefore, the university does not plan to implement this recommendation. However, to improve the transparency and timeliness of the university's executive compensation practices, which are substantially different from those of state agencies, our recommendation is that it issue the annual compensation report by April of each year.

60-Day Agency Response

As previously communicated, the University will target release of this report and all other compensation information and disclosures no later than July of each year, consistent with reporting practices for all state agencies. We are in the process of reviewing this report to be much more of an automated payroll/system generated report, and not the manual data collection effort as it is today, which should make it easier to comply with this requirement in future years.

Estimated Completion Date: July 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Will Not Implement

The university indicates that it will issue its annual compensation report no later than July of each year, which is currently the required date under the Regents' bylaws. Therefore, the university does not plan to implement this recommendation. However, to improve the transparency and timeliness of the university's executive compensation practices, which are substantially different from those of state agencies, our recommendation is that it issue the annual compensation report by April of each year.

Recommendation #11 To: University of California

To ensure that the home loan program is the best use of the university's investment funds, it should conduct a cost benefit analysis that factors in the opportunity costs of investing in the home loan program as opposed to other higher-returning assets.

6-Month Agency Response

As previously reported, based on the results of the cost benefit analysis recently conducted, we are not making any changes to the implementation of the University's home loan program.

We reviewed the loans that have been held in portfolio for more than 3 years. There are 43 loans with a total outstanding balance of $21.7 million. 7 of these loans were rejected by investors for various reasons (delinquent property taxes, insufficient value, other credit issues). Four of the loans are interest-only, and currently investors are not purchasing interest-only loans. The remaining 32 loans do not have a floor rate, so they are also not attractive to investors.

Going forward, it is our intent to sell as many of the newly originated loans as possible. In 2010 we implemented a floor rate, which has made our loans more attractive. Additionally, in 2014, we stopped making interest-only MOP loans.

The $21.7 million outstanding balance represents .43% of the $5 billion held in STIP, so the return on these loans has an insignificant impact on the STIP return.

Regarding the State Auditor's comment that the list of loans included in our analysis does not appear to be a comprehensive list of loans, we would need more information about the discrepancies identified to address the reason for each individual discrepancy, but the following factors would result in discrepancies between the list of loans included in our analysis and the loans provided during the audit: (1) The list of sold loans included in our analysis only includes loans sold since 2010. We did not sell any loans between 2006 and 2010. (2) The list of sold loans included in our analysis did not include loans from the Supplemented Home Loan Program, since those loans are not funded from the Short-Term Interest Pool.

Completion Date: May 2016
Response Date: August 2016

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

Based on information that the university provided, we consider this recommendation to be resolved. Specifically, after additional follow-up with the university, we were able to reconcile most of the loans between the lists it provided us, which would substantiate the accuracy of the university's assertion that it holds home loans for an average of less than three years. Additionally, the university provided us with two policies that demonstrate its intent to periodically sell its home loans.

60-Day Agency Response

Based on the results of the cost benefit analysis recently conducted (attached), we are not making any changes to the implementation of the University's home loan program.

Completion Date: May 2016
Response Date: May 2016

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

The university's cost benefit analysis determined that on average it has held home loans for 2.8 years. Thus, the university asserts that the return rate for its home loan program is comparable to its short term investment pool. As a result, the university concluded, there are no opportunity costs associated with investing in the home loan program as opposed to other higher-returning assets.

We followed up with the university to request documentation to verify this claim, and the university provided excel spreadsheets that indicated that it holds loans for an average of 2.8 years; however, the university continues to hold many other loans, some for over 10 years. Moreover, the list the university provided to us does not appear to be a comprehensive list of the loans it owns because the list does not include a substantial number of loans from a list that the university provided during the audit. Although the university completed this cost benefit analysis in response to our recommendation, it is unclear whether the university will perform this analysis on a regular basis. Further, because the university continues to hold many older loans, it is unclear whether the university has a policy in place to sell home loans after a certain period of time. As a result, we cannot conclude that this recommendation is fully implemented.

Auditee did not substantiate its claim of full implementation

Recommendation #12 To: University of California

To maximize the savings and new revenue from the Working Smarter initiative and ensure that the university uses them for its academic and research missions, the Office of the President should immediately require that the campuses fully participate in all projects unless they can provide compelling evidence demonstrating a harmful effect.

Annual Follow-Up Agency Response From October 2021

As we have previously noted, the University does require campuses to use common administrative systems or processes in many instances to achieve operational efficiencies, cost savings, or other desirable outcomes. Examples include the University's online undergraduate application for admission, Apply UC; the Integrated Capital Asset Management Program (ICAMP); insurance provided though Fiat Lux, the University's captive insurance program; UCPath, the University's systemwide human resources and payroll information system; and many others. The scope of campus participation in such projects has increased since the time of the audit—most notably with the implementation of UCPath at every UC campus and medical center by 2020.

As noted in our earlier response, however, we believe that in many instances, an "opt-in" approach is often more appropriate than a "top-down" approach. An opt-in approach requires programs to demonstrate their potential value to campuses and allows each campus to determine which administrative priorities to focus its resources on and what resources are required to adopt a systemwide program or system.

Because the University requires full campus participation in some but not all such programs or systems, and because the extent of systemwide participation has increased since the time of the audit, we believe that "Not Fully Implemented" correctly describes the implementation status for this recommendation.

Estimated Completion Date: Ongoing

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

The university's response describes the condition at the time of the audit. Because the university has not taken action to mandate the campuses' participation, we evaluate this recommendation as no action taken.

Annual Follow-Up Agency Response From November 2020

The University does require campuses to use common administrative systems or processes in many instances to achieve operational efficiencies, cost savings, or other desirable outcomes. Examples include the University's online undergraduate application for admission, Apply UC; the Integrated Capital Asset Management Program (ICAMP); insurance provided though Fiat Lux, the University's captive insurance program; UCPath, the University's systemwide human resources and payroll information system; and many others. As noted in our earlier response, however, we believe that an "opt-in" approach is often more appropriate than a "top-down" approach. An opt-in approach requires programs to demonstrate their potential value to campuses and allows each campus to determine which administrative priorities to focus its resources on and what resources are required to adopt a systemwide program or system. Because the University requires full campus participation in some but not all such programs or systems, we believe that "Not Fully Implemented" correctly describes the implementation status for this recommendation.

Estimated Completion Date: Ongoing

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Annual Follow-Up Agency Response From November 2019

Estimated Completion Date: Ongoing

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Annual Follow-Up Agency Response From October 2018

As a point of clarification, there is no longer a "Working Smarter" initiative; there is, however, a growing number of examples where the University has established systemwide or multi-campus purchasing or strategic sourcing agreements to achieve cost savings and/or new revenues related to the procurement of goods and services. The University continues to believe that, generally speaking, demonstrating the potential value of these agreements to campuses and departments in order to gain and expand their participation is preferable to mandating participation in a top-down manner. UC campuses operate with a high level of autonomy, which fosters local innovation and allows each campus to "opt in" to those systemwide or multi-campus agreements that best meet its particular needs. This approach also requires systemwide efforts to demonstrate the highest possible value since they must prove themselves to campuses and departments instead of relying on top-down mandates. By providing shared tools, timely access to information, training, and periodic outreach to campus leadership and relevant staff, the University has been able to increase participation by campus departments in a variety of programs to realize benefits, avoid costs, and deliver savings in support of the University's mission.

Estimated Completion Date: Ongoing

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Although we concur that campuses should have autonomy in academic decisions, having autonomy in administrative decisions does not take advantage of the significant efficiencies that can occur when the campuses use common systems. Until UC directs the campuses to use the administrative processes that it asserts are more efficient and cost beneficial, we will consider this recommendation as will not implement.

Annual Follow-Up Agency Response From November 2017

The Office of the President has reached out to coordinators of cost savings and revenue-generating programs (originally part of the Working Smarter initiative) to assess the level of participation, potential for additional savings, and barriers to further participation. Most of the programs already have high levels of participation by campuses, and are contributing benefits to campus departments that may be used to support core academic, research, and public service missions. However, there are opportunities to expand participation further in the areas of Procurement, Travel, Purchase Card, and Equipment Insurance. UCOP will discuss programs with coordinators to recommend policy changes, investments, or incentives that will be needed to increase participation to maximize savings and revenue.

Estimated Completion Date: Ongoing

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

The university does not indicate whether it has directed campuses that they must participate in the Working Smarter initiative, as our recommendation states.

1-Year Agency Response

Cost-savings and revenue-generating efforts that were originally part of the Working Smarter initiative have now become embedded in processes and programs throughout the UC system. UCOP will reach out to coordinators of programs that were initiated under Working Smarter to identify the potential for additional savings made possible by their programs - e.g., through greater utilization of systemwide contracts. UC expects that it will be able to identify and assess those potential savings and to make any recommendations regarding increased participation by July 2017. The University disagrees with the State Auditor that the University's proposed timeline suggests that it is not "serious about generating savings and new revenue." Rather, it reflects a combination of competing priorities - including but not limited to providing timely responses to the State Auditor in conjunction with a subsequent audit of the Office of the President - and limited staff resources at UCOP.

