Report 2016-130 Recommendations

When an audit is completed and a report is issued, auditees must provide the State Auditor with information regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year. Additionally, Senate Bill 1452 (Chapter 452, Statutes of 2006), requires auditees who have not implemented recommendations after one year, to report to us and to the Legislature why they have not implemented them or to state when they intend to implement them. Below, is a listing of each recommendation the State Auditor made in the report referenced and a link to the most recent response from the auditee addressing their progress in implementing the recommendation and the State Auditor's assessment of auditee's response based on our review of the supporting documentation.

Recommendations in 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)

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Recommendations to Legislature
Number Recommendation Status
1

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

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.

2

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.

Recommendations to University of California
Number Recommendation Status
3

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2018:

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.

4

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2018:

Develop a reserve policy that governs how large its reserves should be and the purposes for which they can be used.

5

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2018:

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.

6

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2018:

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.

10

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2018:

Develop a method for weighing comparable public and private sector pay data when establishing salaries for all positions.

11

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2018:

Determine how to restructure salary ranges to make certain the ranges encourage employee development and ensure pay equity

12

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2018:

Evaluate and identify needed changes in employee benefit policies to ensure that they include reasonable safeguards to control costs.

13

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2018:

Complete phase one of CalHR's best-practice workforce planning model by developing a strategic direction for its workforce plan.

18

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2018:

Develop and use a clear definition of systemwide initiatives and administration to ensure consistency in future budgets.

19

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2018:

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.

20

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2019:

Publish the results of its review of fund restrictions and fund commitments and identify any funds it anticipates reallocating to campuses.

21

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2019:

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.

22

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2019:

Continue to present a comprehensive budget based on the presentation in Figure 11 to the regents, the Legislature, and the public.

23

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2019:

Set targets for any needed reductions to salary amounts using the results from its public and private sector comparison and adjust its salaries accordingly.

24

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2019:

Narrow its salary ranges.

25

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2019:

Set targets for appropriate employee benefits and implement new processes that ensure that employees adhere to the revised policies regarding employee benefits.

26

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2019:

Create a plan for reallocating funds that it saves to campuses as it reduces its staffing costs.

27

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2019:

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.

28

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2019:

Establish spending targets for systemwide initiatives and administrative costs.

29

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2019:

Publish the results of the review of systemwide and presidential initiatives, including any funds the Office of the President anticipates reallocating to the campuses.

30

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2019:

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.

31

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2020:

Reallocate to the campuses funds that it identified during its review of fund restrictions and fund commitments.

32

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2020:

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.

33

To determine the amount of money that it can reallocate to campuses and to ensure that it publicly presents comprehensive and accurate budget information, the Office of the President should do the following by April 2020:

Report to the regents on the amount of funds it reallocated to campuses as a result of implementing our recommendations.

34

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2020:

Adjust its salary levels and ranges to meet its established targets.

35

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2020:

Adjust its employee benefits to meet its established targets.

36

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2020:

Reallocate funds to campuses when adjustments to its salaries and benefits result in savings.

37

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2020:

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.

38

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2020:

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.

39

To ensure that its staffing costs align with the needs of campuses and other stakeholders, the Office of the President should do the following by April 2020:

Report to the regents on the amount of funds it reallocates to campuses as a result of implementing our recommendations.

40

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2020:

Publicly publish its progress in meeting systemwide initiative and administrative cost targets.

41

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2020:

Reallocate funds from the review of systemwide and presidential initiatives, as well as any administrative cost savings, to campuses.

42

To ensure that its spending aligns with the needs of its stakeholders, including campuses and students, the Office of the President should do the following by April 2020:

Report to the regents on the amount of funds reallocated to campuses.

Recommendations to University of California Board of Regents
Number Recommendation Status
7

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.

8

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.

9

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.

14

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.

15

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 do the following:

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.

16

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 do the following:

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.

17

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 do the following:

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 in doing so.



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