Report 2016-130 Recommendation 31 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 #31 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 2020 the Office of the President should reallocate to the campuses funds that it identified during its review of fund restrictions and fund commitments.

Annual Follow-Up Agency Response From November 2019

The CSA acknowledges UCOP has fully implemented related Recommendations #3, #4, and #20. Since FY17-18, UCOP has publicly reported to the Regents the reallocations of funds that it identified during its review of fund restrictions and commitments. Over the past three years, UCOP has directly allocated $87.6M in fund balances to the campuses in support of campus housing projects ($65.5M), campus seismic work ($7.1M), the UC Riverside Medical School of Medicine ($8.0M remaining of a $20.0M commitment) and development efforts ($7.0M). In addition, UCOP has indirectly reallocated $50.8M in funds to campuses by reducing UCOP's fund balances to support strategic priorities that would otherwise have been funded through the campus assessment. Total reallocation activity over the past three years from fund balances, $138.4M, is being reported in Schedule G of the November Regents item, which has been provided to the CSA.

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

We assess this recommendation as fully implemented. According to the November 2019 Office of the President Budget to Actual Expenditures presentation, it directly reallocated $87.6 million in funds to campuses that it identified during its review of fund restrictions and fund commitments. Additionally, the Office of the President indirectly allocated $64.7 million through budget reductions during the same period that could have otherwise reduced the amount available to campuses.

Annual Follow-Up Agency Response From April 2019

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 Annual Follow-Up Status: Pending

The status of this recommendation is pending the Office of the President's reallocation to the campuses' funds that it identified during its review of fund restrictions and fund commitments.

1-Year Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2019 recommendations.

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

The status of this recommendation is pending the Office of the President's implementation of our fund restriction and fund commitment recommendations due April 2019.

6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations and potentially on UCOP's ongoing funding sources. Impact of this recommendation varies under the established campus assessment model versus direct state appropriations.

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

The status of this recommendation is pending the Office of the President's implementation of our fund restriction and fund commitment recommendations due April 2018.

60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations and may be dependent on UCOP's on-going funding sources. Impact of this recommendation varies under the established campus assessment model versus direct state appropriations.

Upon completing the initial analysis of current fund restrictions, the fund restrictions work group, consisting of OP and systemwide staff, will develop and document a process for an annual review of fund restrictions and balances. Where fund restrictions or changes in restrictions will allow for broader uses, UCOP will recommend using these funds for programs and areas that further support and benefit the campuses.

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

The status of this recommendation is pending the Office of the President's implementation of our fund restriction and fund commitment recommendations due April 2018. Although we agree that the impact of this recommendation will vary based on the Office of the President's funding situation in April 2020, we are concerned that the Office of the President indicates in its response that it does not plan to directly reallocate these funds to campuses. We look forward to the Office of the President's 6-month response to evaluate the level of campus input in these funding decisions.

All Recommendations in 2016-130

Agency responses received are posted verbatim.