Estimated Completion Date: July 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

The university failed to provide documentation of any assessment conducted with campuses related to savings or new revenue from its Working Smarter initiative. Further, its response indicates that it has not yet reached out to program coordinators to identify the potential for additional savings. Moreover, the university does not indicate whether it has directed campuses that they must participate in the Working Smarter initiative.

6-Month Agency Response

The University will assess with campuses the feasibility of participating in the remaining programs within the Working Smarter portfolio. Each campus, together with UCOP, must evaluate the timing and deployment of limited resources toward systemwide or local campus priorities. Separately, existing projects that are fully implemented but not yet experiencing full participation at every UC location (such as UC Travel /Connexxus) can be re-examined for near-term opportunities to expand the adoption rate where there is room for improvement.

Estimated Completion Date: July 2017
Response Date: August 2016

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

The university indicates that it will assess and evaluate campus participation in Working Smarter programs, however these activities have yet to take place. Further, the university's response does not demonstrate an urgency to optimize savings from the Working Smarter initiative. If the university was serious about generating savings and new revenue, it would have at a minimum, begun an assessment of campus participation in the remaining Working Smarter programs and mandated full participation of campus staff in existing programs.

60-Day Agency Response

Sent as attachment

Estimated Completion Date: July 2017
Response Date: May 2016

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

In its attachment, the university stated that over the next several months, it will assess with campuses the feasibility of participating in the programs within the Working Smarter portfolio. The university also acknowledged that opportunities exist to increase participation where feasible. However, the university did not provide evidence that it has begun this process.

Recommendation #13 To: University of California

To maximize the savings and new revenue from the Working Smarter initiative and ensure that the university uses them for its academic and research missions, the Office of the President should, by June 30, 2016, to the extent possible, implement a process to centrally direct these funds to ensure that campuses use them to support the core academic and research missions of the university.

Annual Follow-Up Agency Response From October 2021

As noted in the University's prior responses, cost savings and other benefits associated with these initiatives accrue directly to participating campuses, which provides an incentive for campuses to participate in applicable systemwide initiatives and to develop cost-saving initiatives of their own. UC does not attempt to "allocate savings to specific campuses to their budget allocations." Since the savings are realized at the campus level, describing how UCOP "is allocating these funds to campuses" is not applicable.

To achieve the recommendation's goal of ensuring "that campuses use [savings] to support the core academic and research missions of the university," the President directed Chancellors to do so in the President's annual budget letter. This directive appeared in the President's budget letters for 2017-18, 2018-19, 2019-20, 2020-21, and 2021-22. That directive is responsive to the recommendation that UC "centrally direct these funds ... to support the core academic and research mission of the University."

Completion Date: January 2019

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

This status is unchanged from the university's prior response. Although the President's allocation letters to the chancellors set some level of expectations for campuses, the university has not implemented a process to centrally direct Working Smarter initiative savings and new revenue, and to make this process an annual activity in its budget process. Further, the university should annually identify the amount of savings and new revenue that it has realized, as well as how it is allocating these funds to campuses.

Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2020

To achieve the recommendation's goal of ensuring "that campuses use [savings] to support the core academic and research missions of the university," the President directed Chancellors to do so in the President's annual budget letter. This directive appeared in the President's budget letters for 2017-18, 2018-19, 2019-20, and 2020-21. That directive is responsive to the recommendation that UC "centrally direct these funds ... to support the core academic and research mission of the University."

Completion Date: September 2018

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

Although the President's allocation letters to the chancellors set some level of expectations for campuses, the university has not implemented a process to centrally direct Working Smarter initiative savings and new revenue, and make this process an annual activity in its budget process. Further, the university should annually identify the amount of savings and new revenue that it has realized, as well as how it is allocating these funds to campuses.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2019

Cost savings and other benefits associated with these initiatives accrue directly to participating campuses, which provides an incentive for campuses to participate in applicable systemwide initiatives and to develop cost-saving initiatives of their own. UC does not attempt to "allocate savings to specific campuses to their budget allocations." To achieve the recommendation's goal of ensuring "that campuses use [savings] to support the core academic and research missions of the university," the President directed Chancellors to do so in the President's annual budget letter. This directive appeared in the President's budget letters for 2017-18, 2018-19, and 2019-20.

Completion Date: January 2017

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

The Office of the President's budget letters do direct campuses to use savings from the Working Smarter initiative to education. However, this falls short of implementation of our recommendation because it does not centrally track those savings or indicate the specific savings that each campus has achieved. The Office of the President's budget letters indicate that its "information systems currently in place do not have the capacity to track savings from specific initiatives and then further track how they are used," but as we discuss in the audit report, the UC was able to determine and report in its overall budget that it achieved $664 million in savings from the Working Smarter initiative. Thus, it is unclear to us why the UC believes it is unable to track savings or to implement the recommendation to centrally direct those funds to ensure campuses use them to support core academic and research missions of the university.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2018

The President's 2017-18 allocation letters to the chancellors included the following directive:

"[I]t is critical that campuses ensure that savings realized from core funds attributable to cost-saving initiatives are used in furtherance of the core academic mission of the University. As the University pointed out in its response to the Auditor, information systems currently in place do not have the capacity to track savings from specific initiatives and then further track how they are used. However, campuses are urged to ensure that departments are aware of the expectation that savings they generate from these initiatives are to be used for the core academic mission of the University."

It is anticipated that the President's 2018-19 will contain a similar directive. We believe this action reflects the intent of the CSA recommendation while acknowledging the limitations of the University's financial information systems.

Completion Date: September 2016

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Our recommendation focused on the UC directing campuses to use the savings of $664 million that it claimed to have achieved from the Working Smarter initiative to fund its core academic and research missions of the university. Although the UC indicates that its "information systems currently in place do not have the capacity to track savings from specific initiatives and then further track how they are used," the UC was able to determine that it achieved savings from the Working Smarter initiative. Thus, it is unclear to us how the UC was able to determine the savings amount, but that it is unable to allocate those savings to specific campuses to their budget allocations

Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2017

It is anticipated that the President's 2017-18 allocation letters to the chancellors will again direct chancellors to ensure that savings realized from core funds from initiatives formerly included in the Working Smarter portfolio are used in furtherance of the core academic mission of the University.

Completion Date: September 2016

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

The university's response indicates that has not implemented a process to centrally direct Working Smarter initiative savings and new revenue. For example, the university should incorporate this process into its policies contained in the Systemwide Budget Manual to ensure that its direction of savings from core funds attributable to the Working Smarter initiative is an ongoing activity. Further, the university should annually identify the amount of savings and new revenue that it has realized, as well as how it is allocating these funds to campuses.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

The 2017-18 Budget Plan includes additional contributions from systemwide contracts ($7.8 million) and Fiat Lux ($5.0 million) as part of its core funds budget, which supports the core academic, research, and public service elements of the University's mission. In addition, the President's 2016-17 allocation letter to the chancellors stated that "it is critical that campuses ensure that savings realized from core funds from initiatives included in the Working Smarter portfolio are used in furtherance of the core academic mission of the University" and directed chancellors "to ensure that departments are aware of the expectation that savings they generate from these initiatives are to be used for the core academic mission of the University." The University believes that this action addresses the recommendation as expressed in the audit report and considers this recommendation to be fully implemented.

Completion Date: September 2016
Response Date: March 2017

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

Although the President's 2016-17 allocation letters to the chancellors set some level of expectations for campuses, the university has not implemented a process to centrally direct Working Smarter initiative savings and new revenue. For example, the university should incorporate this process into its policies contained in the Systemwide Budget Manual to ensure that its direction of savings from core funds attributable to the Working Smarter initiative is an ongoing activity. Further, the university should annually identify the amount of savings and new revenue that it has realized, as well as how it is allocating these funds to campuses.

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

The University will direct that savings from core funds attributable to the Working Smarter initiative be used for meeting core budget needs in its annual allocation letter to campuses, which is usually issued by September of each year.

Estimated Completion Date: September 2016
Response Date: August 2016

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

The status of this recommendation is pending our review of the next issuance of allocation letters being sent to campuses, which according to the university will occur in November for fiscal year 2016-17. Additionally, the university should incorporate this process into its policies contained in Systemwide Budget Manual to ensure that its direction of savings from core funds attributable to the Working Smarter initiative is an ongoing activity.

