State Audit Asks UC for More Transparency

After 15 months spent investigating the UC system and its 10 campuses, California State Auditor Elaine Howle released a 91-page report Thursday, July 28, detailing the inner workings of the UC’s financial operations over a five-year period. The report includes recommendations — namely to improve transparency — and a point-by-point dispute in the form of letters exchanged between Howle and UC President Mark Yudof in the weeks preceding the audit’s publication.

In light of the recent 50-plus percent increase in UC undergraduate tuition, $1.3 billion decrease in state allocations to the UC, and campus cutbacks implemented since 2009, the audit aimed to “uncover the extent of the waste, fraud, and abuse within the UC, and finally hold university executives accountable,” said State Senator Leland Yee, who officially requested the audit in February 2010.

And while the report certainly shines light on certain intricacies, making clear for the first time many facets of the UC’s financial activity, it is hardly the end all, be all of the budget controversy. When the report was published Thursday, the UC Newsroom at the Office of the President reported that the state audit found “no evidence of waste, fraud or abuse,” but rather “validated university procedures in the distribution of resources” and “showed that the UC has protected its core mission during the ongoing financial crisis.”

This was after Yudof wrote more or less the same thing in an eight-page, 20-point letter dated July 6 and addressed to Howle when his office was allowed to see the report before its publication.

“We did not state in our report that during the recent fiscal crisis the university has protected its core mission. However, we did state on page 23 of our report that the majority of the university’s expenses remained concentrated in instruction and research,” read a snippet of Howle’s rebuttal, which picks through Yudof’s response point by point in the comment section at the end of the report.

The report includes Yudof’s letter and Howle’s comments after 78 pages of detailed information, which confirmed many skeptics’ beliefs and provided the much-desired data behind already-known general disparities.

For instance, Bob Samuels, president of University Council-American Federation of Teachers (UC-AFT) and author of Changing Universities (changinguniversities.blogspot.com), recently said that funds raised by undergraduate tuition on campuses with fewer and smaller graduate programs, like UCSB, go into the UC-wide pool only to be redistributed to campuses regardless of the funds’ origin.

We now know that the UC budget allocated $19,529 to each UCLA student and $55,186 to each UC San Francisco student, but only $12,309 to each UCSB student in the last school/fiscal year examined in the report (’09-’10). The fact that UCSB has only 10 percent graduate student enrollment and no health sciences programs explains the disparity, but also raises the question of why UCSB tuition mirrors that of campuses allocated a larger portion of funds.

The report also provides charts that break down expenses and fund distribution. One shows that the amount of students not funded by state appropriations has almost doubled from school years ‘05-’06 through ‘09-’10. “The university’s enrollment of students beyond the agreed-upon growth factor resulted in costs of more than $56 million that state funding would have otherwise covered,” states the report.

Another criticism is that the four campuses with the highest ratios of underrepresented racial or ethnic students — including UCSB — receive less than average funding per student. Yudof argued that the connection was “unwarranted and inflammatory” in his July 6 letter included in the report. Howle responded by writing that differing funding per student is fine, but that the UC should specify the amount of general funds and tuition budget revenues each campus receives for “different types of students, including undergraduate, graduate, and health sciences, and explain these differences.”

In its defense, the UC highlighted repeatedly the Web page titled Reporting Transparency. “Because of the complexity of the UC system,” reads UC Newsroom’s report, released immediately after the state audit report, “the University opens its books routinely for a myriad of federal, state and local regulatory agencies, as many as 80 times a year, including 40 audits.”

The state auditor acknowledged the UC’s reporting transparency page, but concluded, “Although the most recent reports released by the university included presentations of its budget, they lacked the information about the process used to budget funding for the campuses.” Howle’s report highlights and explains numerous places where the UC might improve its transparency.

But again, it was met with defensiveness. The UC Newsroom report disputed the title of the audit report itself. “The BSA report, which the agency entitled, ‘Although the University Maintains Extensive Financial Records, It Should Provide Additional Information to Improve Public Understanding of its Operations,’ made recommendations for improvements and changes in the area of campus funding allocations, in the general transparency of the UC budget process and university funds, and in the way the university uses student fees imposed by referenda.

“In fact, prior to the audit, the University was developing a more transparent funding streams initiative that is now being implemented. The University has also launched a systemwide task force to examine the relationships among campus instruction, research and public service programs, student populations, campus costs and the distribution of funds to campuses.”

Meanwhile, implications for students and workers remain contradictory — students pay more for less; students and professors are faced with crowded classrooms and exhausting schedules, and some students rush to complete their degrees, often taking jobs to supplement rising costs.

Perhaps Samuels said it best in a statement: “This audit is only a first step toward more transparency at the University of California.” But it seems transparency is only the first step toward soothing the real ailment at hand: the deadly combination of decreased state funding for public higher education and more than a 50 percent jump in costs for its students.