Report 2016-130 All Recommendation 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 for Legislative Action

To ensure that the Office of the President's actions align with the university's primary mission, the Legislature should appropriate an amount directly to the Office of the President through the annual state budget process that eliminates the need for a campus assessment. Based on the Office of the President's actions as it implements its three-year plan, evaluate the amount of the direct appropriation annually. Once the Office of the President has completed the three-year plan, evaluate the necessity of a continued direct appropriation after assessing the strength of the Office of the President's new budget, accounting, and staffing policies, as well as its demonstrated commitment to ongoing transparency.

Description of Legislative Action

Assembly Bill 97, the Budget Act of 2017, appropriates $296 million to the Office of the President and provides that the funds may only be encumbered if the President certifies in writing to the California Department of Finance that there will be no campus assessment for support of that office for the 2017-18 fiscal year and overall campus revenues will be greater in the 2017-18 fiscal year than in the previous fiscal year.

  • Legislative Action Current As-of: November 2017

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

Legislation Enacted


Recommendation for Legislative Action

To ensure that the Office of the President's actions align with the university's primary mission, the Legislature should do the following:

From the funds appropriated, require the regents to contract with an independent third party that can assist the regents in monitoring the three-year corrective action plan for the Office of the President. The Legislature should hold annual hearings that include a status report by the independent third party regarding the Office of the President's progress, challenges, and barriers to success in implementing the three-year corrective action plan.

Description of Legislative Action

Legislation was not introduced to address this recommendation; however the Office of the President entered into a contract with an independent third party to assist in monitoring the three-year corrective action plan.

  • Legislative Action Current As-of: November 2017

California State Auditor's Assessment of 6-Month Status: No Longer Necessary

No Longer Necessary


Recommendation #3 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 2018 the Office of the President should document and review the restrictions on its funds and fund commitments to determine whether it can reallocate any of these funds to its discretionary budget for eventual reallocation to campuses.

1-Year Agency Response

Categories and definitions for fund restrictions were created based on the University's accounting policies and generally accepted accounting principles. All of the funds on the general ledger for the Office of the President were reviewed and assigned an appropriate fund restriction category. The results of this process were presented to the Regents Finance and Capital Strategies Committee on March 14, 2018. The fund restriction working group recommended that 68 funds with total balances of $74.7 million as of June 30, 2017 be reclassified as unrestricted and undesignated. The Regents item F10 contains supporting documentation, including a table in Attachment B, summarizing the Office of the President funds and their classification based on the definitions can be found at the link below.

http://regents.universityofcalifornia.edu/regmeet/mar18/f10.pdf

UCOP has provided the CSA with documentation supporting its analysis of fund restrictions.

  • Completion Date: March 2018
  • Response Date: April 2018

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

We assessed this recommendation as partially implemented because the Office of the President did not provide us information regarding its reviews of fund commitments. According to the fund balances the Office of the President presented at the March Regents meeting, the Office of the President had $404 million in total fund balances which are composed of:

-$43 million in restricted funds according to generally accepted accounting principles (11 percent of total funds)

-$361 million in unrestricted funds (89 percent of total funds)

--$223 million designated (62 percent of unrestricted funds)

--$138 million undesignated (38 percent of unrestricted funds)

The $223 million in unrestricted designated funds are funds to be used for a specific purpose. For example, the Regents designated $75 million for its home loan program. Therefore, the amount that is unrestricted and undesignated amounts to $138 million or 38 percent of unrestricted funds; however, the president has the ability to also designate these funds as committed. Because the Office of the President did not provide us the data that supports its fiscal year 2018-19 budget, as discussed in recommendation 5, it is unclear how much of these unrestricted and undesignated funds it will determine are committed and therefore unavailable for reallocation to campuses for student or campus priorities.

By applying new fund definitions, the Office of the President increased the number of unrestricted and undesignated funds from 13 funds to 81 funds. In other words, the amount of unrestricted and undesignated funding increased by $75 million from $63 million to $138 million.


6-Month Agency Response

The workgroup formulated a project scope and workgroup charter . The group has identified a list of funds used within the UCOP budget (500+) and created a file to track them , along with their respective key attributes.

Next steps in the review include identifying funds with external restrictions and subsequently validating this information with departments and divisions across UCOP.

The workgroup will then review the restrictions and evaluate any opportunities to relieve restrictions to support unrestricted budget categories, with the input of key subject-matter experts and the Executive Budget Committee.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's review of fund restrictions. The Office of the President plans to report on its fund restrictions, commitments, and balances by April 2018. According to the Office of the President's working list of restricted funds, there are 521 active restricted funds. The Office of the President asserts that only 136 of those funds are restricted for Office of the President budget purposes, but not restricted per the university's financial audit or generally accepted accounting principles. Therefore, the Office of the President has discretion to make the policy decision to remove the restrictions on these funds.


60-Day Agency Response

A fund restrictions work group has been formed and is meeting twice monthly. The work group consists of staff members from UCOP and systemwide finance, and will draw on subject matter experts as required (e.g. Office of General Counsel). The work group has identified the scope which includes: (1) Review all restricted funds, (2) Evaluate use of fund categories to separate based on least / most restrictive definitions, (3) Apply a materiality methodology to focus on the largest opportunity areas, (4) Develop comprehensive documentation for future use and regular reviews, and (5) Establish where fund restrictions can be removed or modified.

The work group has finalizing a work plan and is launching the analysis and documentation phase. This involves identifying all funds and any existing documentation. It includes understanding the restrictions as well as identifying how or who made the initial restriction (e.g. Federal Research grant vs. UCOP restriction). In addition, the work plan includes assessment of existing best practices and benchmarks.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's review of fund restrictions. The Office of the President plans to report on its fund restrictions, commitments, and balances by April 2018.


Recommendation #4 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 2018 the Office of the President should develop a reserve policy that governs how large its reserves should be and the purposes for which they can be used.

1-Year Agency Response

UCOP has completed its analysis and determined appropriate operating reserve requirements. As a result, a Regents policy governing UCOP's Central Operating Reserve was developed and subsequently approved by the Regents at the January 2018 Regents meeting. The policy can be found here: http://regents.universityofcalifornia.edu/governance/policies/5104.html. Implementation guidelines detailing how the Central Operating Reserve should be implemented are documented in the approved Presidential Guidelines here: https://policy.ucop.edu/doc/3000673. The Presidential Guidelines were included in the item approved by the Regents at the January 2018 meeting.

UCOP has also reviewed historical practices for short-term strategic priorities funding. Presidential Guidelines governing the amount and spending guidelines for the Strategic Priorities Fund were developed, approved by the President, and reviewed by the Regents. The approved Presidential Guidelines covering the Strategic Priorities Fund can be found here: https://policy.ucop.edu/doc/3000674.

  • Completion Date: February 2018
  • Response Date: April 2018

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

We assessed this recommendation as partially implemented because although the Office of the President has developed two reserve policies, it is difficult to determine the Office of the President's total reserve amount, which we do not believe addresses the intent of our recommendation for it to develop comprehensive budget information that promotes transparency. Specifically, to understand the Office of the President's total reserve amount stakeholders would need to add together three different types of reserves—only two of which are included in its budget prototype. Since one reserve type is not included in the presentation, stakeholders cannot determine the total reserve amount from the information the Office of the President plans to present in its annual budget presentation. Moreover, without extensive knowledge about the Office of the President's budget processes, most stakeholders likely would not understand that they need to add together the two reserve types listed below to more fully understand the Office of the President's total reserve amount.

The Office of the President has three reserve types: central operating reserve, strategic priority fund, and restricted and project reserves. At the January 2018 Regents meeting, the Regents approved a policy that requires the Office of the President to maintain a central operating reserve to support its operations in the event of an unanticipated disruption in planned funding. Presidential guidelines effective July 1, 2018 further require a central operating reserve of $15 million or three and a half percent of applicable funds, whichever is greater. The president can also supplement the central operating reserve up to an additional $100 million or three months of applicable funds, whichever is greater. Some funds are not covered by this reserve, including restricted funds and programs with self-funded reserves; the policies for these reserves vary by fund. The central operating reserve is funded by the President's Endowment fund and the president must approve all transactions from the reserve and notify the Regents before any funds are drawn. Expenses beyond $15 million require approval from the majority of three Regents: the chair of the board, the chair of the finance and capital strategies committee, and the chair of the compliance and audit committee.

The Office of the President also issued guidelines governing its strategic priorities fund. This fund is similar to what we described in our report as the undisclosed budget and was supported with reserve funds at the time of our audit. The strategic priorities fund is for one-time or limited-term strategic priorities and is supported with unrestricted funds. The target budget for the strategic priorities fund is $30 million, but is variable based on the Regents' annual approval via the budget process. Additionally, the Office of the President established three internal approval processes that it uses depending on the total amount of the request and the type of the request.


6-Month Agency Response

An analysis and summary of existing UCOP reserve practices and balances and a stakeholder analysis have been completed and reviewed by UCOP leadership. This process included benchmarking and research of reserve practices and policies of other universities and organizations in the non-profit/government sector.

A forecasting model for reserve-requirements scenarios with related assumptions for a central operating reserve is being developed. The workgroup will use it to model various reserve-requirements scenarios. A review of historical practices for strategic-priorities reserves is in progress to support projections and scenarios for future reserves requirements.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's development of a reserve policy. The Office of the President plans to present its recommended reserve policy to the regents in late January 2018.


60-Day Agency Response

The reserve policy work group, which includes both UCOP and campus representatives, has been formed and is currently meeting weekly to define our scope, determine our research and benchmarking methodologies, and develop a more detailed workplan. Current objectives have been defined as: 1) complete a review of current UCOP reserve practices and existing reserves ("set the baseline"); 2) conduct research / benchmarking to document best-practices; 3) develop a formal UCOP Reserves policy and obtain stakeholder agreement and Regental approval; and 4) develop and approve how the reserves will be funded.

Research and benchmarking efforts are already underway and will include: higher education institutions (e.g., CSU, Big 10, SUNY, etc.), industry associations (e.g., NACUBO, EAB, GFAO, etc.), as well as other industry and government entities.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a reserve policy. The Office of the President plans to present its recommended reserve policy to the regents in late January 2018.


Recommendation #5 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 2018 the Office of the President should implement our recommended budget presentation shown in Figure 11 on page 40. Specifically, the Office of the President's budget presentation to the regents should include a comparison of its proposed budget to its actual expenditures for the previous year. It should also include all its expenditures and identify changes to the discretionary and restricted reserves. The Office of the President should combine both the disclosed and undisclosed budgets into one budget presentation.

1-Year Agency Response

UCOP engaged in a project to simplify, clarify, and present a transparent annual operating budget to the Regents. UCOP revised the FY2018-19 budget presentation format by:

- Reviewing GFOA and NACUBO budgeting best practices

- Surveying state systemwide budget presentations, formats and trends in higher education, and professional presentations

- Gathering feedback from the Executive Budget Committee, Sjoberg/Evashenk and the Regents

- Incorporating the CSA's recommended budget format in Figure 11 of the audit report

- Incorporating outcomes from other workstreams

The proposed prototype was reviewed with the Regents in March 2018 and is available here: http://regents.universityofcalifornia.edu/regmeet/mar18/f11.pdf. Per Attachment 4, the format was updated to include:

- A single item format

- Operating and one-time expenses in one budget

- A "Sources and Uses" schedule

- Fee-For-Service and Pass-Through reporting

- Budgets based on projected actuals

- Fund restrictions designations

- Cause of Change analysis

- Strategic Priorities Fund budget that reflects commitments and an uncommitted allocation

A UCOP Budget Manual has been drafted and is being provided to the CSA that documents the policies, guidelines, procedures, and analyses associated with the annual budget process. The manual will be updated as improvements are made.

UCOP is finalizing the FY18-19 budget for the May Regents meeting using the revised format. The April 25th CSA deadline precedes the submission of the budget to the Regents. UCOP has provided the CSA with documented budget formats, enhancements, supporting policies and guidelines, and will send CSA the item when it becomes available to the Regents.

UCOP is making all feasible changes this year and planning improvements over the next two years as recommended by the CSA, including updates to BDS as a gap measure until a new financial and planning system is implemented. A roadmap for BDS replacement has been provided to the CSA.

In reference to the CSA comment at 6 months about the $12M change to the temporary budget from the November item, this was an error that was corrected in the March budget to actual item which reconfirmed that the FY2017-18 approved budget was $39 million and that actuals to date were below the budget.

