UC President Napolitano Hid $175 Million While Raising Tuition

Photo courtesy The National Guard, flickr.

The California State Auditor issued a scathing report last week alleging that University of California President and former Obama Secretary of Homeland Security Janet Napolitano raised tuitions while her office hid $175 million.

The cover page for State Auditor Elaine Howle’s 167-page audit report states bluntly that the UC president’s office  “Failed to Disclose Tens of Millions in Surplus Funds, and Its Budget Practices Are Misleading.”

The audit found that the UC spent $32.5 billion on expenses during the 2015-16 school year to fund 10 campuses, five medical centers, and its Office of the President headquarters. Although the UC states that its “fundamental missions are teaching, research and public service,” the UC only spent “$6.7 billion (21 percent) on teaching, “$4.6 billion (14 percent) on research” and “$630 million (2 percent) on public service.” The other $20.6 billion (63 percent) was spent on non-fundamental activities.

The audit highlighted criticism in January from students and lawmakers after the UC regents approved President Napolitano’s 2.7 percent tuition increase for the 2017-18 year, given that UC tuition nearly doubled from $6,141 in 2006–07 to the current $12,192 this school year.

In addition, State Auditor Howle’s audit found the “Office of the President has amassed substantial reserve funds, used misleading budgeting practices, provided its employees with generous salaries and atypical benefits, and failed to satisfactorily justify its spending on systemwide initiatives.”

Howle ominously added that the “Office of the President intentionally interfered with our audit process. Auditing standards require that we disclose this interference and prohibit us from drawing valid conclusions from this portion of our work.” Specific concerns, outlined in a cover letter to Governor Jerry Brown, include:

  • The Office of the President has accumulated more than $175 million in undisclosed restricted and discretionary reserves; as of fiscal year 2015–16, it had $83 million in its restricted reserve and $92 million in its discretionary reserve.
  • More than one-third of its discretionary reserve, or $32 million, came from unspent funds from the campus assessment— an annual charge that the Office of the President levies on campuses to fund the majority of its discretionary operations.
  • In certain years, the Office of the President requested and received approval from the Board of Regents (regents) to increase the campus assessment even though it had not spent all of the funds it received from campuses in prior years.
  • The Office of the President did not disclose the reserves it had accumulated, nor did it inform the regents of the annual undisclosed budget that it created to spend some of those funds. The undisclosed budget ranged from $77 million to $114 million during the four years we reviewed.
  • The Office of the President was unable to provide a complete listing of the systemwide initiatives, their costs, or an assessment of their continued benefit to the university.
  • While it appears that the Office of the President’s administrative spending increased by 28 percent, or $80 million, from fiscal years 2012–13 through 2015–16, the Office of the President continues to lack consistent definitions of and methods for tracking the university’s administrative expenses.

Breitbart called the University of California’s Office of the President and left a message requesting a comment regarding the audit. No response was received.

This piece was originally published by Breitbart.com/California

Audit: Vets agency wastes $28 million on failed computer system

As reported by the Sacramento Bee:

California’s state auditor has labeled yet another California government technology project an expensive failure.

The California Department of Veterans Affairs has spent nearly $28 million on a system that launched years later than planned, wastes staff time and has not been fully implemented, according to an audit released Thursday by state Auditor Elaine Howle.

The audit marks the latest in a long string of California government technology failures. The auditor previously found data security weaknesses and unsatisfactory oversight on technology projects. Additionally, a payroll system update spiraled into chaos, licensing board software was delayed, and a tax and fee system stalled.

Howle’s latest audit found the Department of Veterans Affairs started with a plan to implement a comprehensive computer system so veterans who receive rehabilitative, residential and medical services would get “consistent and integrated care” no matter which facility they visited throughout the state. The idea was approved in 2006.

Audit the California High Speed Rail Authority

high speed rail trainThe California High Speed Rail Authority once again opposes oversight of its actions. On Tuesday the Joint Legislative Audit Committee held a hearing on the request by state Senator Andy Vidak to have the State Auditor conduct an audit of the Authority’s activities.

