Report 2016-130 Recommendation 25 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 #25 To: University of California

To ensure that its staffing costs align with the needs of campuses and other stakeholders, by April 2019 the Office of the President should set targets for appropriate employee benefits and implement new processes that ensure that employees adhere to the revised policies regarding employee benefits.

Annual Follow-Up Agency Response From April 2019

UCOP developed a methodology for establishing the appropriate baselines and targets for employee benefits, reviewed the targets with the Executive Budget Committee, communicated the targets to stakeholders, and implemented the targets in the FY18-19 budget such that any incremental net savings related to these expense categories will be realized in FY18-19. Policies have been communicated to employees and controls are in place to monitor them.

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

We have rated this recommendation as fully implemented based on the Office of the President's implementation of employee benefit policies and targets for appropriate employee benefits. We reviewed the Office of the President's employee benefit policies and determined that they are reasonable. Additionally, a tracking document from the Office of the President shows that it saved $2.7 million in fiscal year 2018-19 after amending its employee benefit policies. This document also includes the Office of the President's methodology for setting and adjusting employee benefit targets.

1-Year Agency Response

The Office of the President has initiated efforts to implement this recommendation and will provide a status update on its progress at the next reporting milestone.

The Office of the President is setting targets for appropriate employee benefits as part of the 2018-19 budget process.

See update for recommendation 12 outlining the actions taken to approve and publish policy changes.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

The Office of the President is no longer indicating that this recommendation is fully implemented. Based on our six month assessment we continue to rate this recommendation as partially implemented.

6-Month Agency Response

Procedures are in place at each campus, medical center and the Office of the President to ensure compliance with the systemwide policy and administrative changes made in October 2017. Procedures at the Office of the President are in place to implement the policy changes made in April 2017 and October 2017.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although the Office of the President asserted to us that this recommendation is fully implemented, we disagree. As we discuss in recommendation 12, the Office of the President and the regents still need to take additional actions related to its policies for car allowances, business meetings and entertainment, employer contributions toward a retirement savings plan for SMGs, and stipends. Moreover, when we asked the Office of the President to provide targets for appropriate employee benefits, it referred us to one line in the 2017-18 budget that stated it aims to reduce employee travel expenditures by 10 percent. We find this single target insufficient to address this recommendation as we intended the recommendation to encompass all employee benefits.

60-Day Agency Response

Implementation of this recommendation is dependent on actions taken in response to the April 2018 recommendations.

Updates to policies based on benchmarking with federal, state and other universities will be published online.

California State Auditor's Assessment of 60-Day Status: Pending

The status of this recommendation is pending the Office of the President's review of its employee benefit policies due April 2018.

All Recommendations in 2016-130

Agency responses received are posted verbatim.