60-Day Agency Response

The University already includes in its annual budget plan the use of savings from Working Smarter and other cost saving initiatives for meeting core fund needs. In fact, the University's budget plan assumes about one-third of its new funding needs will be met through sources generated through such cost-saving and revenue-generating initiatives. The University will also specifically direct that such savings from core funds be used for meeting core budget needs in its annual allocation letter to campuses, which is usually issued by September of each year.

Estimated Completion Date: September 2016
Response Date: May 2016

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

The university's core funds can be used for purposes other than the academic and research missions. Additionally, the university's response does not address our recommendation to centrally direct these savings and new revenues to its core academic and research missions, to the extent possible. However, the university stated that it will begin to direct its campuses to spend these funds for core budget needs. Thus, we believe this recommendation is partially implemented. To fully satisfy this recommendation, the university will need to demonstrate that it is centrally directing the working smarter savings and new revenues to specific activities related to its academic and research missions.

Recommendation #14 To: University of California

To maximize the savings and new revenue from the Working Smarter initiative and ensure that the university uses them for its academic and research missions, the Office of the President should ensure that it substantiates that projects are actually generating savings and new revenue and that it can demonstrate how the university uses these funds.

Annual Follow-Up Agency Response From October 2021

As noted in the University's earlier response, some activities that were formerly part of the Working Smarter portfolio were one-time actions. We interpreted the 2016 recommendation as applying to any new purported savings from ongoing programs.

To improve the University's ability to document and track savings, the University has further enhanced its Benefit Bank tool to facilitate the capture and quantification of distinct categories of benefits: actualized (a benefit with a defined quantity and absolute/firmly known value); projected (a benefit that has an estimated value based on past behavior and known future conditions, usually resulting from sourcing event); and both (a benefit with both a firmly known value for the current fiscal year and estimated value for future years). The Benefit Bank user interface was modified, and new concept training videos were introduced to guide benefit submitters. Consistent with the University's commitment to continual improvement, a newly enhanced and more in-depth Actualized & Projected training video series was released in early 2021 (see https://ucprocure.zendesk.com/hc/en-us/articles/360032836591-How-to-identify-Benefits-with-Actualized-and-or-Projected-Reporting-Types).

Other efforts that were formerly part of the Working Smarter portfolio report savings in other contexts (e.g., the University's annual report to the Legislature on the Statewide Energy Partnership program).

Estimated Completion Date: Ongoing

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

Annual Follow-Up Agency Response From November 2020

Some activities that were formerly part of the Working Smarter portfolio were one-time actions. We interpreted the 2016 recommendation as applying to any new purported savings from ongoing programs.

One example of an ongoing program is the Family Member Eligibility Reverification Program in which the University confirms the eligibility of family members who are claimed as a dependent and covered by UC's health benefits. The University conducted its most recent large-scale verification in 2017, which resulted in an estimated annual cost reduction of $21M associated with active employees and $2M associated with retirees (based on a 25% random sample of the retiree population). These savings translate into a slightly lower composite benefit rate compared to what the rate would have been without such savings—which ultimately affects the benefit-related expenses incurred by departments and fund sources across the system.

The University has previously cited tools that it has introduced to track projected cost savings, cost avoidance, and other incentives or revenue associated with procurement activities across the UC System. The Benefit Bank tool has been expanded to include savings related to the University's travel program. Other efforts that were formerly part of the Working Smarter portfolio report savings in other contexts (e.g., the University's annual report to the Legislature on the Statewide Energy Partnership program).

As we have previously noted, in many cases it is not possible to determine actual savings—only estimated savings. For example, cost savings associated with establishing a standardized laptop configuration in order to allow a campus to make volume purchases at a discounted price will depend on the hypothetical volume of purchases and laptop configurations that would have otherwise occurred, which is by necessity an estimate. The same is true for savings or benefits achieved through Connexxus, the UC and CSU systemwide travel program.

Estimated Completion Date: Ongoing

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

The UC's Benefit Bank website and its response here indicate that it is developing a process that may implement our recommendation to substantiate the savings the initiative generates from improved procurement practices, and to demonstrate how the university uses these funds. However, the Office of the President does not address how it will substantiate the savings from all 13 projects it included in the Working Smarter initiative.

Annual Follow-Up Agency Response From November 2019

UCOP Procurement Services continues to refine its 'Benefit Bank' tool (see https://www.ucop.edu/procurement-services/procurement-systems/uc-benefit-training.html) to track projected cost savings, cost avoidance, and other incentives or revenue associated with procurement activities across the UC System and trains procurement managers on how to document and record benefits when placing purchase orders. This tool allows the University to more accurately estimate benefits that are being realized. It should be noted, however, that in many cases it is not possible to determine "actual" savings—only estimated savings. For example, cost savings associated with establishing a standardized laptop configuration in order to allow a campus to make volume purchases at a discounted price will depend on the hypothetical volume of purchases and laptop configurations that would have otherwise occurred, which is by necessity an estimate. Nevertheless, it represent a serious and rigorous effort to quantify the estimated benefits associated with these activities, consistent with the intent of the recommendation.

Estimated Completion Date: Ongoing

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

The UC's Benefit Bank website and its response here indicate that it is developing a process that may implement our recommendation to substantiate the savings the initiative generates from improved procurement practices, and to demonstrate how the university uses these funds. However, this procurement program is only 1 of the 13 projects in the Working Smarter initiative, representing $170 million of the $664 million of claimed savings. The Office of the President does not address how it will substantiate the savings from these other 12 projects.

Annual Follow-Up Agency Response From October 2018

Due to competing priorities and staff turnover, we have not finalized the proposed template for distribution to other UCOP or campus departments. This remains a pending action item in 2018-19.

Estimated Completion Date: June 2019

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

Annual Follow-Up Agency Response From November 2017

In order to improve and standardize the reporting of new revenue-generation or cost-reduction efforts, the Financial Planning and Analysis unit has developed a new reporting package for project owners to complete and submit in order to document and substantiate the financial impact of such efforts. The reporting package includes a standard template, instructions on how to use the template, a worksheet for estimating revenue increases and/or cost reductions, and a definition of terms so that project owners can present the impact of their programs in a more uniform manner. Program owners are also asked to provide supporting source documents for any realized actuals, including annual reports or details from the general ledger, and any analysis of prior year data that is used to estimate revenue generation or cost reductions.

The template will be reviewed by staff in the divisions of the Chief Financial Officer and the Chief Operating Officer for any revisions prior to its dissemination to relevant staff at the Office of the President and/or campuses.

Estimated Completion Date: July 2018

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

1-Year Agency Response

The Working Smarter portfolio included many projects with readily quantifiable discounts or revenues. For example, over the course of four years, the University realized $130.4 million in revenue by optimizing the allocation of campus working capital between UC's Short Term Investment Pool (STIP) and its Total Return Investment Pool (TRIP). The University also reduced its employer costs for UC's health benefits by $35 million in a single year after conducting a full validation of every individual claimed as a dependent and covered by UC's health benefits. Other projects delivered benefits in the form of cost or risk avoidance, which by its nature is more difficult to quantify. The estimated fiscal impact of over $660 million generated by Working Smarter projects is well supported by documented revenues and savings, together with responsible estimates where those are not readily available due to the nature of the project.

It is not feasible to track the use of revenues and savings attributable to Working Smarter projects to the degree requested by the auditor. For example, UC Campus Connexions is a program that provides insurance coverage to faculty, staff, students, foundations, alumni associations, and other parties for events and activities held on campus. The program has reduced insurance costs for these individuals and organizations while at the same time protecting the University against property damage or lawsuits arising from these activities. UC is not in a position to track how savings to individuals or third-party organizations are ultimately used. UC has acknowledged that its data systems cannot track how all revenues and savings are ultimately used but has provided direction to chancellors as indicated in its response to #13.

Nevertheless, UC committed to having a new Financial Planning and Analysis unit (within Budget Analysis and Planning) undertake efforts to improve and standardized how savings are tracked.

Estimated Completion Date: July 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

Contrary to the university's claim, during the course of our audit the university was unable to substantiate, with accounting records or other credible evidence, any of the $664 million of savings and new revenue it claimed to have generated under the Working Smarter initiative. In its post-audit responses, the university has not provide any new documentation to substantiate this savings and new revenue. That said, we look forward to reviewing the results of the Financial Planning and Analysis unit's efforts to improve and standardize the university's efforts in this area.

6-Month Agency Response

The University has rigorous requirements for demonstrating savings that are achieved by Working Smarter and other cost-saving or revenue-generating initiatives. However, improvements to standardize and more consistently track these data can be made. The Financial Planning and Analysis unit within the Chief Financial Officer division will undertake this assignment and strengthen processes for tracking savings generated.

With regard to how savings and new revenue are used, no existing information system would allow tracking of these savings and new revenue across the highly decentralized UC system with any degree of specificity. However, the University develops a budget plan every year that assumes a certain level of savings will be achieved in order to meet the requirements of its expenditure plan. Departments are and will continue to be expected to generate these savings to ensure the budget plan priorities are met.