  • Completion Date: April 2018
  • Response Date: April 2018

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

We assessed this recommendation as pending because the Office of the President did not implement the State Auditor's recommendation for developing its budget by April 2018. The failure to do so may hinder the Department of Finance, the Legislature, and the Governor when making decisions regarding the UC's portion of the fiscal year 2018-19 state budget. This is a critical recommendation that, if successfully implemented, will significantly improve stakeholders' ability to hold the Office of the President accountable. Not completing the budget recommendation on-time is an important deficiency in the Office of the President's response to the audit.

Moreover, the Office of the President was not forthcoming about its decision to delay providing us with its budget information. Specifically, beginning with its 60-day response to our audit in June 2017, and again with its 6-month response in October 2017, the Office of the President indicated that it would implement this recommendation by April 2018. In addition, at a meeting with us in February 2018, the Office of the President committed to providing us with the budget information that is necessary for us to assess the Office of the President's progress in implementing this recommendation. However, the Office of the President informed us on April 11—two weeks before the deadline—that it would not provide us with the budget information until May 2018 because it was still in the process of finalizing the budget and therefore it would be premature to provide the materials we requested until the president, Chair of the Regents, and others had reviewed it.

Additionally, the supporting documentation and data would have allowed us to review the accuracy and completeness of its draft budget. For example, we could have verified that the draft budget contained all expenditures—an expectation that is outlined in our recommendation—through a review of the Office of the President's supporting data. Reviewing the Office of the President's budget not only would have allowed us to gain some assurance that the presentation was complete and accurate, but also may have helped the Office of the President improve its budget presentation by addressing any errors or areas needing clarification that we identified in our review. However, all the Office of the President has provided to us is a prototype budget with no actual numbers.

Finally, although we recognize that the Office of the President has made progress by formalizing its budget policies and procedures in a single manual and by seeking feedback from the Regents on its budget prototype, it ultimately failed to develop its budget in a timely manner that would allow it to be assessed as part of the state budget process.


6-Month Agency Response

The budget presentation work group has met regularly to address the California State Auditor's budget format as detailed in figure 11, page 40, of CSA's audit report. The final FY2017-18 budget presentation in July 2017 incorporated CSA audit format and the team is focused on additional improvements to further enhance the nuances and clarity of the UCOP budget.

The work group completed its charter and stakeholder analysis review with COO Nava. The Executive Budget Committee (EBC) has reconvened and meets monthly. The October-through-December EBC meetings will include reviews of UCOP FY2017-18 budgets, including activities and associated costs.

The work group reviewed financial system functionality with partner UC campuses. UCOP awaits additional information from partner campuses before making a recommendation. New system solutions are expected to mitigate existing gaps between current capabilities and best practices, and include specific requirements to further adhere to the format presented in figure 11 of the CSA's report.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

We have concerns regarding the Office of the President's 2017-18 budget. On the Office of the President's website, it states that it has partially implemented this recommendation. However, we disagree based on a review of the Office of the President's data and its supporting documentation. Our concerns are regarding the budget's accuracy and the fact that the Office of the President did not seek the regents' approval for $12 million in additional budget expenditures. Overall, although the Office of the President used our recommended budget format, we found that it could not adequately substantiate the amounts it used in the presentation.

Because the Office of the President expedited its budget process by two months, it developed its budget "offline" using questionable methods. For example, for expenditures from what we called the undisclosed budget— which the Office of the President presented to the regents as the strategic priority reserve in May of 2017—it used estimates from staff as opposed to financial data. Moreover, even though its 2016-17 vacancy rate was 15 percent, the Office of the President also built $25.4 million in one-time salary savings back into the 2017-18 budget. In response to our audit, the Office of the President stated that its reserves stem from vacancies and other unexpected events that create one-time savings and that these are not permanent savings and cannot be used to support permanent expenditures. The Office of the President has consistently budgeted many more positions than it has actually filled. Since fiscal year 2013-14 the Office of the President's vacancy rate has been between 10 and 15 percent. While a small vacancy rate is reasonable, we have concerns because the Office of the President's high vacancy rates translate into recurring one-time savings that help to build its reserve. Our workforce planning recommendation should help the Office of the President better align its staff and lower its vacancy rate. The budget director stated that although the budget office made its best projections in the time available, it would not use the 2017-18 budget methods for future budgets.

In November 2017, the Office of the President also failed to receive the regents' approval for a $12 million increase in multi-year commitments paid for from its reserves and did not adequately describe its planned use of these funds. When asked by the regents, the budget director confirmed that the $12 million increase in multi-year commitments was the result of increased costs for a number of projects that were originally added as placeholders in the Office of the President's May budget proposal. This was despite the Office of the President's claim in its May budget proposal that projects from the reserve undergo a rigorous review prior to consideration for final approval and funding by the President. Moreover, based on our review of the Office of the President's documents, a significant amount of these increased costs relate to information technology projects including updating its financial and budgeting systems. The director of budget and finance stated this increase was presented as an informational item—meaning the regents did not vote on the increase—because of time constraints related to other high priority items for the regents to consider at the November meeting. The chief operations officer stated the Office of the President did not seek approval for this spending because the numbers were still very preliminary. However, we believe the regents should approve the $12 million increase and that the Office of the President should transparently present changes in funding for review by the Legislature, the regents, and the public.

Because of our concerns with the accuracy and budget process that the Office of the President used, we have rated this recommendation as pending. For its 2018-19 budget, we expect the Office of the President to be able to better justify the numbers in its budget and the process it used to develop its budget. We also recommend that the Office of the President seek the regents' approval on the $12 million increase in planned spending for multi-year commitments at the January 2018 regents meeting.


60-Day Agency Response

The budget presentation work group has been formed and meets regularly to incorporate the State Auditor budget format as detailed in Figure 11, page 40 of the State Auditor's audit report. Included in the FY17-18 Regents budget presentation were the following elements: (1) Incorporation of the FY16-17 forecasted actual expenditures compared with budget, (2) Detail of all expenditures including projections of fund balances, and (3) A combined comprehensive view of Permanent and One-Time spend including systemwide programs and initiatives. All of the above elements are included in the work plan.

The work group has already begun development of improved reporting, and will provide budget to actuals on a quarterly basis to the regents. Reporting improvements are also expected to provide visibility to all expenditures and reserves. The work group has initiated a project to evaluate current financial systems including the Budget Development System to identify gaps and evaluate improved systems with robust functionality, including reporting.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending.The Office of the President presented the regents with more robust budgets during the last two regents' meetings that included forecasted actual expenditures and fund balances. However, as discussed during the regents' meetings, further improvements to the budget presentation are necessary to ensure transparency and clarity of the Office of the President's expenditures. The Office of the President plans to present its new budget presentation to the regents in May of 2018. In addition, we will conduct an analysis of the Office of the President's budget system to verify the amounts presented to the regents.


Recommendation #6 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 2018 the Office of the President should increase opportunities for campus stakeholder involvement in the budget development process by reconvening the campus budget committee and establishing an agreed-upon charter that describes the committee's scope, role, and protocol for reviewing and providing comments on the Office of the President's annual budget.

6-Month Agency Response

President Napolitano has reconvened and expanded the scope of the UCOP budget Executive Budget Committee (EBC). The EBC has completed its charter describing the committee's role and protocol for reviewing and providing input on the Office of the President's annual budget. In its critical advisory capacity to the President, the EBC consists of leaders from every campus, Academic Senate representatives, and UCOP leadership . The EBC met in August and September and plans to continue meeting regularly, with meetings occurring monthly for the remainder of 2017.

  • Completion Date: October 2017
  • Response Date: October 2017

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

The Executive Budget Committee Charter (charter) establishes a process in which the Office of the President and campus representatives are engaged in the Office of the President budget process. Specifically, the charter requires the Executive Budget Committee (committee) to review, advise, and make recommendations to the President on the development of the Office of the President's budget including the budget process and presentation. The charter requires monthly meetings during the budget development process and the committee must report on its activities at least annually.


60-Day Agency Response

A budget process work group has been formed and meets regularly. In connection with this recommendation, UCOP did conduct a review of the FY17-18 budget with campus stakeholders (VCPBs) on May 5th, prior to the May Regents presentation. Moving forward, the work group is focused on (1) expanding the involvement of key stakeholders, (2) documenting processes, and (2) formalizing governance for UCOP budget development.

The President has reconvened and expanded the scope of the UCOP budget Executive Budget Committee (EBC), and a charter is being developed to include governance of the UCOP budget. The EBC consists of campus leaders from every campus, Academic Senate representatives, and UCOP leaders, and will serve in an advisory capacity to the President. Its first meeting is being scheduled for August 2017.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a charter for the Executive Budget Committee. The current Executive Budget Committee charter provided by the Office of the President does not adequately define the committee's scope, role, and protocol for reviewing and providing comments on the Office of the President's annual budget.


Recommendation #7 To: University of California Board of Regents

To ensure the ongoing accountability of the Office of the President, the regents should require it to implement our recommendations and report periodically on its progress.

1-Year Agency Response

As reported previously, the Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

-Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

-To the Finance Committee: Reports of budget to actuals at the November, March and July meetings and biannual reports on Presidential Initiatives budgets.

-To the Governance and Compensation Committee: Reports on recommendations regarding staffing at the November, March and July meetings.

The following reports were provided by UCOP to the Regents since our six-month update in October 2017:

At the November 2017 meeting:

-To the Compliance And Audit Committee: Update on the status of implementation of recommendations at 6 months

-To the Finance and Capital Strategies Committee: Report of budget to actuals for the Office of the President

-To the Governance and Compensation Committee: Update on recommendations regarding staffing

At the January 2018 meeting:

-To the Full Board: Report on overall progress by the Chair of the Compliance and Audit Committee

-To the Finance and Capital Strategies Committee:

oAdoption of UCOP reserve policy (action) and discussion of related guidelines

o Update on the UCOP budget process

At the March 2018 meeting:

-To the Finance and Capital Strategies Committee:

oOffice of the President fund restrictions

oReport of budget to actuals for the Office of the President

oUpdate on the UCOP budget process and budget presentation prototype

oBudget categories and definitions: systemwide programs an initiatives

-To the Governance and Compensation Committee:

o Approval of Market Reference Zones for certain senior management group positions (action)

o Update on staff-related implementation workstreams

o Amendment and rescission of certain Regents' and other policies pertaining to senior management group compensation (action)

o Update on workforce planning

Additionally, a Regents working group charged with developing a comprehensive policy on executive compensation discussed salary setting methodology for leadership positions over a series of four meetings in January and February 2018.

  • Completion Date: April 2020
  • Response Date: April 2018

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

This recommendation is partially implemented based on the ongoing oversight the Regents provided since we released our audit one year ago. Full implementation is pending the Regents' ongoing oversight of the Office of the President's implementation of our recommendations. During multiple meetings in January and March, the Regents received multiple reports on the Office of the President's progress towards implementing our recommendations including new policies related to its fund restrictions, reserve, budget, and salaries for senior managers that the Office of the President asked the Regents to approve. The Regents also requested additional information and action from the Office of the President. For example, during the January Regents' meeting, Regent Park requested that the Office of the President clarify the terms restricted because she was unclear as to whether it was restricted externally or by the Office of the President. In March, the Office of the President returned with more in-depth definitions of its restrictions.


6-Month Agency Response

The Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

-Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

-To the Finance Committee: Reports of budget to actuals at the November, March and July meetings and biannual reports on Presidential Initiatives budgets.

-To the Governance and Compensation Committee: Reports on recommendations regarding staffing at the November, March and July meetings.

At the July 2017 Regents meeting, the Regents received an update on the status of implementation of recommendations at 60 days.

At the November 2017 meeting, the following reports will be provided to the Regents:

-To the Compliance And Audit Committee: Update on the status of implementation of recommendations at 6 months

-To the Full Board: Report on overall progress by the Chair of the Compliance and Audit Committee

-To the Finance and Capital Strategies Committee: Report of budget to actuals for the Office of the President

-To the Governance and Compensation Committee: Update on recommendations regarding staffing

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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

The status of this recommendation is pending the regents' ongoing oversight of the Office of the President's implementation of our recommendations. During the November meeting, the regents received multiple reports on the Office of the President's progress towards implementing our recommendations. The regents also requested additional information and action from the Office of the President. For example, Regent Perez was concerned regarding the board's oversight involvement in determining if funds are truly restricted. The chief operating officer responded to this concern by committing to bring the results of the Office of the President's analysis to the regents to ensure it aligns with their expectations.


60-Day Agency Response

The Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

- Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

- To the Finance Committee: Quarterly reports of budget to actuals and biannual reports on Presidential Initiatives budgets.

