Illustration by Joe Lai.
Illustration by Joe Lai.

California’s auditor will soon sift through the University of California’s accounting books, at the request of the California Legislature.

State Sen. Leland Yee, a Democrat from the 8th Senate District that encompasses San Francisco and San Mateo, requested that the Joint Legislative Audit Committee authorize an audit of the UC. The committee voted unanimously to approve the request on Feb. 17.

The California State Auditor, California’s nonpartisan external auditing office for state agencies, will conduct the review of the University of California’s finances.

“A comprehensive state audit will help further uncover the extent of the waste, fraud and abuse within the UC, and finally hold university executives accountable,” said Yee in a statement on his Senate website.

The senator asked the auditors to specifically focus on the UC Office of the President (UCOP), the head office of the University of California.

The audit will track where the UC gets its funds and where each dollar goes. Specifically, it will follow where private funds, state funds, student fees and federal funds all end up.

The audit will also search out how much money is spent per student and what the rest is spent on. Also, the inquiry will include a survey of which outside organizations the UC pays to and which funds are used to pay them.

Yee’s audit request was prompted by two recent online exposés about the University of California. Not long ago, the investigative website reported that some of the UC’s regents have direct financial ties to many of the UC’s investments. Then reported that a consulting firm, Huron Consulting Group, which was recently hired by UCLA, is being investigated by the U.S. Securities and Exchange Commission.

UC President Mark Yudof, in a recent interview with student media organizations, brushed off the state’s audit of the UC.

“I think it’s fine,” Yudof said. “When people are running out of money they often want to audit and want to make sure that all the dollars are being spent [well]. We have nothing to hide.”

Yudof also noted that the UC conducts an audit every year.

“We have an outside audit. We post it online,” he said. “… I think a lot of the information is really out there already. If the legislature wants to look at an audit then we’re happy to do that, and if they find some things we’re doing wrong we’ll fix them.”

Yee’s office rebuffed UCOP statements, explaining the need for an outside auditor.

“It’s a lot like a fox guarding the henhouse,” said Adam Keigwin, Yee’s chief of staff. “You can’t audit yourself.”

One contention from Yee’s office was that the UC allocates its finances so that funding for the university’s core functions — such as paying salaries and benefits of faculty and staff, or paying for equipment and utilities — can only come from the state funds and student fees. The rest, federal grants and private donations, go into restricted categories determined by departments and research groups.

“The UC has $6 billion of reserves that can’t be spent to mitigate fees or be put into the classroom,” Keigwin said. “We want to know what that money does. An audit will help us do that.”

The UC, on the other hand, says that its reserve is currently around $3.5 billion and shrinking. Administrators said that they cannot legally move this money to offset current funding deficits.

This is not the first time Sen. Yee has been an advocate for transparency and accountability in California’s public higher education systems.

In 2007, Yee authored a law that made executive compensation reports for the UC and the California State University (CSU) available to the public.

In the current 2010 legislative session, Yee has reintroduced two bills related to higher education that were previously vetoed by Gov. Arnold Schwarzenegger.

SB 650, an addition to the California Whistleblower Protection Act, would give legal protection to UC or CSU employees who report fraud or waste. SB 330, an update to the California Public Records Act, would bring more oversight to private organizations that contract with a UC or CSU.

Yee also coauthored a state constitutional amendment, which gives the California Legislature power to supersede the UC Board of Regents in making decisions about UC.

If the bill is approved by the legislature, it will be put to voters in November.

The audit of the University of California will start within three to four months, and will take about four to seven months to complete. When the audit is finished it will be posted on the California State Auditor’s website.

In a statement after the audit was approved, Yee expressed his incredulity about the alleged financial mishandling by UCOP, but said that accountability and credibility will be achieved by the audit.

“The UC administration expects taxpayers and students to foot the bill without asking any questions,” Yee said. “It is long overdue for the UC administration to start acting like a public institution and not a private country club.”