Estimated Completion Date: July 2017
Response Date: August 2016

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

We look forward to reviewing the university's implementation of strengthened processes for tracking data for the Working Smarter initiative because, despite the university's claim that it has "rigorous requirements for demonstrating savings that are achieved by Working Smarter and other cost-saving or revenue-generating initiatives," our audit found that it was unable to substantiate any of the $664 million of claimed savings and new revenue generated.

60-Day Agency Response

With regard to how savings and new revenue are used, the University is a highly decentralized system, with responsibility for most expenditures residing at the departmental level. As a result, there is no existing information system that would allow tracking of these savings and new revenue across the system with any degree of specificity. However, the University develops a budget plan every year that assumes a certain level of savings will be achieved in order to meet the requirements of its expenditure plan. Departments are and will continue to be expected to generate these savings to ensure the budget plan priorities are met.

Estimated Completion Date: July 2017
Response Date: May 2016

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

We followed up with the university and asked when the Financial Planning and Analysis unit within the Chief Financial Officer division will undertake this assignment. The university subsequently indicated that its 60-day response provided sufficient information on the status of its progress in implementing this recommendation.

The university stated that the Financial Planning and Analysis unit within the Chief Financial Officer division will strengthen processes for tracking savings generated at some unspecified point in the future. Thus, the status of this recommendation is pending.

Recommendation #15 To: University of California

To ensure that its recruiting efforts benefit residents, the university should prioritize recruiting residents over nonresidents. In particular, the university should focus its recruiting efforts broadly to ensure that it effectively recruits resident underrepresented minorities. For example, the university could establish a limit on the amount of funds it dedicates to nonresident recruiting. Further, it should develop a process to better track its nonresident and resident recruiting expenditures.

Annual Follow-Up Agency Response From November 2020

In response to the CSA's recommendation to prioritize the recruitment of residents over nonresidents, the university's commitment to California Residents is clear As previously communicated, campuses engage in significantly more outreach and recruitment efforts throughout the state than out of state through college fairs, high school visits, open houses, and campus preview days. Systemwide recruitment efforts include outreach to the top 15% of students in the state, Achieve UC and UC for You recruitment events as well as the professional development opportunities for counselors through the UC High School Counselor Conferences and Ensuring Transfer Success Institutes conducted in partnership with the California Community College Chancellor's Office. The University of California's vast Student Academic Preparation and Educational Partnerships (SAPEP) portfolio of programs prepares California students — including those who are first-generation college-goers or socioeconomically disadvantaged and those for whom English is a second language.

While campuses have not established a limit on the amount of funds it dedicates to nonresident recruiting, the majority of expenditures are dedicated to residents. UC will continue to monitor annual expenses. A process for tracking expenses has been in place for several years. The current pandemic has upended traditional recruitment activities both in and out of the state. Virtual events allow for greater reach regardless of physical boundaries.

The university recognizes the spirit of the recommendation and has completed implementation to the extent it plans to.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Essentially, the university describes the condition at the time of the audit as the university's response does not identify actions it has taken to address this recommendation by, for example, establishing a limit on the amount of funds it dedicates to nonresident recruiting.

Annual Follow-Up Agency Response From November 2019

Per Regents Policy 2102: Policy on Undergraduate Admissions, the commitment to California Residents is clear and the prioritization of recruitment and admissions of residents is implicit in this policy. Additionally, the Guideline on Undergraduate Recruitment Practices reaffirms this commitment as it states: "As the University meets its enrollment goals, the University will keep the educational interests of the state, prospective students and the University at the forefront of admissions and recruitment practices." Campuses engage in significantly more outreach and recruitment efforts throughout the state than out of state through college fairs, high school visits, open houses, and campus preview days. Systemwide recruitment efforts include outreach to the top 15% of students in the state, Achieve UC and UC for You recruitment events as well as the professional development opportunities for counselors through the UC High School Counselor Conferences and Ensuring Transfer Success Institutes conducted in partnership with the California Community College Chancellor's Office. The University of California's vast Student Academic Preparation and Educational Partnerships (SAPEP) portfolio of programs prepares California students — including those who are first-generation college-goers or socioeconomically disadvantaged and those for whom English is a second language.

Completion Date: May 2017

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

The university's response does not identify actions it has taken to address this recommendation by, for example, establishing a limit on the amount of funds it dedicates to nonresident recruiting.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2018

The vast majority of applicants for undergraduate admissions as well as new student enrollments are residents of the state. The fall 2017 enrollment headcount for Davis, Merced, Riverside, Santa Barbara, and Santa Cruz were each under the 18% cap prescribed in Regents Policy 2109 (passed in May 2017). Berkeley, Irvine, Los Angeles, and San Diego caps are set at the percent of nonresidents enrolled in 2017-18 academic year. While the Regents Policy did not set a systemwide cap, the percent of nonresident undergraduates enrolled systemwide for fall 2017 was 17.2%.

With the improved accounting structure that was implemented in 2016, UC was able to confirm that in fiscal year 17-18, the proportion of resident to nonresident recruitment expenses was approximately 80/20. Also, no state funds were spent on nonresident recruitment activities.

Campuses continue to engage in a broad range of diversity initiatives within the state targeting different populations such as rural schools, schools with high percentages of underrepresented students, Native American students and community-based organizations that serve these student populations. The objectives of these partnerships include:

-Increasing awareness of UC admission requirements

-Extending a message of welcome and support for underrepresented students

-Engaging students earlier in the college admission process

-Increasing enrollments for admitted underrepresented students

-Hosting counselor training events both on campus and at local high schools for counselors working at schools with high percentages of underrepresented, low-income and first-generation students.

Completion Date: May 2017

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

The new accounting codes implemented by the university and its recruiting partnerships within the State are positive steps; however, the university has not yet implemented a policy to prioritize recruitment of residents over nonresidents.

Annual Follow-Up Agency Response From November 2017

The University continues to prioritize the recruitment of California residents over nonresident students. In 2016-17, California residents constituted 83 percent of all undergraduates enrolled in the UC system. Moreover, the President's goal of enrolling 10,000 more California resident undergraduates over three years (to be fulfilled by the end of the 2017-18 academic year) is on track and nearly fulfilled. Finally, in May 2017, the UC Board of Regents approved Policy 2109 limiting out-of-state and international student enrollment at UC. The Regents voted to cap nonresident undergraduate enrollment to 18 percent at the Davis, Merced, Riverside, Santa Barbara, and Santa Cruz campuses. The remaining campuses—Berkeley, Irvine, Los Angeles, and San Diego—may not exceed the percentage of nonresidents enrolled in the 2017-18 academic year. The Regents plan to review this policy in three years.

Completion Date: May 2017

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

The new accounting codes implemented by the university are a positive step; however, the university has not yet implemented a policy to prioritize recruitment of residents over nonresidents, nor has it taken steps to limit the amount campuses spend on nonresident recruiting.

Furthermore, the nonresident enrollment cap of 18 percent exceeds the percentage of nonresidents enrolled during our audit period. This cap also allows campuses that currently exceed the 18 percent cap to maintain the 2017-18 academic year levels of nonresident enrollment. Secondly, provision 4 allows that the enrollment of nonresident students can increase at the campuses that are currently below the cap to up to 18 percent of their enrollment. As a result, the new university's policy will result in an increased enrollment of nonresident students.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

On October 1, 2016 the Office of the President implemented new accounting codes that will help campuses better track nonresident and resident recruiting expenditures. All campuses will be required to distinguish nonresident recruiting expenses from other expenses this fiscal year, and that data will be available when the actual results are published for 2016-17 in November 2017.

The University has always prioritized the recruitment of California residents over nonresidents. Over 83 percent of all undergraduate students are California residents. To further demonstrate this commitment, the UC Board of Regents plans to adopt a nonresident enrollment policy at its May 2017 meeting. This policy will set a limit on UC nonresident undergraduate enrollment.

Estimated Completion Date: November 2017
Response Date: March 2017

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

However, the proposed nonresident enrollment cap of 20 percent, which the university subsequently lowered to 18 percent, exceeds the percentage of nonresidents enrolled during our audit period. Further, this "cap" has two elements that could result in an increase of nonresident enrollment at many campuses. First, provision 5 of the proposed policy allows campuses that currently exceed the cap to maintain the current levels of nonresident enrollment and grow those levels in proportion to the enrollment increase of resident students. Secondly, provision 4 allows that the enrollment of nonresident students can increase at the campuses that are currently below the cap. Specifically, provision 4 states: "For the University of California system as a whole, and at every campus that currently enrolls less than [18] percent of its undergraduates from outside California, California residents shall continue to represent a minimum of eighty percent of all undergraduate students."