- To the Governance and Compensation Committee: Quarterly reports on recommendations regarding staffing.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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

The status of this recommendation is pending the regent's ongoing oversight of the Office of the President's implementation of our recommendations.


Recommendation #8 To: University of California Board of Regents

To ensure that the Office of the President's spending aligns with the needs of campuses and students, the regents should hold a public meeting to discuss the results of the Office of the President's review of its fund restrictions and funding commitments, as well as its proposal to reallocate funds to campuses.

1-Year Agency Response

In March 2018, the Regents Finance and Capital Strategies Committee discussed the results of the Office of the President's review of its fund restrictions and funding commitments in a meeting open to the public. During this meeting, UCOP recommended that 68 funds with total balances of $74.7 million as of June 30, 2017 be reclassified as unrestricted and undesignated.

As this work continues next year, UCOP will focus on the additional recommendations from the State Auditor related to fund restrictions for 2019 and 2020. This work will include performing additional analysis of the funds by obtaining input from the Executive Budget Committee and other stakeholders on suggestions for future use of the funds, modifying the budget system to support reclassification of the funds, updating the budget presentation, and clearing and closing funds with small balances and limited or no activity.

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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

This recommendation is partially implemented due to the meetings the Regents have held to discuss fund restrictions. Full implementation is pending additional Regents' meetings regarding Office of the President's fund restrictions and commitments. We confirmed with the systemwide deputy audit officer that the Regents believe prior meetings satisfy the commitments for a July 2018 meeting made in the 6-month status report. However, to date the Regents have not had a meeting to discuss fund commitments and how those commitments relate to the fund restrictions the Office of the President has identified.


6-Month Agency Response

The Regents will review the results of the Office of the President's review of its fund restrictions and commitments in a public meeting by July 2018.

  • Estimated Completion Date: July 2018
  • Response Date: October 2017

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

The status of this recommendation is pending the regents' July 2018 meeting regarding Office of the President's fund restrictions and commitments.


60-Day Agency Response

The Regents will review the results of the Office of the President's review of its fund restrictions and commitments in a public meeting by July 2018.

  • Estimated Completion Date: July 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the regents' meeting regarding Office of the President's fund restrictions and commitments.


Recommendation #9 To: University of California Board of Regents

To ensure that the Office of the President's financial safeguards are adequate, the regents should require the Office of the President to engage in a financial audit of only the Office of the President's operations.

1-Year Agency Response

At the November 2017 Regents meeting, PricewaterhouseCoopers (PwC) presented the results of its audit of the statement of revenues and expenses for the Office of the President. PwC issued a clean opinion on the report.

In response to concerns raised by State Auditor regarding the scope of this audit, and to provide additional information to the Regents for its oversight of UCOP finances, UCOP will take the following additional actions:

1. Present to the Regents a schedule of UCOP funds, fund balances, and fund restrictions, including reserve balances (complete as of March 2018)

2. Present to the Chair of the Regents and the Chair of the Compliance and Audit Committee a schedule of revenue and expenses for UCOP showing significant departments within UCOP in separate columns (by June 2018)

3. Engage a third party firm to conduct a review of UCOP's reserve and budgeting internal controls after the fiscal year 2018-19 budgeting process is complete, to allow time for new controls over reserves and budgeting to be implemented (by September 2018)

  • Estimated Completion Date: September 2018
  • Response Date: April 2018

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

Since our 6-month assessment, we had multiple meetings with the Regents and Office of the President executives to discuss this recommendation and determined the most efficient way for the university to address our concerns within a reasonable cost. The items the Office of the President outlines above reflect an agreement we came to during a meeting in February that included the chair of the compliance and audit committee, the systemwide controller, and the chief compliance and audit officer. As we stated as part of recommendation 3, we reviewed the information the Office of President provided to the Regents regarding fund restrictions and did not identify any issues. However, we were unable to review the Office of the President's reserve balances because it did not provide us with that data as discussed in recommendation 5. Additionally, this recommendation is pending the Regents and the Office of the President completing items 2 and 3. Therefore this recommendation is partially implemented.


6-Month Agency Response

The financial audit of the Office of the President is in process. The audit is being conducted by the University's external auditor, PricewaterhouseCoopers (PwC) with support from Internal Audit. PwC will issue an opinion on a report showing Office of the President expenditures and the sources of funds used to pay those expenditures, including the campus assessment. PwC will present this additional report at the November 2017 Regents meeting along with the other external audit reports.

  • Estimated Completion Date: November 2017
  • Response Date: October 2017

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

Although the Office of the President presented the regents with a financial audit in November 2017 titled "Financial Statement, June 30, 2017" (audit), this audit does not implement our recommendation. Specifically, the audit was limited to only the Office of the President's revenues and expenditures for fiscal year 2015-16. Because of the audit's limited scope, it omits the Office of the President's reserve balances. We expected the audit to include an assessment of reserve balances because in our report we found that the Office of the President had failed to disclose the amount and nature of these reserves to the regents and to the public. In addition, the audit did not evaluate the Office of the President's internal controls. We expected an assessment of the Office of the President's reserve and budgeting internal controls because in our report we determined there were significant deficiencies in these areas. While a financial audit of the Office of the President that was similar in nature to university's systemwide audit would have addressed these areas, this November 2017 audit is too limited in nature to satisfy our recommendation.

Finally, another shortcoming of the November 2017 audit is that it includes several large entities under the Office of the President's control, such as the Division of Agriculture and Natural Resources and the Education Abroad Program. Although it is acceptable to include these entities in the audit, the Office of the President should place their financial activities in separate columns to allow for full transparency of the Office of the President's financial activities. Because the report does not show these entities' operations separately from the Office of the President, it does not fully address this recommendation.

We shared our concerns with the Office of the President and Regent Zettel and committed to future coordination to ensure this recommendation is fully implemented.


60-Day Agency Response

The audit scope for 2016-17 for the University's external auditor, PricewaterhouseCoopers, has expanded to include a separate report on the results of operations for the Office of the President. UCOP's Internal Audit department will support this audit by conducting its own review of Office of the President expenditures. PwC will issue an opinion on a report showing Office of the President expenditures and the sources of funds used to pay those expenditures, including the campus assessment. PwC will present this additional report at the November 2017 Regents meeting along with the other external audit reports. In the future, when the Office of the President presents its budget for approval, the Regents will have confidence that the actual expenditures presented are correct since those amounts and underlying transactions will have been audited by Internal Audit and PwC.

  • Estimated Completion Date: November 2017
  • Response Date: June 2017

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

The regents' response implies that it has already expanded the scope of these audits. However, according to the systemwide deputy audit officer, the Office of the President is still in the process of developing these documents and therefore it did not provide any additional information.The status of this recommendation is pending completion of the financial audit and the Office of the President's planned internal audit.


Recommendation #10 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2018 the Office of the President should develop a method for weighing comparable public and private sector pay data when establishing salaries for all positions.

1-Year Agency Response

On March 15, 2018, the Regents adopted a methodology, as recommended by the Regents' Working Group on Executive Compensation, for weighing public and private sector data to create the new Market Reference Zones for Senior Management Group (SMG) members as displayed in the documents found at the link below. The Regents also adopted a methodology to reflect our competitive labor market, and include data from the State and CSU for operational staff and academic administrative positions at UC. As a result, approximately 85% of UC administrative SMG positions and 50% of academic SMG positions were matched to State or CSU positions.

The same methodology for evaluating and weighing public and private sector data has been adopted for non-SMG staff compensation (Career Tracks), including establishing a minimum weighting of 12.5% for State data, and matching UC positions to CSU positions. This methodology will govern data collection and analyses to amend the Career Tracks salary ranges for all non-represented staff, including those at UCOP.

The link to the Regents item below provides details on the new methodology and revised MRZs.

http://regents.universityofcalifornia.edu/regmeet/mar18/g2.pdf

The link below provides the Regents' approval of the item:

http://regents.universityofcalifornia.edu/aar/marg.pdf

A more detailed document on the Overview of Methodology for Staff Jobs excluding SMG and Represented Staff is being submitted to the CSA with this one-year update.

  • Completion Date: March 2018
  • Response Date: April 2018

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

According to documentation provided by the Office of the President, effective April 2018 its compensation unit will adopt a methodology to weigh public and private sector data that will include comparable positions from various state agencies and CSU. Based on the methodology, when the Office of the President identifies a comparable position, state salaries will receive a minimum weight of at least 12.5 percent and CSU salaries will receive a variable weight. According to the March Regents' presentation, the Office of the President matched 70 percent of all operational/administrative senior management positions to state positions. Additionally, the Office of the President's independent consultant reported in January 2017 that it had matched 40 percent of all of the university's positions with marketplace matches to state positions. The Office of the President has implemented this methodology not only for its own staff, but all university employees. To gain some assurance that the Office of the President fully implemented this recommendation, we reviewed the underlying salary data for five senior management positions. We found that the Office of the President identified a CSU and a state position match for four of the five positions we reviewed. The variable weights for the CSU positions ranged from .8 percent to 1.4 percent.

Although state positions were given a higher weight than they had been given when we conducted our audit, which we have determined implements our recommendation, we noted that the Office of the President added an additional 15 to 20 percent "size" premium to almost all of the non-state positions it matched, thus increasing the influence non-state positions have on the final salary for those positions and increasing the overall salary ranges.


6-Month Agency Response

Additional surveys are being reviewed to assess their underlying data management methodology, data viability, and survey participants.

The work group is reviewing practices at other public and private AAU institutions to determine how each define their competitive labor markets; the methodologies they use for including public, private and other data; and, the surveys they use for analyzing markets, among other considerations.

Systemwide data is being reviewed to identify the organizations that comprises UC's recruiting and retention activity.

Survey sources are being reviewed for analyzing and updating Market Reference Zones for Senior Management Group positions.

Analysis of UCOP salary ranges is being conducted.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's development of a method for weighing comparable public and private sector pay data. As of November 13, 2017, the Office of the President has not yet established survey sources, data sources, survey protocols, and survey methodologies. Moreover, it has made no changes to its current process for establishing salaries for executive staff. It claims that it will identify these items by the April due date.

However, we are concerned that the Office of the President does not intend to take genuine steps to implement this recommendation because it continues to contend that university employees are not comparable to state employees. Specifically, an Office of the President document analyzing its labor market concludes, "State positions are not comparable to UC positions, the State is not a competitor with the University, nor are their compensation practices and programs aligned with market practices..." It goes on to state, "CSU, often cited by CSA as a comparator to UC, is not comparable to UC." As we describe in our audit report, in the Budget Act of 2016, the Legislature required the regents to consider compensation for comparable state positions when evaluating the salaries of executives. The Legislature reissued this requirement in the Budget Act of 2017. In our report, we also acknowledge that while the Office of the President's assertion that the higher education environment necessitates higher pay for its staff for certain positions, this argument has less merit for administrative staff who perform similar duties no matter where they work.

The Legislature required the Office of the President to demonstrate a good faith effort to implement all of our recommendations; however, we do not believe that the Office of the President's response to this recommendation meets that requirement. The conclusions of the analysis above is in conflict with these directives and disregards our audit findings that the Office of the President—even when factoring in a cost-of-living adjustment—pays its staff significantly more than public employees as demonstrated in Figure 13 and Table 8 of our report. Furthermore, the Office of the President did not share adequate details with the regents Governance and Compensation committee regarding the work it has performed and its preliminary conclusions. When we shared this recommendation with the chief operating officer, she stated that this analysis was a preliminary look at the marketplace and that the regents and the president still need to weigh in on these conclusions. She also stated that the Office of the President is not necessarily going to align its salaries with the market and that it is taking this analysis very seriously. However, we recommend that the regents and their independent consultant invest additional efforts into holding the Office of the President accountable for implementing this recommendation.


60-Day Agency Response

A work group has been formed for the two projects related to staff salary ranges (OP and system). The work group members are compensation experts from OP and campuses/medical centers. Meetings occur weekly. A project plan has been finalized. A call with CalHR Compensation is scheduled for information collection regarding the State's approach to market pricing/data management processes and salary ranges. Possible additional survey sources focusing on public employers have been identified for the staff positions and the survey protocols and methodologies are being reviewed and data is being tested to determine integrity, adequate number of benchmark matches, etc. Once data sources are selected, a method for weighing comparable public/private pay data can be established.

