Report 2015-107 Recommendation 13 Responses

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

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.

Agency Response*

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.

  • Response Type†: Annual Follow Up
  • Completion Date: September 2016
  • Response Date: November 2017

California State Auditor's Assessment of 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

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.

  • Response Type†: 1-Year
  • Completion Date: September 2016
  • Response Date: March 2017

California State Auditor's Assessment of 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

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.

  • Response Type†: 6-Month
  • Estimated Completion Date: September 2016
  • Response Date: August 2016

California State Auditor's Assessment of 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.


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.

  • Response Type†: 60-Day
  • Estimated Completion Date: September 2016
  • Response Date: May 2016

California State Auditor's Assessment of 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.


All Recommendations in 2015-107

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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