Janet Napolitano, the ‘Political Heavyweight,’ Now Finds Herself Under Fire

The tables have turned and Janet Napolitano, president of the University of California system, is now in the hot seat.

In April, a state audit concluded that Ms. Napolitano’s office had failed to disclose $175 million in reserve funds to the university’s Board of Regents or to the California Legislature. Ms. Napolitano disputed that finding and others in a statement after the audit report was released, and on Tuesday in an interview with The Chronicle.

The audit also found that the UC Office of the President had spent less than it budgeted, while asking for increases in future funding based on the previously overestimated budgets. And the report accused the office of interfering with the audit by reviewing campuses’ survey responses and changing responses before they were submitted.

The findings raised enough eyebrows among state lawmakers that several committees held a joint hearing with Ms. Napolitano and the state auditor, Elaine M. Howle, last week. At the hearing, Ms. Napolitano apologized for the way her office had handled the state audit.

During her tenure as president, Ms. Napolitano has not been shy about taking action in tough situations, like ordering the campuses to do a better job of responding to allegations of sexual misconduct, negotiating directly with Gov. Jerry Brown over reducing the system’s costs while pressing for more money from the state, and asking Linda P.B. Katehi, the former chancellor of UC’s Davis campus, to resign. Now, the new state audit puts Ms. Napolitano herself on the defensive.

Ms. Napolitano told The Chronicle she’s confident that the system will be judged by its research, graduation rates, and the public service it does for California. Given the audit’s findings, however, she foresees spending more time working with state legislators to explain how the system is adopting the changes recommended in the audit.

Echoing her earlier statement and her letter of response to Ms. Howle, Ms. Napolitano said she disagrees with some of the audit’s findings, especially its assertion that her office had $175 million in undisclosed funds. The letter to the auditor states that the “true amount” of uncommitted reserve funds available to the president’s office was $38 million, which Ms. Napolitano said was a “modest amount” for an organization of the university’s size.

“The notion that we have an undisclosed pot of money — that was inaccurate,” she said.

The Campus-Survey Problem

The questions over the size of the reserve fund and whether the president’s office was sufficiently transparent about it aren’t the only problem, however. Legislators have taken particular notice of Ms. Howle’s statements that the Office of the President reviewed campuses’ responses to a survey from the auditor and changed responses from negative to more positive ratings of the office. Ms. Napolitano said at the hearing last week that her office had only offered the campuses help and that she did not intend to manipulate findings. (Emails obtained by The San Francisco Chronicle cast doubt on the notion that Ms. Napolitano’s office only meant to provide assistance.)

The allegations have prompted some state lawmakers to mull legislation that would penalize anyone who compromises a state audit. “The state auditor made it clear that while they did not see any evidence of criminal liability on the part of the University of California, nevertheless going forward we want to make sure that the state auditor has the tools to hold agencies accountable,” said Assemblyman Al Muratsuchi, one of three members of the State Assembly who are planning to introduce legislation that would back up the state auditor in similar situations.

Assemblyman Phil Ting said that because the survey responses had been tampered with, they were now useless and that one of the questions he had hoped the audit would clarify — whether there were any redundancies between the president’s office and the campuses — remained unanswered.

A state audit quickly identifies problems within a public institution, Mr. Ting said, but changes need to happen afterward for the audit to have a lasting effect. The findings of the most recent audit in particular have legislators motivated to act.

Complicating things further for Ms. Napolitano, The San Francisco Chronicle reported this week that records it had obtained turned up what the newspaper called lavish spending by the Office of the President, including a $4,200 tab for a retirement party for a former director of UC’s California Digital Library in 2015.

According to a university policy memo, the university will reimburse expenses for “morale-building activities,” including retirement parties, for up to $27 per person for breakfast, $47 for lunch, $81 for dinner, and $19 for light refreshments.

Ms. Napolitano said she did not know why her office had spent that much on the 2015 event. “This is a $31-billion-a-year organization,” she said, “so a particular retirement party wouldn’t cross my desk.”

Professors React

Chris Newfield, a professor of literature and American studies at the Santa Barbara campus, said that state audits can have real power if there is a response from the Legislature, and that the recently concluded one represented a setback for public transparency.

When Ms. Napolitano was hired, many people thought having a former U.S. secretary of homeland security and former governor of Arizona leading the system would signal political power for keeping up relationships with the statehouse in Sacramento. “Basically, she was hired because she was a political heavyweight,” Mr. Newfield said.

“I didn’t agree with it, but I saw the logic of hiring someone like her. If you think your problem is Sacramento, then you hire a politician to deal with the pols of Sacramento,” he said. “I don’t think that’s worked out.”

To regain the trust of the State Legislature, faculty members, and students, Mr. Newfield said it will take full disclosure from the president’s office of what happened with the audit, and a reform process that doesn’t hire outside consultants.

Michael Meranze, professor of history at the Los Angeles campus, said the audit certainly has increased skepticism in the Legislature. “I suspect that it will raise larger questions about President Napolitano and about the organization of the Office of the President.”

Shane White, vice chair of the systemwide Academic Senate, said any controversy is demoralizing, especially if it carries the potential to damage the university. But this audit, said Mr. White, who sits on the Board of Regents as a faculty representative, seems like a distraction from addressing the issues facing the university’s long-term funding plans.

“It appears to me there’s no intent here to hide any money,” Mr. White said. “It appears to me that the audit is a criticism of some of these central programs rather than a question of dollars and cents.”

Still, Ms. Napolitano said she’s determined to solve the problems presented in the audit and that her office is well on the way to following its recommendations.

“When issues arise, my way of dealing with them is to acknowledge them,” Ms. Napolitano said. “If there are problems, to fix them. And to address them in as timely a way as we can.”

Chris Quintana contributed to this article.

Fernanda Zamudio-Suaréz is a breaking-news reporter. Follow her on Twitter @FernandaZamudio, or email her at fzamudiosuarez@chronicle.com.