An additional work group has been formed to address the project related to the review of leadership salary ranges (Market Reference Zones), systemwide. The work group members are compensation and Human Resource experts from OP and campuses/medical centers. Meetings occur twice monthly. A project plan has been finalized. Additional survey sources or alternate methods of data collection are being identified/reviewed that would support proper benchmark matching and data collection. A call with CalHR is scheduled for information collection regarding the State's approach to market pricing/data management processes and salary ranges. An advisory group comprised of Chief Human Resource Officers from campuses/medical centers has been created to review and provide input throughout the process. Once data sources are selected, a method for weighing comparable public/private pay data can be established.

Revised guidelines have been developed for the semi-annual equity/promotion process. At this time the semi-annual equity/promotion process scheduled for July 2017 has been suspended to continue to look at ranges and the weighting of market data.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a method for weighing comparable public and private sector pay data. Because the Office of the President's response implies it has identified additional survey sources, data sources, survey protocols, and survey methodologies, we requested the Office of the President provide additional documentation to support these statements for its 6-month response.


Recommendation #11 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2018 the Office of the President should determine how to restructure salary ranges to make certain the ranges encourage employee development and ensure pay equity.

1-Year Agency Response

Career Tracks is the UC classification and grade structure that provides staff with: a clear and transparent system for charting and understanding options for a career path anywhere in UC; details of the job requirements of their current position and any other position they might be interested in pursuing; and online access to all job descriptions, job requirements and salary ranges.

Career Tracks uses a market-based salary structure, meaning that external labor market salaries for a position are the primary basis for establishing job value which drives assignment of salary ranges. Salary data for comparable positions at the State and CSU will be included in this market analysis, as described in recommendation #10, and as approved by the Regents. This market-based structure promotes pay equity and is legally defensible because ranges are linked to external factors rather than to individual employees or internal pay practices. The majority of salaries will fall at or near the 50% percentile (midpoint), but the breadth of the salary range accommodates a range of skill levels for a job: those just beginning their career receive a salary in the lower portion of the range, and those who have deep relevant knowledge, skills and technical expertise greater than the "average" worker could, in a given role, be paid higher in the salary range, above the midpoint.

Additional details are provided in the Overview of Methodology for Staff Jobs excluding SMG and Represented Staff submitted to the CSA, and the Regents item:

http://regents.universityofcalifornia.edu/regmeet/mar18/g2.pdf. The methodology described above will be the basis for narrowing the salary ranges by the April 2019 CSA recommendation. UCOP has begun identifying several possible scenarios for narrowing ranges based on the Regents' approved method for weighing comparable public and private sector pay data for non-executive staff. Analysis of the possible scenarios will begin in the next fiscal year.

  • Completion Date: March 2018
  • Response Date: April 2018

California State Auditor's Assessment of 1-Year Status: No Action Taken

Although the Office of the President asserts this recommendation is fully implemented, we disagree. It was unclear to us what actions the Office of the President planned to take to restructure its salary ranges because its response largely reiterates how its current salary setting system works. When we followed up with the Office of the President's Executive Director of Human Resources, she was unable to provide any evidence of any action taken regarding a determination of how the Office of the President would restructure the salary ranges and confirmed that that analysis would begin next fiscal year. Had the Office of the President started this process sooner, the results of the above analysis would be responsive to our recommendation. Thus the status of this recommendation is no action taken until we can evaluate the actionable steps the Office of the President will take to narrow its salary ranges.

We expected to see an analysis of the salary range widths the Office of the President uses and analysis of how they can bring their salary ranges to a width that is in line with compensation best practices. According to the Society for Human Resource Management (SHRM), a traditional salary range width is commonly 30 percent to 40 percent based on the midpoint. In other words, for a 30 percent salary range, SHRM's guidance recommends that an agency calculate 15 percent of the midpoint and use the results of that calculation to establish the salary range minimum and maximum. However, the Office of the President commonly uses salary ranges with a width that is approximately double that guidance. For example, in our report we identified that for a financial analyst position the Office of the President established a salary range width of 68 percent with 34 percent on either side of the midpoint. To address this recommendation the Office of the President could have performed an analysis to determine the appropriate target width for its salary ranges.


6-Month Agency Response

Options and recommendations for including public data and for assigning a weight have been presented to UCOP leadership for review and feedback.

Survey sources are being reviewed for analyzing and updating Market Reference Zones for Senior Management Group positions.

Analysis of UCOP salary ranges is being conducted.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's actions related to restructuring its salary ranges. To date the Office of the President has not provided us with sufficient documentation to allow us to understand the status of this recommendation. However, the concerns we discuss in recommendation 10 also apply to this recommendation.


60-Day Agency Response

A work group of compensation and Human Resource experts from OP and campuses/medical centers has been formed and will be working to address salary range structure as it relates to employee development and assurance of pay equity. A project plan has been finalized. A call with CalHR compensation is scheduled for information collection regarding the State's approach to employee development.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's actions related to restructuring its salary ranges.


Recommendation #12 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2018 the Office of the President should evaluate and identify needed changes in employee benefit policies to ensure that they include reasonable safeguards to control costs.

1-Year Agency Response

Policy revisions to the Senior Manager Group policies for car allowances, employer contributions toward a Retirement Savings Plan, relocation allowances and moving reimbursements were approved by the Regents Governance and Compensation Committee on March 14, 2018.

http://regents.universityofcalifornia.edu/regmeet/mar18/g1.pdf (item attachments show the "marked up" revisions)

Revised and approved stipend procedures and policies at the Office of the President were published here:

https://www.ucop.edu/local-human-resources/_files/policies/ppsm/PPSM30_stipend.pdf

https://www.ucop.edu/local-human-resources/_files/policies/ppsm/ppsm30.pdf

Regarding the CSA's concern about UCOP business meeting meals for its employees, UCOP revised its policy to lower the daily maximum for all meals to $74 per day and require that meetings be a minimum of three hours. Revised business meeting and entertainment policies and procedures for UCOP were published here:

https://www.ucop.edu/business-resource-center/policies-and-guidance/guidelines/new-restrictions-on-use-of-ucop-funds.html

  • Completion Date: April 2018
  • Response Date: April 2018

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

The Office of the President has taken action on all of the benefit policies we outline in Table 9 in our report. The changes we identified at six months paired with the changes described below make these policies sufficient to address the concerns we raise in the report and our recommendation.

Car Allowances: On March 15, 2018, the Regents approved an amendment to its car allowance policy. Under the new policy the university no longer offers car allowances to new senior management hires or appointees. Employees who currently receive these allowances will be able to continue to receive them as long as they remain in their current position.

Business Meetings and Entertainment: On April 19, 2018, the Office of the President issued a letter announcing a new daily maximum on business meals for meetings that is effective immediately. According to the letter, the new policy reduces the daily maximum for meeting meals from $174 to $74.

Employer Contributions Toward a Retirement Savings Plan for SMGs: On March 15, 2018, the Regents approved an amendment to the senior management supplemental benefit program. Under the new policy, the university no longer offers participation in this program to new senior management hires or appointees. Employees who currently receive the employer contributions may continue to receive them as long as they remain in their current position.

Stipends: The Office of the President formalized its local policy related to stipends-its human resources has approval authority for stipends that do not exceed 20 percent of an employee's base salary, whereas stipends over 20 percent, and up to 25 percent, of an employee's base salary must be approved by the Executive Director of UCOP Operations.


6-Month Agency Response

Changes to systemwide policies were made for car allowances, meal limits during business travel, hotel rates, relocation allowances, moving reimbursements and senior manager supplemental retirement contributions, effective October 2017. Changes to policies at the Office of the President were made in October 2017 for issuance of cell phones and other electronic devices and for stipends.

  • Completion Date: October 2017
  • Response Date: October 2017

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

The Office of the President has taken action on most of the benefit policies we outline in Table 9 of our report. Although the Office of the President asserts it made changes to systemwide policies, we determined that this recommendation remains partially implemented due to actions the Office of the President and the regents need to take to change its policies for car allowances, business meetings and entertainment, employer contributions toward a retirement savings plan for SMGs, and stipends. Moreover, many of the policy changes only effect new hires or appointees and do not apply to current staff.

Incomplete

Car Allowances: In October, the Office of the President added an administrative note to the car allowance policy stating that the President is no longer recommending or approving automobile allowances for new hires or new appointees. The note further states that current recipients may continue to receive automobile allowances until they step down from their current positions or change positions. Although we recognize this action as a positive step that meets the spirit of our recommendation, until the regents take action to approve the policy changes the Office of the President's approach creates the risk that in the future a president may choose to remove the administrative note and restart the practice of issuing car allowances. To implement this recommendation fully, the Office of the President needs to take policy revisions to the regents for approval who would vote to change the policy.

Business Meetings and Entertainment: We expressed a concern in our audit that the amount the Office of the President reimburses for business and entertainment costs is too high. The Office of the President has taken some actions to change its costs for business meetings and entertainment, but has not revised the university policy that allows for the reimbursement of these costs. In May 2017, the Office of the President implemented new restrictions disallowing expenditures on retirement events and limiting the cost of morale building events to $19 per person or $500 in total, whichever is less. The policy also states that Office of the President funds cannot be used for any form of entertainment such as tickets to a fine arts or sporting events. However, because the Office of the President has not taken steps to update the university's policy, we still have concerns. For example, based on our reading of the May 2017 memo and the university's policy, Office of the President employees could still charge between $19 and $81 for business meetings provided to its employees. To implement this recommendation fully, the Office of the President needs to update the university's business meeting and entertainment policy to lower these reimbursable costs.

Employer Contributions Toward a Retirement Savings Plan for SMGs: In October, the Office of the President added an administrative note to the senior management supplemental benefit policy stating that the President is no longer recommending or approving participation in this program for new hires or new appointees. The note further states that current recipients may continue to participate in the program until they step down from their current positions or change positions. We recognize this action as a positive step that meets the spirit of our recommendation. However, until the regents take action to approve policy changes that affect the compensation of SMG employees, the Office of the President's approach creates the risk that in the future a president may choose to remove the administrative note and allow new SMG employees to participate in the program. The Legislature made $50 million of funding contingent upon the university demonstrating a good faith effort at adopting a policy that does not provide supplemental retirement payments to any new SMG employees no later than May 1, 2018. To implement this recommendation fully, the Office of the President needs to take policy revisions to the regents for approval so they can vote to change the policy.

Stipends: In October 2017, the Executive Director of UCOP Human Resources sent an e-mail to all Office of the President managers and supervisors reissuing the Office of the President's procedures for approving stipends. In this e-mail, she establishes additional controls for Office of the President employees that exceed the requirements of the university's compensation policy. Specifically, according to this e-mail, the Office of the President's human resources recommends that stipends do not exceed 20 percent of an employee's base salary; whereas, the policy allows stipends to reach 25 percent of an employee's base salary. Although we recognize that this action is a positive step that meets the spirit of our recommendation, to implement this recommendation fully, the Office of the President needs to establish formal policies and procedures for the approval of stipends that reconcile the difference between the recommendation from its human resources and its formal policy.

Complete

Cell Phones: In October, the Office of the President issued a mobile device policy that includes many safeguards to control costs and ensure the proper distribution and tracking of cell phones and other electronics. This policy is sufficient to address our recommendation.

Meals: In October, the Office of the President updated its travel policy to limit the allowable per-person reimbursement for meals and incidentals to $62 per day. The policy also states that meal reimbursements must not be treated as a per diem and must be for the actual and reasonable costs incurred. This policy aligns with that of the California State University and is therefore more reasonable and justified. This policy is sufficient to address our recommendation.

Lodging: In October, the Office of the President updated its travel policy to limit in-state and out-of-state lodging reimbursements to a traveler's actual costs not to exceed $275 per night. The policy also states that lodging reimbursements must be reasonable for the locality of travel. This lodging policy aligns with that of the California State University and is therefore more reasonable and justified. This policy is sufficient to address our recommendation.

Relocation Allowance: In October 2017, the Office of the President removed its policy on relocation allowances and replaced it with a more specific policy on reimbursable relocation expenses. The new policy allows the university to reimburse an appointee for the cost to sell his/her former primary residence or for the settlement of an unexpired lease. This policy is sufficient to address our recommendation.

Moving Reimbursement: In October 2017, the Office of the President updated its moving reimbursement policy. The new policy clearly outlines which costs the university will reimburse for and places limits on those costs. It also made some costs that were previously reimbursable—such as the assembly and disassembly of unusual items like swing sets and swimming pools—unallowable. This policy is sufficient to address our recommendation.

