Listen to the Regents' Governance Committee Meeting of June 17, 2019 (and a note of caution)

The Regents' Governance Committee had an off-cycle meeting this past Monday. There were no public comments at the session. The main item was approval of a budget for UCOP. Blog readers will recall that the state auditor several years ago criticized UC and the Regents for maintaining a hidden reserve. The legislature then insisted that there should be a separate budget from UCOP and that the Regents should more closely monitor reserves.

UC prez Napolitano at the session argued for a return to the prior model, i.e., no separate allocation from the legislature and what amounts to a kind of tax system on the campuses to pay for central services. The newer Regents, however, wanted to learn more about the history and methodology and it was agreed that UCOP would come up with a more detailed history and explanation at the July Regents meeting.

UCOP seems to make a distinction between official reserves - i.e., accounts labeled as such - and "balances" in various fund accounts. The distinction is strained at best and (I predict) won't fly if the state auditor comes back for another look. In effect, if you think of UCOP as a household with a checking account for day-to-day expenses and a savings account for emergencies, you might say there is some distinction between the balance in the checking account and the balance in the savings account. But in fact, a dollar is a dollar. If you need money because of some kind of emergency, it really doesn't matter whether you draw down your checking account or you draw down your savings account. The Regents could be treading on dangerous ground if they try to convince the state auditor or the legislature that there is some practical distinction between dollars in a checking account and dollars in a savings account.

Moreover, as it happens, the state auditor has issued a report critical of CSU for having hidden reserves - although the magnitude involved is oodles higher than what came out of the UC audit. It would be particularly dangerous, with the legislature focused on the CSU matter, for the Regents to move in the direction that seemed to be proposed at this time.* Let's hope the new Regents continue to ask questions and there is no rubber stamping of the proposal in July.

You can hear the discussion at:

or direct to:
https://archive.org/details/RegentsGovernanceCommittee61719
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*On the CSU affair, see:
https://www.sfchronicle.com/news/article/CSU-stashed-away-1-5B-surplus-without-telling-14025568.php