SACRAMENTO, Calif. — The University of California system would face new financial restrictions and enrollment targets under a proposed state budget after an audit found administrators hid tens of millions of dollars from the public.

California Gov. Jerry Brown and lawmakers called for reforms to the system’s budgeting process and record-keeping following the release of the April audit report, which said administrators didn’t disclose $175 million in the president’s office even as tuition was increasing.

The budget, which lawmakers plan to pass Thursday, would withhold $50 million from the UC system if recommendations in the audit aren’t implemented and would give lawmakers more control over funding for the UC president’s office.

“We take this audit very seriously,” Assembly Speaker Anthony Rendon, a Los Angeles-area Democrat and UC regent, said Tuesday. “We take our accountability role very seriously.”

UC President Janet Napolitano apologized last month for her office’s handling of the situation and committed to keeping clearer budget plans and records. She has disputed the audit’s account of hidden money, saying the reserve fund actually totals $38 million.

Most of the $175 million identified in the audit funds important university programs administered by her office, including research grants, Napolitano said.

The president’s office currently draws money from each of the 10 UC campuses. But the proposed budget instead allots roughly $300 million directly to the office and about $50 million for its human resources and payroll program, effectively giving the Legislature more oversight.

Napolitano’s office has objected to the change, arguing the regents who govern the university system, not the Legislature, should make such decisions.

UC spokeswoman Dianne Klein declined to comment further on the state budget proposal.

Assemblywoman Catharine Baker, a Republican from the San Francisco Bay Area, said she thought money should be withheld from the Office of the President and not the entire UC system. She said she mostly agreed with other proposed changes to UC funding in the state budget.

“We have to attach strings to make them accountable for the money we send them,” Baker said.

The Legislature is also seeking reforms to the enrollment process, with the goal of admitting more in-state students.

The $50 million contained in the budget plan is also contingent on increasing the enrollment of California transfer students to a third of the incoming class at most campuses. That’s already the case across most UC campuses. Only two of the eight targeted campuses — UC Santa Cruz and UC Riverside — have a smaller proportion of transfer students.

UC Merced, a new campus, and UC San Francisco, which has only graduate students, would be exempt from the transfer goal.

The budget proposal directs the UC system to enroll 1,500 more in-state undergraduate students using savings from the president’s office and to enroll 500 more graduate students while prioritizing in-state students.

The proposed changes come weeks after the UC Board of Regents approved its first ever enrollment cap on out-of-state undergraduates.

Nonresident undergraduates pay nearly $39,000 in tuition fees a year, while residents pay $12,300.

In addition to the UC changes, the state budget would also require the California State University system to offer admission somewhere in the CSU system to all qualified in-state students who apply.

The CSU system turns away more than 30,000 qualified in-state students every year because there isn’t room at the campuses where they applied, said Assembly budget chair Phil Ting, a Democrat from San Francisco.

The UC system already offers a similar guarantee for in-state students.


AP writer Jonathan J. Cooper in Sacramento contributed to this report.