Performance Bonuses: In May 2017, the Office of the President implemented new restrictions regarding employee bonuses. Specifically, it limited STAR Awards to $500 per person. Moreover, the policy only allows one award per person or team per fiscal year and the awards must recognize a specific project or event that is above and beyond the normal scope of an employee's regular job. These changes address our recommendation.


60-Day Agency Response

A memo restricting the use of funds for retirement parties and gifts, morale-building activities, STAR awards and spot awards at the Office of the President was issued on May 31, 2017 and the changes were effective immediately. Benchmarking of UC policies to other universities, CSU, the state of California and federal rates is underway.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The May 31, 2017 memo included reductions in employee benefits such as bonuses and additional safeguards to control costs. Full implementation of this recommendation is pending the review of other employee benefit policies.


Recommendation #13 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2018 the Office of the President should complete phase one of CalHR's best-practice workforce planning model by developing a strategic direction for its workforce plan.

1-Year Agency Response

The workgroup completed Phase One: Setting the Strategic Direction of CalHR's best practice workforce planning model. The resulting whitepaper has been reviewed and discussed with key stakeholders, including the president, senior staff, Executive Budget Committee, Academic Senate representatives, Council of Chancellors and the UC Regents.

The March 2018 Regents Item: Update of University of California Office of the President Audit of Administrative Expenditures on Workforce Planning can be found here: http://regents.universityofcalifornia.edu/regmeet/mar18/g5.pdf

  • Completion Date: April 2018
  • Response Date: April 2018

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

The Office of the President presented a draft version of the strategic direction for its workforce plan as a discussion item at the March 14, 2018 Regents' meeting. We reviewed the draft copy of Workforce Planning for UCOP Setting the Strategic Direction and found that it was consistent with phase one of CalHR's best-practice workforce planning model. Specifically, the document outlined the strategic goals for the Office of the President's five largest divisions and identified both internal and external factors that impact the Office of the President's workforce needs. We look forward to seeing the finalized copy of the strategic direction report.


6-Month Agency Response

The workgroup has reviewed the CalHR workforce planning model and is is reviewing practices at other public and private AAU institutions to determine how each define the approach to workforce planning.

The group has completed the stakeholder analysis and is focused on the early development of the UCOP workforce planning model.

There was a conference call with CalHR in early October to discuss the current state of the CalHR workforce planning activity. Members of the workforce planning workgroup participated in the CalHR Quarter Workforce Planning forum on in early October.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's completion of CalHR's best-practice workforce planning model.


60-Day Agency Response

A work group has been formed and has begun identifying and reviewing different workforce planning models currently in place at state and like university systems to better understand the best practices. The work group consists of staff members from compensation, talent acquisition, HR Generalists, the program management office, departments from OP and campuses/medical centers. Meetings are being scheduled bi-weekly.

An initial call with CalHR's Director of Human Resources took place the week of May 15, 2017 to discuss CalHR's workforce planning model. A follow up call with the Division Chief in charge of workforce planning for CalHR took place the week of June 12, 2017.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's completion of CalHR's best-practice workforce planning model.


Recommendation #14 To: University of California Board of Regents

To ensure that the Office of the President's staffing levels are justified and that costs are reasonable and align with the needs of campuses and other stakeholders, the regents should require the Office of the President to implement our recommendations and report periodically on its progress.

1-Year Agency Response

As reported previously, the Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

-Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

-To the Finance Committee: Reports of budget to actuals at the November, March and July meetings and biannual reports on Presidential Initiatives budgets.

-To the Governance and Compensation Committee: Reports on recommendations regarding staffing at the November, March and July meetings.

The following reports were provided by UCOP to the Regents since our six-month update in October 2017:

At the November 2017 meeting:

-To the Compliance And Audit Committee: Update on the status of implementation of recommendations at 6 months

-To the Finance and Capital Strategies Committee: Report of budget to actuals for the Office of the President

-To the Governance and Compensation Committee: Update on recommendations regarding staffing

At the January 2018 meeting:

-To the Full Board: Report on overall progress by the Chair of the Compliance and Audit Committee

-To the Finance and Capital Strategies Committee:

oAdoption of UCOP reserve policy (action) and discussion of related guidelines

o Update on the UCOP budget process

At the March 2018 meeting:

-To the Finance and Capital Strategies Committee:

oOffice of the President fund restrictions

oReport of budget to actuals for the Office of the President

oUpdate on the UCOP budget process and budget presentation prototype

oBudget categories and definitions: systemwide programs an initiatives

-To the Governance and Compensation Committee:

o Approval of Market Reference Zones for certain senior management group positions (action)

o Update on staff-related implementation workstreams

o Amendment and rescission of certain Regents' and other policies pertaining to senior management group compensation (action)

o Update on workforce planning

Additionally, a Regents working group charged with developing a comprehensive policy on executive compensation discussed salary setting methodology for leadership positions over a series of four meetings in January and February 2018.

  • Completion Date: April 2020
  • Response Date: April 2018

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

This recommendation is partially implemented based on the ongoing oversight the Regents provided since we released our audit one year ago. Full implementation is pending the Regents' ongoing oversight of the Office of the President's implementation of our recommendations. During multiple meetings in January and March, the Regents received multiple reports on the Office of the President's progress towards implementing our recommendations including new policies related to its fund restrictions, reserve, budget, and salaries for senior managers that the Office of the President asked the Regents to approve. The Regents also requested additional information and action from the Office of the President. For example, during the January Regents' meeting, Regent Park requested that the Office of the President clarify the terms restricted because she was unclear as to whether it was restricted externally or by the Office of the President. In March, the Office of the President returned with more in-depth definitions of its restrictions.


6-Month Agency Response

The Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

-Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

-To the Finance Committee: Reports of budget to actuals at the November, March and July meetings and biannual reports on Presidential Initiatives budgets.

-To the Governance and Compensation Committee: Reports on recommendations regarding staffing at the November, March and July meetings.

At the July 2017 Regents meeting, the Regents received an update on the status of implementation of recommendations at 60 days.

At the November 2017 meeting, the following reports will be provided to the Regents:

-To the Compliance And Audit Committee: Update on the status of implementation of recommendations at 6 months

-To the Full Board: Report on overall progress by the Chair of the Compliance and Audit Committee

-To the Finance and Capital Strategies Committee: Report of budget to actuals for the Office of the President

-To the Governance and Compensation Committee: Update on recommendations regarding staffing

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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

The status of this recommendation is pending the regents' ongoing oversight of the Office of the President's implementation of our recommendations. During the November meeting, the regents received multiple reports on the Office of the President's progress towards implementing our recommendations. The regents also requested additional information and action from the Office of the President. For example, Regent Perez was concerned regarding the board's oversight involvement in determining if funds are truly restricted. The chief operating officer responded to this concern by committing to bring the results of the Office of the President's analysis to the regents to ensure it aligns with their expectations.


60-Day Agency Response

The Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

- Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

- To the Finance Committee: Quarterly reports of budget to actuals and biannual reports on Presidential Initiatives budgets.

- To the Governance and Compensation Committee: Quarterly reports on recommendations regarding staffing.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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

The status of this recommendation is pending the regent's ongoing oversight of the Office of the President's implementation of our recommendations.


Recommendation #15 To: University of California Board of Regents

To ensure that the Office of the President is engaging in a thorough review of its systemwide and administrative costs and implementing our recommendations, the regents should develop a contract for an independent third party that can assist the regents in monitoring implementation of the three-year corrective action plan for the Office of the President. The independent third party should have expertise in higher education, public administration, and public finance. Moreover, the independent third party should have complete access to the Office of the President's documentation and its staff so that it has sufficient and appropriate information to verify the Office of the President's actions. The independent third party should report to the regents on the Office of the President's progress, challenges, and barriers to success at least quarterly.

1-Year Agency Response

Sjoberg Evashenk Consulting, Inc. (SEC) has continued its work to assist the Regents in monitoring the Office of the President's progress in implementing the recommendations from this audit. These efforts include attending workgroup meetings, meeting with the President, attending Executive Budget Committee meetings, reviewing documents prepared to support workgroup activities, reviewing benchmarks, and conducting numerous other conversations to understand UCOP efforts to meet the one year milestones set by the CSA. Additionally, SEC reviewed the materials provided to the CSA in the UC's 6 month and one year responses and the comments CSA made in response to that 6 month report.

Since the six month update, SEC has issued two additional quarterly reports to the Regents in January and April 2018. In developing the April 2018 report, in addition to the activities described above, SEC conducted an in-depth review of each workgroup's response to the CSA's one-year recommendations and the team presented their insights and observations on implementation progress to the Regent's Compliance and Audit Committee and to individual Regents, as requested.

  • Completion Date: July 2017
  • Response Date: April 2018

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

Full implementation of this recommendation is pending the quarterly reporting from the Regent's independent consultant, Sjoberg Evashenk Inc (consultant). The consultant provided a more thorough review of the Office of the President's progress in implementing our recommendations in its January and April 2018 reports compared to the review it had performed at the time we conducted our 6-month response assessment. In its January report, the consultant indicated that it was most concerned about the Office of the President's ability to meet our due dates. In its April 2018 report the consultant summarized the Office of the President's progress for each of the 10 recommendations that were due and provided a conclusion as to their status. We disagree with the consultant's conclusions on multiple recommendations.

For example, we disagree with the consultant's perspective in relation to recommendation 5 which required that the Office of the President develop a more robust budget by April 2018. The consultant stated that our due date is a function of when we issued the report and that we should not expect the university system to move the Regents' time frame up a quarter in order to align with our audit report release. However, we believe the April due date is critical because the failure to complete its budget in April may hinder the Department of Finance, the Legislature, and the Governor when making decisions regarding the UC's portion of the fiscal year 2018-19 state budget. Additionally, our recommendation states that the Office of the President should move its budget approval by one month, from April to May, and not a quarter.


6-Month Agency Response

Sjoberg Evashenk Consulting, Inc. (SE) has been selected to serve as the independent third party to assist the Regents in monitoring the Office of the President's progress in implementing the recommendations from this audit. The contract with SE was executed on July 7, 2017. SE issued its initial report on its independent assessment of implementation plans in July 2017. Its second quarterly report was issued in October 2017.

  • Completion Date: July 2017
  • Response Date: October 2017

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

At the July meeting, the regents announced that it hired Sjoberg Evashenk Consulting, Inc. (Sjoberg Evashenk) in response to this recommendation. The scope of work outlines requirements that align with our recommendation. Although the regents claim this recommendation is fully implemented, full implementation is pending the quarterly reporting from Sjoberg Evashenk to the regents.

Moreover, we are concerned because we found minimal evidence that Sjoberg Evashenk is independently verifying the Office of the President's implementation of our recommendations. In its formal reports and presentations to the regents, it has stated there are no potential issues at this time. However, we believe there were issues that Sjoberg Evashenk should have brought to the regents' attention such as the $12 million increase in multi-year commitment spending discussed in recommendation 5 and concerns with the employee benefit policies discussed in recommendation 12. Moving forward we hope that the regents clarify their expectations of its independent consultant to ensure the consultant is reviewing, verifying, and reporting on at-risk areas in the implementation of our recommendations.


60-Day Agency Response

The Regents conducted a request for proposal (RFP) process to identify an independent third party consultant that can assist in the planning and implementation of the recommendations from this audit. The RFP required that the consultant must have expertise in higher education, public administration, and public finance. A consultant has been selected and the contract is expected to be finalized shortly. The consultant will be supervised by and report directly to the Regents Compliance and Audit Committee. The consultant will report to the Compliance and Audit Committee on the Office of the President's progress, challenges, and barriers to success at least quarterly.

  • Estimated Completion Date: July 2017
  • Response Date: June 2017

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

At the July meeting, the regents announced that it hired Sjoberg Evashenk Consulting, Inc. in response to this recommendation.The scope of work outlines requirements that align with our recommendation. Full implementation of this recommendation is pending the quarterly reporting from Sjoberg Evashenk Consulting, Inc. to the regents.


Recommendation #16 To: University of California Board of Regents

To ensure that the Office of the President is engaging in a thorough review of its systemwide and administrative costs and implementing our recommendations, the regents should hold a public meeting that includes university stakeholders, including campuses and students, to discuss the purpose, intent, and prioritization of each systemwide and presidential initiative in light of campus funding levels for students. Require the Office of the President to publish the results of this meeting, including any systemwide or presidential initiatives that are eliminated or scaled down and the amount of money that will be reallocated to campuses for students.

