$175 Million in Secret Funds Found in UC President's Office

In a shocking revelation, the California State Auditor has found $175 million in secret funds hidden by the University of California' president's office.

The money was swept into special reserves that UC President Janet Napolitano could use for projects of her choosing, all the while inflated budgets were passed and tuition was increased.

Money from the president's secret fund was broken down into three categories upon audit: restricted funds, uncommitted funds, and discretionary commitments. Restricted funds are money tagged for specific uses by Napolitano herself.

One example of restricted funds is a sum of $6.3 million left over from a lawsuit settlement with disgraced energy giant Enron. The funds from the suit were tagged for the university's strategic energy program, although there were no terms from the settlement that prescribed the money to be used for energy.

Uncommitted funds include money saved from unfilled positions at the president's office and interest from the university's endowment. $32 million of the $38 million uncommitted funds were from annual fees paid by the individual UC campuses, which the state auditor said should be returned to the campuses.

The final $54 million of Napolitano's secret funds are for discretionary commitments, which are specialized projects needing attention, such as fixing heating systems in UC buildings and doing home improvement on campus chancellors' houses.

Over $5 million in unspent funds were found in Napolitano's Global Food Initiative Fund, a program which aimed to build food pantries for UC students who could not afford to eat, among other programs. The program was started in 2014, yet its budget shows that none of the money tagged to the fund has as of yet been spent.

The state auditor revealed that Napolitano's office had difficulty identifying the amount and source of the reserve funds, and didn't know the true total of the $175 million stash until it was highlighted through the audit.

“This is a very complex budget,” UC COO Rachel Nava said. “Some of these things are difficult to explain — not because we don’t know what’s going on, but because of the complexity.”

In the wake of the audit, California Gov. Jerry Brown has announced that he will withhold $50 million from UC's annual budget, barring Napolitano making progress on 33 auditor's recommendations to be fulfilled within the next three years.



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