The Committee, on a strictly party line vote, denied the request. The request was triggered by the explosive Sunday, Oct 25th L.A. Times article, which disclosed a previously undisclosed report by the Authority’s contractor, Parson Brinkerhoff (PB).  The report projected a $9 billion increase in construction costs of the initial Merced to Burbank segment. (The article also disclosed from interviews with experts, that time lines, and budget targets would not be met.) 

The Times article, authored by Ralph Vartabedian, noted the cost increase report was delivered months before the 2014 business plan was released. The 2014 business plan did not include the projected $9 billion cost increase and instead continued to use cost projections from the 2012 business plan.

The first responses from the Authority to the Times article were: We don’t know about such a report, followed then by a blunt statement from Authority Chair Dan Richard, stating the article was “bunk.”

The Authority’s often-restated position is that the Authority is the most transparent of public agencies. Yet its actions reveal a completely different picture.

The Times article, was followed by numerous Freedom of Information act requests, which belatedly forced the Authority to release the report. The report was in the form a PowerPoint presentation, and was presented several months before the 2014 Business Plan was released.

Assemblywoman Toni Atkins then announced that a hearing would be held on the issues raised in the article. The hearing is now set to take place on Jan 27th.  Indeed the argument used by Democrats at the JLAC hearing to deny the audit was that an audit by the State Auditor was unnecessary and would be redundant to what would be revealed at the Legislative hearing.

But there is a whole world of difference between an audit conducted by the non-partisan State Auditor, and any legislative hearing being conducted by a Democratic controlled committee. Indeed, already announced by Atkins was that subpoenas would not be issued by the committee conducting the hearing.

Transparency and oversight in the Authority’s view, have many restrictions. The Authority denies many public record requests using one excuse or another. Many times disclosure comes only after immense pressure is exerted on the Authority. This was certainly the case which finally caused the release of the Powerpoint report disclosed in the LA Times article. This was also the case regarding final disclosure last year to the public, of the responses from private investors to the Authority’s request for Expressions of Interest in the project. (None of the finally revealed 36 responses indicated any willingness to invest.)

The Authority, throughout its existence, has used many tactics to avoid oversight. During 2010 to 2012, when the state Senate Housing and Transportation committee was led by Democrats, Senators Alan Lowenthal and Joe Simitian, numerous hearings were held and on many occasions the committee had to fight very hard to obtain needed information.

Last year the Authority managed to get the Legislature to remove the Authority’s obligation to report twice yearly and instead only reporting once every 2 years; removing one more level of oversight.

During the JLAC hearing on Tuesday, the State Auditor, Elaine Howle, presented her plan for the audit. She disclosed the audit would take about 2,100 hours and would need 5 months to complete. Considering the Authority has now spent almost $2 billion, the cost of this modest audit was hardly a consideration. Nevertheless, the Democrat-controlled committee rejected the request.

The Authority has stopped releasing the Funding Contribution Plans. These reports are mandated by the funding agreement between the Authority and the Federal Railway Administration (FRA). The reports are due quarterly within 30 days after the end of a quarter. The last report disclosed was the March 2015 report. Thus, as of this date, the June and Sept. 2015 reports are delinquent, and at the end of this month, the Dec. 2015 report will also be past due. These are the key reports showing how the Authority is performing on its project. Apparently the FRA has quit worrying about the Authority’s compliance with the funding agreement. The FRA has thus far not replied to my Freedom of Information request concerning the missing Funding Contribution Plans.

A just released poll from the Stanford University Hoover Institution reported “53 percent of Californians would vote for a ballot measure ending high-speed rail and using the unspent money on water-storage projects.” (poll details) The poll also reveals only 20 percent strongly approve, whereas 33 percent strongly disapprove of the California HSR project.

esident of Menlo Park and Founder of DERAIL, a grassroots effort against the California high-speed rail project.

This piece was originally published by Fox and Hounds Daily