1-Year Agency Response

In March 2018, UCOP provided a presentation to the Regents Finance and Capital Strategies Committee on systemwide programs and presidential initiatives in a meeting open to the public. This presentation included a comprehensive list of programs and initiatives, including purpose and cost, and formalized categories for classifying programs and initiatives, along with their definitions. These programs and initiatives will be presented again as part of the FY2018-19 UCOP Budget presentation at the May Regents meeting.

Additionally, in response to AB97, UCOP submitted a report to the Department of Finance and the Joint Legislative Budget Committee in December 2017 redirecting $15 million in savings from systemwide initiatives and programs and UCOP administrative costs to fund 1,500 additional students beginning in the 2018-19 academic year.

  • Estimated Completion Date: May 2018
  • Response Date: April 2018

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

This recommendation is partially implemented pending the public meeting in which the Regents will review with their stakeholders the prioritization of systemwide and presidential initiatives through the budget process in May 2018. In March 2018, the Office of the President presented the Regents with the list and cost of systemwide and presidential initiatives and in December 2017, the Office of the President redirected $15 million from systemwide initiatives and programs as stated in the Regents' response.

We confirmed with the systemwide deputy audit officer that the Regents believe prior meetings satisfy the commitments for a July 2018 meeting made in the 6-month status report. Specifically, for its March 2018 meeting it highlighted on its website the item discussing systemwide programs and presidential initiatives and invited students and the public to comment specifically on the item during the public comment period that occurred on each day of the three-day meeting.


6-Month Agency Response

The Regents will review systemwide and presidential initiatives in a public meeting by July 2018. In this meeting, we will discuss the purpose, intent, and prioritization of each systemwide and presidential initiative. The results of the meeting will be published.

  • Estimated Completion Date: March 2018
  • Response Date: October 2017

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

This recommendation is pending the July 2018 public meeting in which the regents will review systemwide and presidential initiatives.


60-Day Agency Response

The Regents will review systemwide and presidential initiatives in a public meeting by July 2018. In this meeting, we will discuss the purpose, intent, and prioritization of each systemwide and presidential initiative. The results of the meeting will be published.

  • Estimated Completion Date: March 2018
  • Response Date: June 2017

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

This recommendation is pending the July 2018 public meeting in which the regents will review systemwide and presidential initiatives.


Recommendation #17 To: University of California Board of Regents

To ensure that the Office of the President is engaging in a thorough review of its systemwide and administrative costs and implementing our recommendations, the regents should require the Office of the President to implement our recommendations and report periodically on its progress in doing so.

1-Year Agency Response

As reported previously, the Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

-Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

-To the Finance Committee: Reports of budget to actuals at the November, March and July meetings and biannual reports on Presidential Initiatives budgets.

-To the Governance and Compensation Committee: Reports on recommendations regarding staffing at the November, March and July meetings.

The following reports were provided by UCOP to the Regents since our six-month update in October 2017:

At the November 2017 meeting:

-To the Compliance And Audit Committee: Update on the status of implementation of recommendations at 6 months

-To the Finance and Capital Strategies Committee: Report of budget to actuals for the Office of the President

-To the Governance and Compensation Committee: Update on recommendations regarding staffing

At the January 2018 meeting:

-To the Full Board: Report on overall progress by the Chair of the Compliance and Audit Committee

-To the Finance and Capital Strategies Committee:

oAdoption of UCOP reserve policy (action) and discussion of related guidelines

o Update on the UCOP budget process

At the March 2018 meeting:

-To the Finance and Capital Strategies Committee:

oOffice of the President fund restrictions

oReport of budget to actuals for the Office of the President

oUpdate on the UCOP budget process and budget presentation prototype

oBudget categories and definitions: systemwide programs an initiatives

-To the Governance and Compensation Committee:

o Approval of Market Reference Zones for certain senior management group positions (action)

o Update on staff-related implementation workstreams

o Amendment and rescission of certain Regents' and other policies pertaining to senior management group compensation (action)

o Update on workforce planning

Additionally, a Regents working group charged with developing a comprehensive policy on executive compensation discussed salary setting methodology for leadership positions over a series of four meetings in January and February 2018.

  • Completion Date: April 2020
  • Response Date: April 2018

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

This recommendation is partially implemented based on the ongoing oversight the Regents provided since we released our audit one year ago. Full implementation is pending the Regents' ongoing oversight of the Office of the President's implementation of our recommendations. During multiple meetings in January and March, the Regents received multiple reports on the Office of the President's progress towards implementing our recommendations including new policies related to its fund restrictions, reserve, budget, and salaries for senior managers that the Office of the President asked the Regents to approve. The Regents also requested additional information and action from the Office of the President. For example, during the January Regents' meeting, Regent Park requested that the Office of the President clarify the terms restricted because she was unclear as to whether it was restricted externally or by the Office of the President. In March, the Office of the President returned with more in-depth definitions of its restrictions.


6-Month Agency Response

The Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

-Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

-To the Finance Committee: Reports of budget to actuals at the November, March and July meetings and biannual reports on Presidential Initiatives budgets.

-To the Governance and Compensation Committee: Reports on recommendations regarding staffing at the November, March and July meetings.

At the July 2017 Regents meeting, the Regents received an update on the status of implementation of recommendations at 60 days.

At the November 2017 meeting, the following reports will be provided to the Regents:

-To the Compliance And Audit Committee: Update on the status of implementation of recommendations at 6 months

-To the Full Board: Report on overall progress by the Chair of the Compliance and Audit Committee

-To the Finance and Capital Strategies Committee: Report of budget to actuals for the Office of the President

-To the Governance and Compensation Committee: Update on recommendations regarding staffing

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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

The status of this recommendation is pending the regents' ongoing oversight of the Office of the President's implementation of our recommendations. During the November meeting, the regents received multiple reports on the Office of the President's progress towards implementing our recommendations. The regents also requested additional information and action from the Office of the President. For example, Regent Perez was concerned regarding the board's oversight involvement in determining if funds are truly restricted. The chief operating officer responded to this concern by committing to bring the results of the Office of the President's analysis to the regents to ensure it aligns with their expectations.


60-Day Agency Response

The Office of the President has confirmed to the Regents that it will implement all of the State Auditors recommendations from this audit. The Regents have identified the following reporting schedule and structure for updating the Board on the status of implementing the recommendations from this audit:

- Reports on status of implementation of recommendations at 60 days, 6 months, one year, and annually thereafter to the Compliance and Audit Committee. Work Plan oversight will be governed by a working group of the board composed of the Chair and Vice Chair of the Board and the Chairs of the Finance, Compliance and Audit, and Governance and Compensation Committees. The Chair of the Compliance and Audit Committee will report overall progress to the Board of Regents no less than every 6 months.

- To the Finance Committee: Quarterly reports of budget to actuals and biannual reports on Presidential Initiatives budgets.

- To the Governance and Compensation Committee: Quarterly reports on recommendations regarding staffing.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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

The status of this recommendation is pending the regent's ongoing oversight of the Office of the President's implementation of our recommendations.


Recommendation #18 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2018 the Office of the President should develop and use a clear definition of systemwide initiatives and administration to ensure consistency in future budgets.

1-Year Agency Response

UCOP has completed its development of clear, mutually exclusive definitions to distinguish between the primary functional areas of the Office of the President: Central & Administrative Services and UCOP-affiliated Programs and Initiatives. Further, UCOP-affiliated Programs and Initiatives have been separated into five distinct categories including State/Federal Programs, Campus Programs, Systemwide Programs, Systemwide and Presidential Initiatives. All definitions were reviewed by the Executive Budget Council and the President prior to presentation to the Regents. These definitions will be applied to budgets moving forward.

The definitions were reviewed by the Regents at the March 2018 Regents meeting in Item F9.

http://regents.universityofcalifornia.edu/regmeet/mar18/f9.pdf

An updated document with the same definitions plus additional context, including an expanded explanation of UC budget processes is being submitted to the CSA as part of this one year update.

  • Completion Date: March 2018
  • Response Date: April 2018

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

The Office of the President's systemwide initiatives workgroup presented the following definitions to the Regents as a discussion item at the March 14, 2018 meeting. The development and publication of these definitions fulfills our recommendation.

Central and Administrative Services are the Office of the President's administrative support functions or centralized operational services for which there is a clear benefit to having one entity perform on behalf of the entire system, capturing economies of scale.

The Office of the President Affiliated Programs and Initiatives are funded wholly or in part through the Office of the President budget and/or receive state general funds through an annual set-aside allocation that flows directly to the campus and not through the Office of the President budget.


6-Month Agency Response

The UCOP systemwide initiatives workgroup, supported by a team of subject-matter experts from the Academic Affairs division, has compiled a preliminary data set of UCOP systemwide programs and initiatives and formalized the categories for these items with clearly articulated definitions. The terms and definitions will be used to develop future budgets.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The Office of the President's working documents shows that it has developed five definitions to establish and track statewide, systemwide, and campus initiatives and programs. According to the Office of the President's website, the President will review and approve these definitions in January 2018. Moreover, our recommendation indicates that the Office of the President should develop a definition of administration, but it has yet to do so. Thus, this recommendation is pending approval by the President of statewide, systemwide, and campus initiatives and programs in addition to the development and approval of a definition for administration.


60-Day Agency Response

A UCOP systemwide initiatives work group has been formed. This group includes representation from key stakeholders across a variety of functional areas within the Office of the President. The work group has met and a workplan has been developed. It has begun formulating a project scope and a work group charter. The work group will: (1) develop a baseline understanding of current initiatives and how they are defined, (2) undertake a research phase as required to understand best practices and leverage existing methodologies, (3) establish and apply clear definitions, and (4) document and develop processes to differentiate types of initiatives and use them consistently in future budgets.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a clear definition for systemwide initiatives and administration. Additional documentation provided by the Office of the President shows that by August 2017 it intends to develop a framework for reviewing systemwide initiatives. Additionally, by December 2017, it plans to complete its assessment of the programs it identified for review.


Recommendation #19 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2018 the Office of the President should develop a comprehensive list of systemwide initiatives and presidential initiatives, including their purpose and actual cost that will be used in the regents' meeting previously recommended.

1-Year Agency Response

UCOP completed a comprehensive review of the set of UCOP-affiliated programs and initiatives. A listing by category of these programs and initiatives, and their associated budget allocations, is included in the materials submitted to CSA as part of this one year update. Additionally, a more detailed summary of each program, including its purpose, its stakeholders, and the funds used to support it, is also included in the submitted materials.

The finalized list of UCOP-affiliated programs and initiatives totals to $410.9 million. This is a variance of 0.5% from the budget approved by the Regents.

As requested by the CSA, UCOP reviewed the 6 month draft list of programs to address the identified variance of $32 million identified by the CSA. The reconciliation schedule is included in the documentation submitted to the CSA and includes explanation of the variances.

Finally, UCOP has provided a detailed description of the nine presidential initiatives in the materials submitted to the CSA. Each summary includes an overview of the origin, intent and activities of the initiative and includes funding commitments. UCOP will continue to use this category of programs as has been defined, but will be updating its process for funding these initiatives.

Past budgets included a President's Initiative Fund (PIF) funded at $9.8 million annually. This budget will be reduced $2 million in FY2018-19 from $9.8 million as part of the $15 million redirection to fund additional enrollment growth. As part of the presentation to the Regents in March 2018 on Reserves (see recommendation #4), UCOP is eliminating the Temporary (One-Time) budget practice, establishing a Strategic Priorities Fund (SPF) and absorbing the President's Initiative Fund (PIF). The SPF is intended to be used to support presidential initiatives as well as other initiatives, projects and emergent needs requiring short-term funds. The fiscal impact of establishing the SPF is expected to be a budget reduction of short-term/temporary expenditures by approximately half the amount of previous years.

  • Completion Date: April 2018
  • Response Date: April 2018

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

We found the Office of the President's actions are sufficient to address this recommendation. The Office of the President presented a list of 70 Office of the President affiliated programs and initiatives including the programs and initiatives function, program summary, and budget to the Regents at the March 14, 2018 meeting. This list and the list it provided to us included:

-18 state/federal programs budgeted to cost $222.8 million that are either required by legislation or that the university operates by contract on behalf of the state or federal government.

-11 campus programs budgeted to cost $3.6 million that exist solely at one or two campuses and are not systemwide in reach or impact.

-31 systemwide programs budgeted to cost $169.6 million that benefit the State, multiple campuses, or the entire system and are funded with ongoing or permanent funds.

-1 systemwide initiative that benefits the State, multiple campuses, or the entire system and is funded solely with time-bound or single-occasion funding commitments. This systemwide initiative is using prior year funding amounts and is not currently supported through the Office of the President's budget.

