UC system under state investigation

With a seemingly long history of student fee hikes and executive compensation scandals, the UC system is now being audited by California’s Bureau of State Audits.

With a seemingly long history of student fee hikes and executive compensation scandals, the UC system is now being audited by California’s Bureau of State Audits.

The bureau approved Sen. Leland Yee’s (D-San Francisco) audit request, along with its scope and objectives, in Feb. 2010. The results will be made public when the investigation ceases, which is projected to occur in April 2011, said Margarita Fernandez, public affairs chief for the Bureau of State Audits.

Yee’s office hopes to get a better look at what is occurring within the university through the audit.

“In light of all the fee increases to students, the continual executive compensation scandals and the seeming disregard for the lowest paid workers at the university, this audit clearly needed to take place,” said Adam Keigwin, chief of staff for Yee.

One of the main reasons for the audit request was to challenge the luxury and privileges awarded to UC executives. The system lacks transparency and accountability, and the top executives continue to receive raises while student fees are increasing, Keigwin said. If student fees are increasing, then executives should not be receiving wage increases.

“[The executives] treat [the university] as if they can do whatever, however they please with no accountability and no transparency,” Keigwin said. “It seems that the university has a complete disregard for the students and for the public – the taxpayers. They don’t like to do things with transparency and then they keep enriching themselves virtually … You don’t expect that at a public university that is made to serve our students of California.”

Regents still approve pay raises and executive compensations at their meetings. Keigwin also noted that there are millions of dollars in grants that are given to the university, but that there is never a true counting of how that money is spent and distributed.

The UC Office of the President (UCOP) maintains that the university is committed to the students, and that it’s the state that is disinterested in higher education.

“Unsubstantiated claims from Senator Yee’s office about the University of California should be taken with a large grain of salt,” said UC spokesperson Steve Montiel, in an e-mail interview. “We trust the people of California to sort out fact from fiction, and we’re confident that the state audit will confirm the integrity of the UC system’s efforts to preserve quality, access and public service in the face of chronic state disinvestment in higher education.”

Montiel said that UC highly values transparency in order to disprove misinformation. Also, UC cooperates routinely for financial and programmatic reviews and audits, and is fully cooperating with the nonpartisan Bureau of State Audits on the current audit.

It will be unclear whether there is fraud or not until the audit results come in, but there is evidence of conflicts of interest, Keigwin said. For example, UC has an investment advisory committee made up of individuals who were handing over contracts to their friends and family. Additionally, there are regents that own investment companies that have been giving contracts to UC.

“The conflicts of interests are real, whether it goes beyond that in terms of fraudulent behavior, we don’t know because the system is just so closed and we don’t get to see their book,” Keigwin said.

Another large issue presented by Yee was the wages of the lowest paid workers in the university. The university says that it does not have enough money to provide livable wages for its lowest paid workers, but it always has money to pay its top executives, Keigwin said. Currently, many of the workers with these wages rely on public assistance programs.

Additionally, Yee’s office is concerned with the increase in auxiliary organizations in the system, Keigwin said.

“We know there’s an increase in foundations and auxiliary organizations popping up on campus, which are not subject to a California Public Records Act,” he said. “So we don’t even know how much money are in these foundations and where that money is going, and if the executives are getting money out of there as well.”

Keigwin said that any public institution must have transparency and accountability measures set in place.

“Unfortunately, it’s kind of been a black hole when it comes to what’s happening within the university,” he said. “The university constantly just says ‘trust us, we’re taking care of things,’ but that’s not how things work in a public institution. You don’t just trust: you verify, you review, you hold people accountable. Without the transparency, it’s impossible to hold anyone accountable. That’s what this audit will do.”

Fernandez said that the details of the audit and where the state would be investigating are confidential.

The full scope and objectives of the audit can be found at bsa.ca.gov/bsa/aip.

MARTHA GEORGIS can be reached at campus@theaggie.org.