6-Month Agency Response

See attached

Estimated Completion Date: December 2016
Response Date: August 2016

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

In its attachment, the university stated it disagreed with the our assessment that the "University...has taken [no steps] to ensure that its recruiting efforts benefit residents." To support its position, the university noted that its Fall 2016 admission results demonstrate that its recruitment activities have been successful in admitting more residents, including sizeable increases in the admission of students from underrepresented groups. The university provided data on its Fall 2016 admission of freshman residents and community college transfers. Furthermore, the university indicated that it is in the process of finalizing new accounting codes that will help campuses better track nonresident and resident recruiting expenditures.

While the increased enrollment of residents is a positive development, the university has not indicated any policy or recruitment changes that would have caused this increased enrollment. To address this aspect of our recommendation, the university should demonstrate that its policy is to prioritize recruiting the residents over nonresidents. Further, the university's improved process to track nonresident and resident recruiting expenditures should entail more than the addition of new accounting codes. Rather, it should involve monitoring of recruiting expenditures to ensure that campuses' recruiting activities are consistent with university and state policy.

60-Day Agency Response

The University strongly disagrees with the suggestion that it does not currently prioritize the recruitment of California residents. In 2014-15, the University spent 56 percent more to recruit California residents than it did nonresidents. In fact, only 23 percent of UC recruiting expenses is exclusively devoted to recruiting nonresidents. On this point, then, the University believes that its current recruitment efforts are completely aligned with the California State Auditor's recommendation. (Fully Implemented)

Regarding the recommendation that the "University should focus its recruiting efforts broadly to ensure that it effectively recruits resident underrepresented minorities," preliminary data from the 2015-16 freshman recruitment cycle indicate that UC campuses continue to be fully aligned with this goal. As noted in the University's April 4, 2016 news release,

"The latest admission figures show a substantial increase in the number and percentage of California freshmen from historically underrepresented groups, representing 37.2% of all California freshmen admitted for fall 2016. Admission of Chicano/Latinos increased to 32 percent of the total number of admitted students, up from 28.8% last year. The number of admitted African-American students jumped 32% over 2015."

Preliminary admission figures for transfer students also show robust increases in the number of students from underrepresented groups who have been admitted to all UC campuses. Although the transfer admissions process will not be completed until mid-June, preliminary data indicate that UC campuses have admitted substantially more transfer students from underrepresented groups over the previous year. (Fully Implemented)

Finally, the University will develop a process to better track its nonresident and resident recruiting expenditures. These new processes will be implemented no later than December 2016.

Estimated Completion Date: December 2016
Response Date: May 2016

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

The university's response does not identify any new steps that it has taken to ensure that its recruiting efforts benefit residents. Furthermore, the response does not indicate whether the university plans to establish a limit on the amount of funds it dedicates to nonresident recruiting, which we cited as an example of how the university might focus its recruiting efforts broadly to ensure that it effectively recruits resident underrepresented minorities . Finally, the university did not provide detail related to the process it intends to implement that will allow it to better track its nonresident and resident recruiting expenditures.

Recommendation #16 To: University of California

To determine if the campuses are using funds to further the goals of the University of California system and the Legislature, the Office of the President should begin regularly monitoring and analyzing how campuses are using both state funds and nonresident supplemental tuition. If, after the close of the fiscal year, the Office of the President determines that campuses are not using state funds and/or nonresident supplemental tuition in accordance with those goals, the Office of the President should take steps to correct the campuses' spending decisions as soon as possible.

Annual Follow-Up Agency Response From October 2021

As the University has previously noted, campus departments routinely charge expenditures to a pooled fund source that consists of a combination of core funds - including but not limited to State General funds, tuition and fees paid by in-state students, and tuition and fees paid by nonresident students. Campuses then associate expenditures to a specific component of core funds (e.g., nonresident tuition) after the fact, ensuring that any expenditure attributed to a fund is consistent with the permitted use of the fund. This approach is far more efficient than asking individual departments to track multiple fund sources and to choose among them when covering thousands of individual expenditures.

Because these individual components of core funds are largely fungible, how a campus decides to attribute a particular expenditure to a particular component of core funds (e.g., nonresident tuition) can vary by campus and, more importantly, is not representative of the actual role played by that component in overall campus expenditures from core funds. For this reason, oversight provided by the Office of the President continues to focus on campus expenditures from core funds as a group rather than from any specific component of core funds.

Completion Date: January 2019

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's position is unchanged from its previous response. The university's response indicates that it will not take any efforts to monitor campuses' use of state funds and nonresidential supplemental tuition. Page 70 of our report illustrates the importance of monitoring how the university spends nonresident tuition in the context of enrolling additional resident students. It says "Because as recently as December 2014 the university publicly declared that nonresident revenue allows campuses to maintain and increase enrollment of residents, we expected the Office of the President to have directed the campuses to spend nonresident revenue on activities that result in enrolling additional residents. At the least, we expected the Office of the President to be monitoring how campuses spend nonresident revenue to ensure the prudency of their decisions."

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2020

Campus departments routinely charge expenditures to a pooled fund source that consists of a combination of core funds - including but not limited to State General funds, tuition and fees paid by in-state students, and tuition and fees paid by nonresident students. Campuses then associate expenditures to a specific component of core funds (e.g., nonresident tuition) after the fact, ensuring that any expenditure attributed to a fund is consistent with the permitted use of the fund. This approach is far more efficient than asking individual departments to track multiple fund sources and to choose among them when covering thousands of individual expenditures.

Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's response indicates that it will not take any efforts to monitor campuses' use of state funds and nonresidential supplemental tuition. Page 70 of our report illustrates the importance of monitoring how the university spends nonresident tuition in the context of enrolling additional resident students. It says "Because as recently as December 2014 the university publicly declared that nonresident revenue allows campuses to maintain and increase enrollment of residents, we expected the Office of the President to have directed the campuses to spend nonresident revenue on activities that result in enrolling additional residents. At the least, we expected the Office of the President to be monitoring how campuses spend nonresident revenue to ensure the prudency of their decisions."

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2019

In response to the California State Auditor's recommendation, the University developed the "Core Fund Expenditures Report" for the 2016-17 and 2017-18 fiscal years and will conduct a similar analysis for 2018-19. The report analyzes 3-year trends in campus expenditures by function and by object category (salaries and wages, scholarships and fellowships, employee benefits, supplies and materials, utilities, etc.) to review how campuses are using core funds, identify any material increases in campus spending (particularly in areas which do not directly relate to educating students or which are meant to be self-supporting) and conduct campus-to-campus comparisons.

In instances where UCOP staff identified large year-to-year variances or material increases in expenditures that did not appear to be related to instruction or research, staff consulted with campus budget staff to understand the reason for the expenditures and to confirm that expenditures were, in fact, consistent with the intended uses of core funds. This is now an ongoing responsibility of the UCOP Budget Analysis and Planning department.

Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Page 70 of our report illustrates the importance of monitoring how the university spends nonresident tuition in the context of enrolling additional resident students. It says "Because as recently as December 2014 the university publicly declared that nonresident revenue allows campuses to maintain and increase enrollment of residents, we expected the Office of the President to have directed the campuses to spend nonresident revenue on activities

that result in enrolling additional residents. At the least, we expected the Office of the President to be monitoring how campuses spend nonresident revenue to ensure the prudency of their decisions."

The university's response states the university developed its core fund expenditures report in response to this recommendation, however, the core fund expenditures report does not differentiate between state funds and nonresident supplemental tuition. Page 3 of the core funds report explains "This report focuses on the $8.4 billion of these expenditures that were made from "core funds". Core funds consist of State General Funds, student tuition and fees, and UC General Funds (primarily nonresident supplemental tuition)."

This report does not serve to implement our recommendation to monitor and analyze how campuses are using both state funds and nonresident supplemental tuition, and in fact it is difficult to see how this report represents any change to the university's practices. Page 70 of our report clarifies that the finding relates to tracking the use of nonresident revenue: "Further, aside from a high-level collection of financial information that it uses primarily to detect spending anomalies, the Office of the President does not systematically monitor how each campus uses its nonresident revenue separately from other revenue sources at the campuses."

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2018

Consistent with the University's response last year, the Financial Planning & Analysis ("FP&A") unit developed and piloted a methodology for reviewing the last three years of core fund expenditures at each UC campus. Staff reviewed expenditures in FY2015, FY2016, and FY2017. At the systemwide level, core fund expenditures increased to varying degrees across all functional areas, with the slowest growth occurring in core-funded student financial aid. (This is consistent with the University's decision to hold Tuition flat during this period, which is the single biggest source of core-funded student financial aid at UC. It is also consistent with actions taken by the Regents in 2015 to eliminate, over time, financial aid provided to nonresident undergraduate students from the University's systemwide pool of needbased aid and to redirect those funds to other parts of the University's budget.) Staff will further refine the methodology to identify issues or trends for discussion with campus budget staff as appropriate and to incorporate expenditure data from FY2018, which became available only a few weeks ago.

