The way that the University of Washington accounts for its costs, and the complexity of its sprawling operations that include a major medical center, have led to a confusing system that makes it difficult for lawmakers and members of the public to understand the university’s financial information, a new report says.
The report was requested by the Washington state Legislature in spring 2014 because lawmakers wanted to better understand where the university spends its money. The 117-page audit was written by Sjoberg Evashenk Consulting, a California business management consultant.
The report highlights two key problems: First, in the state’s financial documents, colleges and universities are not reported in a single column, but blended with other agencies, creating a lack of transparency.
Second, the size and scope of the UW’s extensive operations contributes to confusion. The UW’s projected operating budget in 2014 is $6 billion, but only $239 million of that — roughly 4 percent — comes from state funding. The vast majority of operating revenue comes from tuition, fees, grants, contracts, gifts and operations of its hospitals and other medical clinics.
The report also called out the UW’s aging financial software systems, noting that the primary system is nearly 40 years old and the staff had trouble generating some of the reports and data requested by auditors.
The auditors had five recommendations for how to make the UW’s accounting process more transparent, including consolidating policies and procedures and creating a central repository of key fiscal records. The report suggests that the state and Legislature read the UW’s audited financial statements, rather than relying solely on statewide financial reports.
And it suggests that, since the state, legislative staff and UW each follow different processes, the various parties “need to discuss the different tools used to forecast and budget for operating fees, such as tuition. The lack of consistency and different models used by the various parties undermine the accuracy and credibility of the data.”