The president's office of the University of California has been under fire since an April audit finding that UC administrators failed to disclose $175 million it had saved by spending less than budgeted and requesting increases based on previous years' overestimated budgets.
Napolitano says the reserve fund is only $38 million.
UC's strong focus on serving in-state undergraduates is unique among many top-ranked public institutions.
State lawmakers past year held back $18.5 million unless the system adopted a cap.
Beginning in fall 2018, university campuses will be capped at 18 percent nonresident student enrollment, unless their 2017-18 undergraduate student body already has a rate exceeding that level. Those campuses are UC San Diego and UCLA at 23 percent; and UC Irvine at 19 percent. In fact, all UC campuses enroll less than one-quarter of their undergraduates from outside California - well below the average proportion of nonresident enrollment for public AAU institutions.
George Kieffer, a product of the 10-campus University of California system, said Thursday that he didn't want to cap out-of-state enrollment at campuses that could benefit from an influx of out-of-state tuition.
The state legislature allocated $18.5 million to the UC on the condition that the board adopt a policy limiting the number of undergraduate nonresidents.
Still, she and the board committed to implementing the audit's 33 recommendations to improve transparency and spell out policy.
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Some board members complained about poor press coverage, and thanked the auditor for clarifying that the president's office did not commit malfeasance.
"And the Office of the President is not doing a good job", she said.
A UC board meeting to discuss a critical state audit and to consider a cap on nonresident student enrolment is underway.
University of California regents on Thursday approved the first limit on out-of-state and worldwide student enrollment, settling for now a prolonged fight over who gets admitted to the prestigious public research university. Jerry Brown withheld $18.5 million from UC until it developed a nonresident enrollment policy.
UC's original proposal of a 20% systemwide cap led to so much disagreement that regents delayed a scheduled vote on it in March and brought it back this week, reworked.
Much of Thursday's meeting was taken up with a current audit so scathing that it drew bipartisan legislative ire and prompted California Gov.
State Auditor Elaine Howle, who briefed the UC Board of Regents Thursday, said she meant no disrespect to Napolitano, a former U.S. Secretary of Homeland Security, but her job was to survey budgeting process and practices.
UC President Janet Napolitano denied her office improperly stashed money.
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