Report 2016-130 Recommendation 20 Responses

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

Recommendation #20 To: University of California

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, by April 2019 the Office of the President should publish the results of its review of fund restrictions and fund commitments and identify any funds it anticipates reallocating to campuses.

Annual Follow-Up Agency Response From October 2018

The implementation of this recommendation is complete:

-A review and classification of all of UCOP's more than 500 funds was published at the March 2018 Regents meeting.

-At the May 2018 Regents meeting, the presentation and publication of the FY2018-19 UCOP budget included a breakdown of fund balances and commitments for all three categories of funds, as noted in #3 above. Included in those committed funds, ~$40M was redirected to campuses for the UC Riverside School of Medicine and to support campus housing strategies.

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

In March 2018, the Office of the President presented a review of 466 restricted and unrestricted funds. As part of the review, the Office of the President recommended that 68 funds be reclassified to unrestricted-undesignated, which would increase the number of unrestricted-undesignated funds from 13 to 81 and increase the June 30, 2017 unrestricted-undesignated fund balances by $75 million—from $63 million to $138 million according to the May 2018 budget presentation. According to the budget update that the Office of the President presented to the Regents in November 2018, as of June 30, 2018, it had $84 million in unrestricted-undesignated funds and $292 million in total unrestricted funds (less patent royalty passthroughs). According to the Office of the President, it plans to review its fund balances twice a year as part of its formal process to determine which fund balances it anticipates reallocating to campuses.

1-Year Agency Response

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

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

The status of this recommendation is pending the Office of the President's publication of the results of its review of fund restrictions and fund commitments in addition to the identification of funds that it anticipates reallocating to campuses.

6-Month Agency Response

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

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

The status of this recommendation is pending the Office of the President's review of fund restrictions due by April 2018.

60-Day Agency Response

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

The fund restrictions work group, consisting of staff from UCOP and systemwide finance, will develop a white-paper and proposed recommendation to be reviewed by key stakeholders and presented for required approvals. This document will serve as a guideline to govern the use and re-allocation of restricted funds, potentially supporting portions of the budget currently funded by unrestricted sources. The information will be published and made accessible in the appropriate format as determined by the Regents.

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

The status of this recommendation is pending the Office of the President's review of fund restrictions due by April 2018.

All Recommendations in 2016-130

Agency responses received are posted verbatim.