Estimated Completion Date: June 2019

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

Annual Follow-Up Agency Response From November 2017

The Financial Planning & Analysis ("FP&A") unit has developed a prototype analytical tool and report for use in analyzing core funds expenditures at each UC campus during the past three years. The tool and report have the potential to provide useful information about trends in spending by function and by expense type to identify any significant year-to-year variances and to ensure that core funds are used in a manner consistent with the University's core mission. Upon final testing and review of the tool, UCOP staff will use it to conduct annual analyses to better understand spending patterns at each campus and to identify issues or trends for discussion with campus budget staff as necessary. For material variances, staff will consult with campuses to better understand the reasons for the variance, and recommend any action for future changes, if applicable. Staff will begin using this tool and reporting template beginning in early 2018 to review expenditures through FY2017.

Estimated Completion Date: April 2018

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

1-Year Agency Response

The Financial Planning and Analysis unit has been tasked with developing models for tracking and evaluating campus expenditures from core funds as a whole, including State General Funds, UC General Funds, and tuition and fees. The models would be reviewed by campuses and UCOP in order to create a standardized "dashboard" (or dashboards) to enable meaningful analyses of campus expenditures over time and differences in expenditures across campuses. The FP&A unit is only just beginning their work on this. Because developing a framework for monitoring and evaluating expenditures will be a consultative effort, the UC anticipates a September 2017 delivery date.

Estimated Completion Date: September 2017
Response Date: March 2017

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

We look forward to reviewing the "dashboard" upon its completion. Work is ongoing by the university, so the pending assessment will remain unchanged.

6-Month Agency Response

The Office of the President will develop and implement a process to regularly evaluate campus expenditures from core funds - State General Funds, Nonresident Supplemental Tuition, other UC General Funds, and student tuition and fees - and will continue to take appropriate measures to ensure that those expenditures are aligned with the University's core missions.

Estimated Completion Date: September 2017
Response Date: August 2016

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

60-Day Agency Response

Estimated Completion Date: September 2017
Response Date: May 2016

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

We asked the university whether it has begun this process and why it believed the process would take until September 2017 to implement. The university subsequently stated that its initial 60-day response provided sufficient information. Because the university did not provide any specifics as to what steps it intends to take or when it will begin to develop the process, we consider the university to have taken no action on this recommendation.

Recommendation #17 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 track spending from state funds for programs that do not relate to educating students.

Annual Follow-Up Agency Response From October 2021

As referenced in the University's response to recommendation 16, UCOP has introduced tools for tracking expenditures from all core funds as a group and monitoring how their use aligns with instruction, student services, and other expense categories. Limiting this analysis to a specific component of core funds (e.g., State General Funds) would not provide a meaningful assessment of how that component is ultimately used because, as described above, core funds are largely fungible.

As noted previously, a full accounting of how State General Funds are allocated annually across campuses—including a breakdown of State funds that are allocated on the basis of student enrollment and funds that are allocated for specific identified programs (including programs that relate to all three elements of the University's mission: instruction, research, and public service)—is available on the University's website for each of the past three fiscal years at the following URL: https://www.ucop.edu/operating-budget//budgets-and-reports/other-resources/

Completion Date: January 2019

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's position is unchanged from its previous response. The university's response addresses allocation amounts, but not spending. Our recommendation is for the university to track spending of state funds for programs that do not relate to educating students.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2020

Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's response addresses allocation amounts, but not spending. Our recommendation is for the university to track spending of state funds for programs that do not relate to educating students.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2019

The analysis referenced in the University's response to recommendation 16 includes all State General Funds as well as other core funds, which are collectively used to cover direct and indirect costs associated with the University's teaching and research mission.

A full accounting of how State General Funds are allocated annually across campuses—including a breakdown of State funds that are allocated on the basis of student enrollment and funds that are allocated for specific identified programs (including programs that relate to all three elements of the University's mission: instruction, research, and public service)—is available on the University's website for each of the past three fiscal years at the following URL: https://www.ucop.edu/operating-budget//budgets-and-reports/other-resources/

Completion Date: December 2017

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

The university's response addresses allocation amounts, but not spending. Our recommendation is for the university to track spending for programs that do not relate to educating students.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2018

The new methodology for reviewing expenditures described in the University's response to recommendation 16 includes all State General Funds as well as other core funds, which are collectively used to cover direct and indirect costs associated with the University's teaching and research mission.

The University publishes a full accounting of how State General Funds are allocated annually across campuses and major programs. See, for example, https://www.ucop.edu/operating-budget/_files/bap/2016-17_summary_of_state_general_fund_allocations.pdf

A more detailed listing of State funding by program is available at

https://www.ucop.edu/operating-budget/_files/legreports/17-18/AB97RedirectionofFundsforEnrollmentGrowthLegRpt.pdf

Completion Date: December 2017

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

The university's response to recommendation #16 indicated that it was still in the process of developing the tracking tool. Further, the documents that the university references in this response do not sufficiently address our recommendation. As a result, we will mark this recommendation as pending and look forward to reviewing the university's response related to how it will track spending from state funds for programs that do not relate to educating students.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

Estimated Completion Date: April 2018

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

The university's response does not address how its new tool and report will track spending of state funds for programs that do not directly relate to educating students. Therefore, we look forward to its 2018 response to understand how the university will use the new tool and report to implement our recommendation.

1-Year Agency Response

UC does not agree that spending on programs for research or public service should be subjected to a greater level of scrutiny than programs related to instruction, since all such programs support the University's core mission. The University plans to include all core fund expenditures in the framework that it develops for monitoring and evaluating how funds are used (as described in our response to #16) with the same expected delivery date.

Estimated Completion Date: September 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

As noted in our previous response, we are not advocating a different level of scrutiny. In point of fact, the university was already subjecting certain programs to differing level of scrutiny by not actively reviewing them. We continue to recommend that the university actively track spending of state funds for programs that do not directly relate to educating students, and thereby apply the same level of review and stewardship that should be used with all allocations of state funds.

6-Month Agency Response

The University strongly disagrees with the suggestion that programs that do not directly relate to the instructional mission but relate to one of the two other core missions of Research and Public Service should be subjected to a different level of scrutiny.

With that said, consistent with the University's response to recommendation 16, the University will implement a system for monitoring the use of all core funds to ensure they are being spent prudently and consistent with the University's missions.

Estimated Completion Date: September 2017
Response Date: August 2016

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

The university misconstrues our recommendation as we do not suggest that it should subject research and public service programs to a different level of scrutiny. Rather, we recommended that the university should actively track spending of state funds for programs that do not relate to educating students, which are the 18 programs listed on Table 17 on page 75 of our report. As noted on page 71 of our report, the university does not actively track the allocation of state funds to these programs, and essentially, was continuing to fund these programs without putting any thought into whether that funding was necessary or justified, or considering whether alternate funding sources exist.

60-Day Agency Response

The University has a tripartite mission - teaching, research, and public service. It is committed to ensuring that State funds are used appropriately within all three of its defined missions. The University strongly disagrees with the suggestion that programs that do not directly relate to the instructional mission but relate to one of the two other core missions should be subjected to a different level of scrutiny.

Estimated Completion Date: September 2017
Response Date: May 2016

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

We asked the university whether it has begun to develop the system and why it believed the system would take until September 2017 to implement. The university subsequently stated that its initial 60-day response provided sufficient information. Because the university did not provide any specifics as to what steps it intends to take or when it will begin to develop the system, we consider the university to have taken no action on this recommendation.

Recommendation #18 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 reevaluate these programs each year to determine whether they continue to be necessary to fulfill the university's mission.

Annual Follow-Up Agency Response From October 2021

As noted in the University's response to recommendation 17, a full accounting of how State General Funds are allocated annually across campuses—including a breakdown of State funds that are allocated on the basis of student enrollment and funds that are allocated for specific programs (including programs that relate to all three elements of the University's mission: instruction, research, and public service)—is available on the University's website for each of the past three fiscal years at the following URL: https://www.ucop.edu/operating-budget//budgets-and-reports/other-resources/

These allocations are not immutable and are subject to change from one year to the next. The fact that the University intentionally allocates funding to these programs each year reflects a determination that the programs continue to be aligned with the University's mission of instruction, research, and public service. In cases where funding for these programs was originally specified in a State Budget Act, the Governor and the Legislature themselves determined that the program was consistent with the University's mission and a legitimate recipient of State support.

Completion Date: January 2019

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's position is unchanged from its previous response. The university's response indicates it does not believe the recommendation to annually reevaluate the necessity of programs that do not directly relate to educating students is needed.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2020

The fact that the University intentionally allocates funding to these programs each year reflects a determination that the programs are aligned with the University's mission of instruction, research, and public service. In cases where funding for these programs was originally specified in a State Budget Act, the Governor and the Legislature themselves determined that the program was consistent with the University's mission and a legitimate recipient of State support. Absent a change to the University's mission, the University does not believe at a wholesale annual review of these programs is needed.

Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's response indicates it does not believe the recommendation to annually reevaluate the necessity of programs that do not directly relate to educating students is needed.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2019

Completion Date: December 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

The university's response indicates it does not believe the recommendation to annually reevaluate the necessity of programs that do not directly relate to educating students is needed.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From October 2018

A more detailed listing of State funding by program is available at

https://www.ucop.edu/operating-budget/_files/legreports/17-18/AB97RedirectionofFundsforEnrollmentGrowthLegRpt.pdf

Completion Date: December 2017

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

The university's response does not indicate how it plans to reevaluate programs that do not directly relate to educating students each year to determine whether they continue to be necessary to fulfill the university's mission.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

Estimated Completion Date: April 2018

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

The university's response does not address how its new tool and report will reevaluate the need to spend state funds for programs that do not directly relate to educating students. Therefore, we look forward to its 2018 response to understand how the university will use the new tool and report to implement our recommendation.

1-Year Agency Response

UC disagrees with the premise that programs related to research and public service that rely in part on State funds should be subject to special scrutiny, as they too help the University to fulfill its three-part mission. Moreover, the administrative burden that would be required to annually reevaluate every program that receives State funds and that is not directly related to instruction would be extraordinary. The University will, however, include expenditures on these programs in the framework for monitoring core fund expenditures described above.

Estimated Completion Date: September 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

We have clearly reiterated that our recommendation relates to a certain subset of programs indicated on page 71 of our report. We question why the university continues to respond based on an erroneous reading of our report.

6-Month Agency Response

The University does not agree that all programs should be reevaluated each year to determine if they continue to be consistent with the University's mission. The administrative burden of this kind of review of each and every program that does not relate specifically to instruction of students would be onerous and cost prohibitive.

However, consistent with the response to recommendation 16, the University will implement a system for monitoring the use of all core funds to ensure they are being spent prudently and consistent with the University's missions.

Estimated Completion Date: September 2017
Response Date: August 2016

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

The university misconstrues our recommendation as we do not suggest that "all programs should be reevaluated each year to determine if they continue to be consistent with the University's mission." Rather, we recommended that the university should annually reevaluate the spending of state funds for programs that do not relate to educating students, which are the 18 programs listed on Table 17 on page 75 of our report. As noted on page 71 of our report, the university does not actively track the allocation of state funds to these programs, and essentially, was continuing to fund these programs without putting any thought into whether that funding was necessary or justified, or considering whether alternate funding sources exist.

60-Day Agency Response

Estimated Completion Date: September 2017
Response Date: May 2016

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

We asked the university whether it has begun this system and why it believed the system would take until September 2017 to implement. The university subsequently stated that its initial 60-day response provided sufficient information. Because the university did not provide any specifics as to what steps it intends to take or when it will begin to develop the system, we consider the university to have taken no action on this recommendation.

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.

Estimated Completion Date: June 2023

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.

Estimated Completion Date: 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.

Completion Date: December 2018

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

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

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.

Completion Date: December 2017

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.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

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

Completion Date: December 2017

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.

Estimated Completion Date: 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.

Estimated Completion Date: April 2017
Response Date: March 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.

Estimated Completion Date: July 2017
Response Date: August 2016

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

Estimated Completion Date: July 2017
Response Date: May 2016

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.

Recommendation #20 To: University of California

To increase its transparency and help ensure that it can justify its spending decisions, the university should make publicly available the amounts of state funding it allocates toward per-student funding, as well as the amounts it or campuses spend for programs that are not directly related to educating students. The university should publicly present the ranges of per-student funding based upon the amount of funding excluded from the formula.

Annual Follow-Up Agency Response From November 2017

The spreadsheet has been updated to included weighted enrollment at each campus and the corresponding per-student level of funding. The spreadsheet is available at http://www.ucop.edu/operating-budget/_files/bap/2016-17_summary_of_state_general_fund_allocations.pdf

Completion Date: October 2017

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

1-Year Agency Response

A detailed depiction of State General Fund allocations is available at http://www.ucop.edu/operating-budget/_files/bap/2016-17_summary_of_state_general_fund_allocations.pdf

Completion Date: January 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

The university's response does not address per student funding beyond noting its re-benching weights, and did not provide any information as to what steps it intends to take or when it will begin to develop an appropriate way to include per student funding information on its budget website.

Auditee did not address all aspects of the recommendation

6-Month Agency Response

The University will develop an appropriate way to include per student funding information on its budget website.

Estimated Completion Date: January 2017
Response Date: August 2016

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

The university did not provide any information as to what steps it intends to take or when it will begin to develop an appropriate way to include per student funding information on its budget website

60-Day Agency Response

The University will develop an appropriate way to include per student funding information on its budget website.

Estimated Completion Date: January 2017
Response Date: May 2016

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

The university did not provide any information as to what steps it intends to take or when it will begin to develop an appropriate way to include per student funding information on its budget website.

Recommendation #21 To: University of California

To ensure that its rebenching efforts lead to equalized per-student funding among the campuses, the university should include actual enrollment numbers in its rebenching formula.

Annual Follow-Up Agency Response From November 2017

The Systemwide Budget Manual states that "[I]n consultation with campuses, the Office of the President will establish enrollment levels for State-supported programs at each campus for purposes of allocating State funds." That consultation resulted in the budgeted enrollment levels for 2016-17 as well as the updated budgeted enrollment levels for 2017-18. In response to CSA's assessment, UCOP has modified the Systemwide Budget Manual to include the word "annually" in this requirement.

Completion Date: October 2017

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

1-Year Agency Response

The differences between budgeted and actual enrollment noted by the auditors have been greatly reduced upon completion of the rebenching "phase-in" in 2016-17. Going forward, UC will use enrollment targets determined with campuses as the basis for allocating per-student State funding. Using enrollment targets instead of actual enrollment for purposes of allocating State funds provides the University with a mechanism for regulating growth across campuses and for ensuring that no campus's allocation of state funds is adversely affected by another campus's enrollment decisions. To the extent that actual enrollment levels conform to those enrollment targets, per-student funding can be expected to be equivalent across campuses.

Completion Date: September 2016
Response Date: March 2017

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

The university has not provided any support related to the asserted reduction between budgeted and actual enrollment numbers. As noted previously, in order for the intent of this recommendation to be fully implemented, we would expect the university to incorporate a requirement to update its enrollment targets annually into its Systemwide Budget Manual to ensure that the process is an ongoing activity.

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

The University intends to complete the rebenching process and its two-year plan to fund overenrollment with allocations made for 2016-17. Following that, UC will use enrollment targets determined with campuses as the basis for allocating per-student State funding. Using enrollment targets instead of actual enrollment for purposes of allocating State funds provides the University with a mechanism for regulating growth across campuses and for ensuring that no campus's allocation of state funds is adversely affected by another campus's enrollment decisions. To the extent that actual enrollment levels conform with those enrollment targets, per-student funding can be expected to be equivalent across campuses.

Estimated Completion Date: September 2016
Response Date: August 2016

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

The university's plan to base its campus funding allocations on enrollment targets instead of actual enrollment can further equalize per-student funding and satisfy the intent of our recommendation so long as the university uses enrollment targets that it updates annually. As we discuss on page 83 of our report, by using outdated budgeted enrollment—from fiscal year 2011-12 for the first three years of its rebenching process—the university failed to design a method for ensuring equity in per-student funding. However, by using enrollment targets that are updated annually rather than actual enrollment as we recommended, the university would satisfy the intent of our recommendation, which was that the university use more realistic and more current enrollment numbers in its campus funding allocations.

In order for this recommendation to be fully implemented, we would expect the university to incorporate this new process into its Systemwide Budget Manual to ensure that the process is an ongoing activity.

60-Day Agency Response

Estimated Completion Date: September 2016
Response Date: May 2016

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

The university stated that it intends to use enrollment targets as the basis for allocating per-student state funding. We asked the university how often it intends to update the enrollment targets, but it stated that its initial 60-day response provided sufficient information. Because the university has begun the process of rebenching using enrollment targets, but has not provided sufficient detail related to how often it intends to update the targets, this recommendation is pending.

Recommendation #22 To: University of California

To ensure that its rebenching efforts lead to equalized per-student funding among the campuses, the university should adopt a methodology that it can use, at least every three to five years, to update its weighting system to ensure the weight factors take into account campuses' actual costs of instruction, using the cost study that we recommend in Chapter 1 and other revenue sources if necessary.

