State to audit UC

The finances of the University of California will be examined by the state auditor as a result of an official request by Senator Leland Yee.  After reports of improprieties and poor decision-making by UC executives, the Joint Legislative Audit Committee (JLAC) today unanimously (10-0) approved Yee’s request. 

Last week, Senator Yee announced he was requesting the state audit following reports that University of California executives could be involved in scandals, "Not even one month can pass without another scandal plaguing our university," Yee said in announcing the request. "A comprehensive state audit will help further uncover the extent of the waste, fraud and abuse within the UC and finally hold university executives accountable."

Among the requests, the state auditor will be able to: identify the sources of UC's public funding; review and evaluate the policies and practices UC uses to track and allocate public funds; determine how the UC has spent its state appropriation, student fees, and funds from the federal government; evaluate UC's practices for non-salary expenditures including travel, consultants, and entertainment; assess expenditures for instruction and identify the average amount per student the UC spends on instruction; determine what funds are restricted and how; and examine auxiliary organizations, including expenditures.

Testifying in support of the audit included individuals from the California Federation of Teachers, University Council-American Federation of Teachers, University Professional and Technical Employees, California Labor Federation, California Nurses Association and the American Federation of State, County, and Municipal Employees.

A recent report in Spot.us alleges several UC Regents have direct financial ties to a number of university investments. Another report by Californiawatch.org reports UCLA hired a consulting firm that is now under investigation by the US Securities and Exchange Commission for numerous accounting errors. 

Adam Keigwin, Senator Yee's Chief of Staff told KALW, "We want to know how much money the UC has in federal, state, student fee and philanthropic dollars and where that money is going. If expenditures are going to contracts of family and friends of UC executives, we'll be able to flush that out. Sometimes auditors go in and look at the books and find more than they went looking for. When we look at these expenditures, we'll see the extent of the problem."

Currently, the UC does not have to disclose how much their school based auxiliary foundations raise in philanthropic dollars and how they ultimately spend the money. Recently, Senator Yee reintroduced SB 330. The bill, which passed in the Senate by a vote of 37-1, would require UC executives to open their accounting books. Last year, the bill passed in the Assembly by a vote of 76-0 but was vetoed by Governor Arnold Schwarzenegger.

"We need this audit," says Keigwin, Yee's Chief of Stafff, "we have no idea how much they have in their auxiliary budget. Regents and trustees of the UC operate behind closed doors without any public disclosure."

In 2009, the Legislature overwhelmingly approved three bills, authored by Yee to freeze executive pay during bad budget years, subject campus auxiliary organizations to the California Public Records Act, and provide legal protections to employees who report waste, fraud, and abuse.  Governor Arnold Schwarzenegger vetoed all three bills. 

The latest in an ongoing investigation by Spot.us highlights how some UC Regents may be making millions of dollars from university investments.  Their latest report can be found here: http://blog.spot.us/2010/02/11/uc-regents-schwarzenegger-and-wachter-are-they-making-a-profit-from-university-investments/.

 The Californiawatch.com story regarding UCLA’s consulting firm that has been plagued by accounting scandals can be found here: http://www.californiawatch.org/watchblog/ucla-consultant-involved-accounting-scandal.