-9 presidential initiatives budgeted to cost $9.8 million that were launched by a president to address university, statewide, national or global issues, which are solely funded with time-bound or single-occasion funding commitments

Moreover, we verified the Office of the President's $32 million reconciliation and found it was reasonable. We also found the Office of the President's approach to presidential initiatives is also reasonable.


6-Month Agency Response

The UCOP systemwide initiatives workgroup, supported by a team of subject-matter experts from the Academic Affairs division, has: (1) compiled a comprehensive data set of UCOP systemwide programs and initiatives, including individual purposes and costs, (2) formalized categories for these items along with their definitions, and (3) developed key attributes to assist with reporting . This documentation will be incorporated in future budgets.

To respond to the timing of AB97, UCOP's effort to identify savings to be put towards its share of $15M in funds for enrollment increases beginning in the 2018-19 academic year, the team used the data set of programs and initiatives. This documentation has been provided to key stakeholders (Executive Budget Committee, Council of Chancellors, Department of Finance and others) for consultation and evaluation to ensure UC will meet December 2017 deadlines for development of the State of California budget.

  • Estimated Completion Date: April 2018
  • Response Date: October 2017

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

The Office of the President provided us with a working list of 90 statewide, systemwide, and campus programs. The list includes a summary of each program, its stakeholders, and the funds used to support it. According to this document—which the Office of the President highlighted as a work in progress—the total 2017-18 Office of the President budget for initiatives and programs equals $440 million. This total is $32 million more than the amount approved by the regents. Since this list is a work in progress, it is possible that this discrepancy represents data entry errors; the Office of the President stated it is still validating data internally and with its campuses. By April, we expect these amounts to tie back to the budget approved by the regents or to be otherwise explained.

Moreover, we also expect clarification on the status of presidential initiatives. The budget director informed us that through its review of statewide, systemwide, and campus programs UCOP has preliminarily determined that presidential initiatives generally fit into one of these categories. He stated that management had not determined how the Office of the President would define presidential initiatives or the status of the $10 million allocated each year to the presidential initiative fund.


60-Day Agency Response

A UCOP systemwide initiatives work group has been formed. This group includes representation from key stakeholders across a variety of functional areas within the Office of the President. The work group will complete a baseline review including development of a comprehensive list of systemwide and Presidential initiatives. The documentation will explain: purpose, commitment levels, and costs. This baseline will be used in the subsequent research phases to implement further recommendations. Consistent with recommendations related to budget process and presentation, these initiatives will be presented in the annual budget process.

  • Estimated Completion Date: April 2018
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a comprehensive list of systemwide initiatives and presidential initiatives.


Recommendation #20 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 2019 the Office of the President should publish the results of its review of fund restrictions and fund commitments and identify any funds it anticipates reallocating to campuses.

1-Year Agency Response

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.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President's publication of the results of its review of fund restrictions and fund commitments in addition to the identification of funds that it anticipates reallocating to campuses.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's review of fund restrictions due by April 2018.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

The fund restrictions work group, consisting of staff from UCOP and systemwide finance, will develop a white-paper and proposed recommendation to be reviewed by key stakeholders and presented for required approvals. This document will serve as a guideline to govern the use and re-allocation of restricted funds, potentially supporting portions of the budget currently funded by unrestricted sources. The information will be published and made accessible in the appropriate format as determined by the Regents.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's review of fund restrictions due by April 2018.


Recommendation #21 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 2019 the Office of the President should implement the best practices for budgeting identified by the GFOA and NACUBO, including developing budget policies and procedures and formally documenting, approving, and justifying all one-time and unexpected expenditure requests.

1-Year Agency Response

As part of the UCOP FY2018-19 budget process, the Office of the President made incremental improvements to its budget process, policies, and guidelines in order to support development of a best practice budget presentation. A summary of the processes and supporting guidelines are documented in the UCOP Budget Manual. Budget process best practice analysis is underway, and we anticipate full implementation of this recommendation in April 2019.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President's analysis of budget process best practices and changes it may make to its budget manual. Based on our review, the budget manual provided appears comprehensive and will serve as a strong foundation for future budget processes.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

Review of best practices has commenced. Some best practices were identified using NACUBO and will be incorporated with improvements in budget process and presentation.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's adoption of our recommended budget format due by April 2018.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

A budget process work group has been formed and will conduct a research phase that will identify and document budgeting best-practices. This review will include leveraging sources of common best-practices like NACUBO, GFOA, and other sources. UCOP will develop a white paper to document best-practices and recommend an annual budget process from kick-off through Regents approval.

This process will leverage all established review committees (Executive Budget Committee) and key stakeholders consistent with the recommendation to reconvene the Executive Budget Committee. Implementation of this recommendation will require that we improve process, reporting and controls for one-time spending items.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's adoption of our recommended budget format due by April 2018.


Recommendation #22 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 2019 the Office of the President should continue to present a comprehensive budget based on the presentation in Figure 11 to the regents, the Legislature, and the public.

1-Year Agency Response

Consistent with the update provided in recommendation 5, the Office of the President has incorporated CSA's recommended budget format for the FY2018-19 annual budget presentation and is charting a course for continuous improvement beyond this budget year.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President's presentation of a comprehensive budget in April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's adoption of our recommended budget format due April 2018.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

The budget presentation work group plans to implement improved financial systems to better support on-going development and transparency of the budget presentation, and this requires replacement of the existing budget development system (BDS). Figure 11 will be used, among other best practices guidelines, to establish user requirements for a BDS system.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's adoption of our recommended budget format due April 2018.


Recommendation #23 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2019 the Office of the President should set targets for any needed reductions to salary amounts using the results from its public and private sector comparison and adjust its salaries accordingly.

1-Year Agency Response

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.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President setting targets for any needed reductions to salary amounts and adjusting salaries accordingly.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's development of a method for weighing comparable public and private sector pay data due April 2018.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

A work group has been formed for the two projects related to staff salary ranges (OP and system). The work group members are compensation experts from OP and campuses/medical centers. Meetings occur weekly. An additional work group has been formed to address the project related to the review of leadership salary ranges (Market Reference Zones), systemwide. The work group members are compensation and Human Resource experts from OP and campuses/medical centers. Meetings occur twice monthly.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a method for weighing comparable public and private sector pay data due April 2018.


Recommendation #24 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2019 the Office of the President should narrow its salary ranges.

1-Year Agency Response

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.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President's actions related to our previous recommendation--restructuring its salary ranges--that was due April 2018. Additionally, the Office of the President will need to narrow its salary ranges by April 2019 to fulfill this recommendation.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's actions related to restructuring its salary ranges due April 2018.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

A work group has been formed for the two projects related to staff salary ranges (OP and system). The work group members are compensation experts from OP and four campuses/medical centers. Meetings occur weekly. An additional work group has been formed to address the project related to the review of leadership salary ranges (Market Reference Zones), systemwide. The work group members are compensation and Human Resource experts from OP and campuses/medical centers. Meetings occur twice monthly. The information gathered through the in depth analysis that is currently in progress will be used to determine the appropriate salary ranges.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's actions related to restructuring its salary ranges due April 2018.


Recommendation #25 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2019 the Office of the President should set targets for appropriate employee benefits and implement new processes that ensure that employees adhere to the revised policies regarding employee benefits.

1-Year Agency Response

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.

The Office of the President is setting targets for appropriate employee benefits as part of the 2018-19 budget process.

See update for recommendation 12 outlining the actions taken to approve and publish policy changes.

  • Estimated Completion Date: May 2018
  • Response Date: April 2018

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

The Office of the President is no longer indicating that this recommendation is fully implemented. Based on our six month assessment we continue to rate this recommendation as partially implemented.


6-Month Agency Response

Procedures are in place at each campus, medical center and the Office of the President to ensure compliance with the systemwide policy and administrative changes made in October 2017. Procedures at the Office of the President are in place to implement the policy changes made in April 2017 and October 2017.

  • Completion Date: October 2017
  • Response Date: November 2017

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

Although the Office of the President asserted to us that this recommendation is fully implemented, we disagree. As we discuss in recommendation 12, the Office of the President and the regents still need to take additional actions related to its policies for car allowances, business meetings and entertainment, employer contributions toward a retirement savings plan for SMGs, and stipends. Moreover, when we asked the Office of the President to provide targets for appropriate employee benefits, it referred us to one line in the 2017-18 budget that stated it aims to reduce employee travel expenditures by 10 percent. We find this single target insufficient to address this recommendation as we intended the recommendation to encompass all employee benefits.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Updates to policies based on benchmarking with federal, state and other universities will be published online.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's review of its employee benefit policies due April 2018.


Recommendation #26 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2019 the Office of the President should create a plan for reallocating funds that it saves to campuses as it reduces its staffing costs.

1-Year Agency Response

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.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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 staffing recommendations due by April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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 staffing recommendations due by April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

A work group has been formed for the two projects related to staff salary ranges (OP and system). The work group members are compensation experts from OP and four campuses/medical centers. Meetings occur weekly. An additional work group has been formed to address the project related to the review of leadership salary ranges (Market Reference Zones), systemwide. The work group members are compensation and Human Resource experts from OP and campuses/medical centers. Meetings occur twice monthly.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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 staffing recommendations due by April 2019.


Recommendation #27 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2019 the Office of the President should implement phase two of CalHR's best-practice workforce planning model by determining its current and future staffing and competency gaps. As part of this phase, the Office of the President should consider the input of stakeholders, including campuses and students, regarding which elements of its organization are of critical importance and which elements it could eliminate or downsize.

1-Year Agency Response

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.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President's completion of CalHR's best-practice workforce planning model due April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's completion of CalHR's best-practice workforce planning model due April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

From the beginning of implementation, UCOP is proactively seeking and considering the input of stakeholders. The work group for this recommendation includes staff members from compensation, talent acquisition, HR Generalists, the program management office, key units within OP and representatives from campuses/medical centers. Meetings are being scheduled bi-weekly. The analysis that is currently in progress will create the structure and process that OP will use moving forward.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's completion of CalHR's best-practice workforce planning model due April 2019.


Recommendation #28 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2019 the Office of the President should establish spending targets for systemwide initiatives and administrative costs.

1-Year Agency Response

Spending targets are being set for programs, initiatives, and central administration as part of the FY18-19 UCOP budget process. The Office of the President will continue to develop and improve upon its efforts to establish spending targets and conduct program reviews, and will provide a status update on its progress at the next reporting milestone.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending the Office of the President's establishment of spending targets for systemwide initiatives and administrative costs 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 establishment of spending targets due April 2019.

The Executive Budget Committee has been consulted on AB97 and is expected to continue to review the list of systemwide initiatives and programs, including establishment of targets by 2019.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's development of a clear definition for systemwide initiatives and administration due April 2018 and its establishment of spending targets for systemwide initiatives and administrative costs due April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

The systemwide initiatives work group will work with the budget process work group to develop work flow, approvals and review of initiatives in the context of annual budgets. The budget process documentation will include methodology for establishment and communication of annual budget targets expected to include targets for systemwide and Presidential initiatives. The establishment of targets and the prioritization of alternatives will include key stakeholders such as the Executive Budget Committee who will serve in an advisory capacity to the President.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a clear definition for systemwide initiatives and administration due April 2018 and its establishment of spending targets for systemwide initiatives and administrative costs due April 2019.


Recommendation #29 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2019 the Office of the President should publish the results of the review of systemwide and presidential initiatives, including any funds the Office of the President anticipates reallocating to the campuses.

1-Year Agency Response

The Office of the President published the results of the AB97 proposal to redirect $15M to the campuses to fund additional undergraduate enrollment in FY18-19 which included reducing the funding for presidential initiatives by $2M and other UCOP-budgeted programs by $.5M.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

The status of this recommendation is pending any additional funding the Office of the President identifies for reallocation to campuses by April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

The systemwide and presidential initiatives workgroup will develop reports to enhance transparency. The workgroup will continue to engage the Executive Budget Committee. The workgroup will determine review criteria and a frequency to periodically review items. Governance will be established to enable review and to facilitate prioritization and trade-off decisions, as needed. The workgroup will publish its results.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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

The status of this recommendation is pending the Office of the President's development of a comprehensive list of systemwide initiatives and presidential initiatives due April 2018.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

The systemwide and Presidential initiatives work group will develop reporting to enable transparency. The work group will engage the Executive Budget Committee and develop an approach to evaluate the review of the portfolio of projects and initiatives. Governance will be installed to ensure review so that less impactful items may be discontinued. The work group will publish their results.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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

The status of this recommendation is pending the Office of the President's development of a comprehensive list of systemwide initiatives and presidential initiatives due April 2018.