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 modify the weights used for students in health sciences programs and to introduce a new weight for undergraduates from disadvantaged educational backgrounds, who often require additional support. It is anticipated that any changes would be introduced beginning with the 2023-24 fiscal year.

Estimated Completion Date: June 2023

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 will include potential modifications to the weighting system used to allocate State General Funds across campuses. This review is expected to be completed by June 2022.

Estimated Completion Date: June 2022

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

Annual Follow-Up Agency Response From November 2020

President Michael V. Drake, who took office in August 2020, has expressed an interest in reviewing the student weights used to allocate State funds across campuses, as well as other aspects of the University's allocation methodology. The timeline for this review and any potential changes to that methodology are not yet known and will depend upon other competing priorities.

Estimated Completion Date: TBD

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Annual Follow-Up Agency Response From November 2019

The University will conduct this review by 2020 in consultation with the Academic Senate, campus leadership, students, and other interested stakeholders.

Estimated Completion Date: September 2020

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

Annual Follow-Up Agency Response From October 2018

The University will conduct this review by 2020 in consultation with the Academic Senate, campus leadership, students, and other interested stakeholders.

Estimated Completion Date: September 2020

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

Annual Follow-Up Agency Response From November 2017

The University will conduct this review by 2020 in consultation with the Academic Senate, campus leadership, students, and other interested stakeholders.

Estimated Completion Date: September 2020

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

1-Year Agency Response

The University plans to review the weighting factors used for distributing State General Funds across the campuses on a per-student basis. This review will be conducted every five years.

Differences in the cost of providing instruction to different categories of students will be among the considerations used to evaluate the weighting factors. However, the methodology for distributing State funds across campuses will continue to take into account other relevant factors that were thoroughly debated as the methodology was being developed. For example, the methodology accounts for the fact that professional degree programs that charge Professional Degree Supplemental Tuition have access to resources that other programs do not have and thus a student in one of these programs is weighted the same as an undergraduate student, yet the cost of some of those programs is relatively high.

Estimated Completion Date: September 2020
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: No Action Taken

The university did not indicate how or when it will conduct this review, therefore no action has been taken.

6-Month Agency Response

The University has agreed to review the weighting factors used for distributing State General Funds across the campuses on a per-student basis. This review will be conducted every five years.

Estimated Completion Date: September 2020
Response Date: August 2016

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

The university did not indicate how or when it will conduct this review, therefore no action has been taken.

60-Day Agency Response

The University has agreed to review the weighting factors used for distributing State General Funds across the campuses on a per-student basis. This review will be conducted every five years.

Differences in the cost of providing instruction to different categories of students will be among the considerations used to evaluate the weighting factors. However, the current methodology for distributing State funds across campuses will continue to take into account other factors that were thoroughly debated as the methodology was being developed. For example, the methodology accounts for the fact that professional degree programs that charge Professional Degree Supplemental Tuition have access to resources that other programs do not have and thus a student in one of these programs is weighted the same as an undergraduate student, yet the cost of some of those programs is relatively high. If weighting factors were based on cost alone, these programs would receive significantly more resources, which would be an unintended result.

Note that although this recommendation references "campuses' actual costs of instruction," incorporating campus-specific instructional costs into the weighting factor would be inconsistent with a key goal of rebenching, which is to provide the same level of State funding for the same type of student at every campus.

Estimated Completion Date: September 2020
Response Date: May 2016

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

Until such time as the university adopts a methodology to update its weighting system, we conclude that the university has taken no action on this recommendation. In addition, our recommendation refers to the cost to instruct students across all campuses at the systemwide level, not the cost to instruct a student at a specific campus.

Recommendation #23 To: University of California

To ensure that its rebenching efforts lead to equalized per-student funding among the campuses, the university should exclude from its rebenching calculation all state funding it uses for programs that do not directly relate to educating students. The university should exclude these programs only after it has evaluated them in accordance with the recommendation we made previously.

Annual Follow-Up Agency Response From November 2020

Those programs that are funded separately from a per-student funding model were either identified through a consultative process and/or received specific State-designated appropriations at the time rebenching was adopted (or in subsequent years). Although the University will periodically review the list of programs that it treats as set-asides for purposes of State funding, it does not believe that it is possible or desirable to consider every use of State funds that does not "directly relate to educating students" as entitled to a separate allocation outside of the University's per-student allocation methodology.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Will Not Implement

As stated previously, our recommendation is based on the fact that the university currently excludes only some of the programs that do not directly relate to educating students from its rebenching calculation. During the audit we had extensive conversations with university staff related to the applicable programs detailed in Table 17 of our report. The university did not provide additional documentation of any actions it has taken, therefore the recommendation status remains as it will not implement.

6-Month Agency Response

Response Date: August 2016

California State Auditor's Assessment of 6-Month Status: Will Not Implement

As stated in the 60-day public assessment, our recommendation is based on the fact that the university currently excludes only some of the programs that do not directly relate to educating students from its rebenching calculation. Further, because we had extensive discussions with university staff during the audit, and we provided a list of these programs in Table 17 on page 75 of our report, we disagree with the university's statement that this recommendation "is overly broad and very difficult to reasonably interpret." In our report on pages 77 to 79, we indicated that the university could not provide to us a sufficient rationale for why it excluded some programs and not others from its rebenching calculation. Therefore, our recommendation is intended to ensure consistency within the rebenching formula.

60-Day Agency Response

The University disagrees that "all" State funding for programs that "do not directly related to educating students" should be excluded from the State funding methodology as set-asides. This recommendation is overly broad and very difficult to reasonably interpret. Does this mean all funds for administration or maintenance of plant should be excluded? As the methodology was being developed, the work group was fully aware that funds would be distributed for non-student-related functions. However, the group felt that the number of students a campus enrolls was a good proxy for the appropriate level of State support for a particular campus despite the fact that these funds would be used for programs that do not directly support student instruction. The University will continue to review the list of set-asides it treats separately in the State allocation methodology, as indicated in the prior recommendation, but it does not intend to extend that list to all such related programs.

Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Will Not Implement

Our recommendation is based on the fact that the university currently excludes only some of the programs that do not directly relate to educating students from its rebenching calculation. Further, because we had extensive discussions with university staff during the audit, and we provided a list of these programs in Table 17 on page 75 of our report, we disagree with the university's statement that this recommendation "is overly broad and very difficult to reasonably interpret." In our report on pages 77 to 79, we indicated that the university could not provide to us a sufficient rationale for why it excluded some programs and not others. Therefore, our recommendation is intended to ensure consistency within the rebenching formula.

Recommendation #24 To: University of California

To ensure that its rebenching efforts lead to equalized per-student funding among the campuses, the university should include stakeholders such as students, legislative and executive branch staff, and student groups in future discussions of rebenching to ensure that it considers their viewpoints and to increase transparency regarding its funding decisions.

Annual Follow-Up Agency Response From November 2017

The University will include students and other interested stakeholders in future deliberations about significant changes to its State funding allocation methodology, consistent with the following provision of the Systemwide Budget Manual:

"V. Modifications to University practices regarding systemwide State General Fund allocations.

A. The Office of the President will consult with appropriate campus representatives prior to adopting any material change to the underlying goals, policies, or practices regarding State General Fund allocations described in this manual."

Completion Date: March 2017

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

1-Year Agency Response

As previously noted, the original recommendation from the State Auditor did not include a recommendation to adopt a formal policy regarding the inclusion of students and other stakeholders in discussions of its state funding allocation methodology. Moreover, the more recent statement by CSA that the University should develop a policy that it will include students and other interest stakeholders "in any future discussions of its state funding allocation methodology" is unworkable on its face, as ad hoc "discussions" related to the methodology occur on a nearly daily basis in the course of the University's operations. However, the University will include students and other interested stakeholders in future deliberations about significant changes to its State funding allocation methodology, consistent with the following provision of the Systemwide Budget Manual:

"V. Modifications to University practices regarding systemwide State General Fund allocations.

Completion Date: March 2017
Response Date: March 2017

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

We look forward to reviewing how the university involves stakeholders in any future formal discussions related to the state funding allocation methodology.

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

The University will include students and other interested stakeholders in any future discussions of its State funding allocation methodology.

Estimated Completion Date: Ongoing
Response Date: August 2016

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

In order for this recommendation to be fully implemented, we would expect the University to develop a policy that it will include students and other interested stakeholders in any future discussions of its state funding allocation methodology.

60-Day Agency Response

The University will include students and other interested stakeholders in any future discussions of its State funding allocation methodology.

Estimated Completion Date: Ongoing
Response Date: May 2016

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

We asked the university when there would be another discussion of its state funding allocation methodology and what steps the university planned to take in order to include students and other interested stakeholders. The university subsequently stated that its initial 60-day response provided sufficient information. Because the university did not provide any specific details, we consider the university to have taken no action on this recommendation.

All Recommendations in 2015-107

Agency responses received are posted verbatim.