Report 2016-130 Recommendation 21 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 #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.

Annual Follow-Up Agency Response From October 2018

As part of the UCOP FY2018-19 budget process, the Office of the President made improvements to its budget processes, policies, and guidelines in order to support development of a best practice budget presentation. To support this effort, UCOP:

-Reviewed GFOA and NACUBO budgeting best practices

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

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

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

-Incorporated outcomes from other related workstreams

Updates on the revised best-practice budget process were presented to the UC Board of Regents in January 2018 (http://regents.universityofcalifornia.edu/regmeet/jan18/f7.pdf) and March 2018 (http://regents.universityofcalifornia.edu/regmeet/mar18/f11.pdf). The March Regent's item includes best-practice analyses and the roadmap for implementation.

In addition, budget processes and supporting guidelines, including procedures for formally documenting, approving, and justifying one-time and unexpected expenditure requests, were developed and are documented in the UCOP Budget Manual. This manual is not intended to be a static document and will continue to be updated as additional improvements are identified and made.

  • Completion Date: May 2018

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We determined this recommendation is fully implemented because on April 24, 2018, the Office of the President released its operating budget manual that incorporates elements of our recommendations, NACUBO and GFOA best practices, as well as other recommended changes identified by Office of the President staff and its third party consultants. Additionally, the Office of the President's new budget format includes ongoing operating and one-time expenditures in one budget, total budgeted revenues, budget to actual comparisons, fund balances, reserve balances, and a cause of change analysis detailing year-over-year budget change drivers. The budget manual also requires justification for all one-time requests for funding over $100,000, funding requests from the strategic priorities fund, or requests that impact Office of the President staffing. Finally, in our review of the fiscal year 2018-19 budget, we also confirmed approval for planned expenditures from the strategic priority fund.


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.


All Recommendations in 2016-130

Agency responses received are posted verbatim.