Recommendation #30 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2019 the Office of the President should restructure budget and accounting systems to ensure that the costs of the Office of the President can be clearly tracked and reported annually. Specifically, the budget and accounting systems should be able to distinguish between systemwide initiatives, presidential initiatives, and administrative costs.

1-Year Agency Response

The Office of the President is working to implement incremental improvements to the existing BDS system to improve tracking, reporting and alignment to budgets. Plans for a new budget system have been initiated and a planning document has been submitted to the CSA along with this report.

  • Estimated Completion Date: April 2019
  • Response Date: April 2018

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

We reviewed the documentation the Office of the President provided and it clearly lays out the challenges the Office of the President is facing with implementing a new budget system. Moving forward it will be important for the Office of the President to transparently share these challenges with its stakeholders and the impact that the need for a new system may have on its ability to complete our recommendations by their due dates.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations as well as dependencies that will be identified in the budget process workgroup.

UCOP has begun exploring system improvements. UCOP is working with UCLA as the campus identifies a new financial system that includes general ledger and planning tools. We continue to explore the use of systems to effectively capture systemwide and presidential initiatives. Key requirements will also include improved budgeting, tracking and reporting on these projects.

A key dependency for the timing of this item will include the UCLA or alternative campus system implementation, which has a 2- to 3-year timeline, independent of UCOP's control. Actual costs, dependent on commensurate accounting and financial system upgrades, are subject to the UCLA project timeline. UCOP has restructured its budget development system (BDS) to track and report budgeted costs to distinguish between those that are systemwide, presidential and administrative.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

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 budget, systemwide initiative, presidential initiative, and administrative cost recommendations due April 2018. The Office of the President's response implies that it will not be able to fully implement this recommendation on time because of difficulties in transferring to new systems. Upgrading the Office of the President's budget and accounting systems is very important because these systems affect its ability to present accurate and transparent data to the regents and the public. Because of the importance of this recommendation, the Office of the President needs to fully disclose the challenges it is facing and the impact that delays to system timelines will have on implementing this recommendation.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

UCOP will review budget development tools in use at select campuses as part of the financial systems replacement project (driven by UCLA) with a goal of identifying and implementing a new budget tool. In establishing the UCOP requirements, we will explore greater use of systems to categorize Systemwide and Presidential initiatives. The requirements will also include improved budgeting, tracking and reporting on these projects to capture inception-to-date, annual and multi-year spending.

  • Estimated Completion Date: April 2019
  • Response Date: June 2017

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 budget, systemwide initiative, presidential initiative, and administrative cost recommendations due April 2018.


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.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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.


Recommendation #32 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 evaluate its budget process to ensure that it is efficient and has adequate safeguards that ensure that staff approve and justify all budget expenditures. If the Office of the President determines that its safeguards are sufficient, it should begin developing a multiyear budget plan.

1-Year Agency Response

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

The Office of the President currently relies on UCLA's financial systems and a budget planning and reporting tool (BDS) developed by UCOP. Budget and reporting needs have evolved, and the current BDS system, initially implemented for the FY2011-2012 budget, does not support new requirements consistent with best-practices or the recommendations of the California State Auditor.

A project is underway to assess replacement of the Budget Development System to:

- support improved budgets that are clear, transparent, and comprehensive and align processes, presentations and financial systems to support this;

- develop and document repeatable, best-practices processes supported by financial systems; and

- broaden stakeholder involvement and continue developing multi-year strategic plans that are aligned with the UC mission and the campuses.

UCOP is addressing reporting and planning requirements to identify an efficient, cost effective way to partner with UCLA and/or another campus in implementation of a new system. Because system implementation projects are long, UCOP is also working to incrementally improve existing BDS functionality to satisfy requirements in the 2018-2020 timeframe. UCOP continues to explore options and will make a decision in the next few months on the long-term financial system solution after completing due diligence on project scope, functionality, timing and costs and reviewing options with stakeholders.

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 budget recommendations due in April 2019 and April 2020.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

High-level financial system requirements analysis has included evaluation of new technology and the handling of process flows, financial controls and required resources. UCOP will require the functionality to complete multi-year budgets.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 budget recommendations due in April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

A budget process work group has been formed and has begun early stages of scoping a robust budget system to replace the existing limited functionality of the current Budget Development System (BDS). In connection with the UCLA financial systems replacement project (UCOP leverages UCLA general ledger and procurement modules), the work group is reviewing budget systems at some of the campuses to evaluate process and technology. In connection with a BDS replacement, the work group will (1) evaluate current process, flows and budget controls and (2) evaluate technology and implement updated systems with new policies, procedures and controls documented in our requirements. Any UCOP investment in an updated budgeting tool will be functionality to complete multi-year budgets.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 budget recommendations due in April 2018 and April 2019.


Recommendation #33 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 report to the regents on the amount of funds it reallocated to campuses as a result of implementing our recommendations.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 budget recommendations due in April 2019 and April 2020.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

The EBC charter includes the following specific language: "The Executive Budget Committee is accountable for ensuring that recommendations are consistent and aligned with the timely incorporation of the CSA audit budget requirements dated April 2017, as part of a transparent planning, resource allocation, and assessment process." As such, UCOP requires that the EBC provide campus-level input on future funding decisions.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 budget recommendations due in April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Included in research and evaluation of Best-Practices, the budget process and presentation work groups will develop a comprehensive budget check-list to be submitted annually with budgets. The work groups will include the requirement to report amounts reallocated to campuses or used to offset subsequent year assessments or other purposes as determined by the President.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 budget recommendations due in April 2018 and April 2019. The impact of this recommendation will vary based on the Office of the President's funding situation in April 2020; however, we are still concerned that the Office of the President implies in its response that it may not directly reallocate these funds to campuses. We look forward to the Office of the President's 6-month response to determine the level of campus input on these funding decisions.


Recommendation #34 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2020 the Office of the President should adjust its salary levels and ranges to meet its established targets.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 salary restructuring recommendations due in April 2018 and April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 recommendations.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 salary restructuring recommendations due in April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

A work group has been formed for the two projects related to staff salary ranges (OP and system). The work group members are compensation experts from OP and four campuses/medical centers. Meetings occur weekly. An additional work group has been formed to address the project related to the review of leadership salary ranges (Market Reference Zones), systemwide. The work group members are compensation and Human Resource experts from OP and campuses/medical centers. Meetings occur twice monthly. The information gathered through the in depth analysis that is currently in progress will be used to determine the appropriate salary ranges and targets.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 salary restructuring recommendations due in April 2018 and April 2019.


Recommendation #35 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2020 the Office of the President should adjust its employee benefits to meet its established targets.

1-Year Agency Response

See recommendation 12 update for actions taken to implement the changes in employee benefits.

  • Completion Date: April 2018
  • Response Date: April 2018

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

The Office of the President adjusted its employee benefits, as we noted in our assessment of recommendation 12.


6-Month Agency Response

Systemwide policy changes were implemented in October 2017 based on benchmarking data from federal and state sources as well as CSU and other public universities .

  • Completion Date: October 2017
  • Response Date: October 2017

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 employee benefit recommendations due in April 2018 and April 2019. As we discuss in recommendation 12, the Office of the President and the regents still need to take additional actions related to its policies for car allowances, business meetings and entertainment, employer contributions toward a retirement savings plan for SMGs, and stipends.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Policies will be revised based on benchmarking with federal, state, and other university policies.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 employee benefit recommendations due in April 2018 and April 2019.


Recommendation #36 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2020 the Office of the President should reallocate funds to campuses when adjustments to its salaries and benefits result in savings.

1-Year Agency Response

The Office of the President has initiated efforts to track savings from employee reimbursement policy changes.

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 staffing related 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.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 staffing related recommendations due April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Any potential savings from this process will either be reallocated to campuses or used for programs and areas that further support and benefit the campuses.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 staffing related recommendations due April 2018 and April 2019. The impact of this recommendation will vary based on the Office of the President's funding situation in April 2020; however, we are still 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 determine the level of campus input on these spending decisions.


Recommendation #37 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2020 the Office of the President should implement phase three of CalHR's best-practice workforce planning model by presenting the final workforce plan to its staff and beginning its implementation by carrying out workforce planning strategies covering a three-to five-year period. The Office of the President should make its final workforce plan publicly available.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 workforce planning recommendations due April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 and April 2019 recommendations.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 workforce planning recommendations due April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

UCOP will carry out workforce planning strategies covering a three to five year period and will make its final workforce plan publicly available.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 workforce planning recommendations due April 2018 and April 2019.


Recommendation #38 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2020 the Office of the President should implement phases four and five of CalHR's best practice workforce planning model by implementing its workforce plan strategies and annually evaluating the completed workforce plan strategies against defined performance indicators and revising the plan where necessary.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 workforce planning recommendations due April 2019.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 and April 2019 recommendations.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 workforce planning recommendations due April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

UCOP will annually evaluate its completed workforce plan strategies against defined performance indicators and revise the plan where necessary.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 workforce planning recommendations due April 2018 and April 2019.


Recommendation #39 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2020 the Office of the President should report to the regents on the amount of funds it reallocates to campuses as a result of implementing our recommendations.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 staffing-related 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.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 staffing-related recommendations due April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

The Regents have established regular reporting schedules related to audit implementation progress and the recommendations made in the report. UCOP will report to the Regents at those times throughout the year and on items recommended by the State Auditor in its report.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 staffing-related recommendations due April 2018 and April 2019.


Recommendation #40 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2020 the Office of the President should publicly publish its progress in meeting systemwide initiative and administrative cost targets.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 systemwide initiative and administrative cost recommendations due April 2019 and April 2020.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 and 2019 recommendations.

Upon completion of this requirement, UCOP will identify the best, most appropriate way(s) to publish reports regarding systemwide and presidential initiatives, to further transparency of these efforts.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 systemwide initiative and administrative cost recommendations due April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Upon completion of this requirement, UCOP will identify the appropriate and best way to publish reports regarding systemwide and Presidential initiatives to ensure transparency of these efforts.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 systemwide initiative and administrative cost recommendations due April 2018 and April 2019.


Recommendation #41 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2020 the Office of the President should reallocate funds from the review of systemwide and presidential initiatives, as well as any administrative cost savings, to campuses.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 systemwide initiative and presidential initiative recommendations due April 2019 and April 2020.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 and 2019 recommendations.

The Executive Budget Committee, consistent with its charter, will continue to serve in its campus-input role of making recommendations on resource allocations.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 systemwide initiative and presidential initiative recommendations due April 2018 and April 2019.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

The systemwide and Presidential initiatives work group will develop reporting to enable transparency. The work group will publish reports their results. Potential reallocations to the campuses will be included as applicable.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 systemwide initiative and presidential initiative recommendations due April 2018 and April 2019.


Recommendation #42 To: University of California

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, by April 2020 the Office of the President should report to the regents on the amount of funds reallocated to campuses.

1-Year Agency Response

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

  • Estimated Completion Date: April 2020
  • Response Date: April 2018

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 systemwide initiative, administrative cost, and presidential initiative recommendations due April 2019. The impact of this recommendation will vary based on whether the Office of the President is funded via a direct appropriation from the State or the campus assessment in April 2020.


6-Month Agency Response

Implementation of this recommendation will be dependent on actions taken in response to the April 2018 and 2019 recommendations. Furthermore, the UCOP resources available to fund these activities may depend on the outcome of other recommendations, including those relating to fund restrictions, budget process and reserves.

The Executive Budget Committee, consistent with its charter, will continue to serve in its campus-input role of making recommendations on resource allocations.

  • Estimated Completion Date: April 2020
  • Response Date: October 2017

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 systemwide initiative, administrative cost, and presidential initiative recommendations due April 2018 and April 2019. The impact of this recommendation will vary based on whether the Office of the President is funded via a direct appropriation from the state or the campus assessment in April 2020.


60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Included in our research and evaluation of Best-Practices, UCOP will develop a comprehensive budget check-list to be submitted annually with budgets. We will include the requirement to report amounts reallocated to campuses or used for programs and areas that further support and benefit the campuses.

  • Estimated Completion Date: April 2020
  • Response Date: June 2017

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 systemwide initiative, administrative cost, and presidential initiative recommendations due April 2018 and April 2019. The impact of this recommendation will vary based on the Office of the President's funding situation in April 2020; however, we are still 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 determine the level of campus input on these spending decisions.


All Recommendations in 2016-130

Agency responses received are posted verbatim.