University of California President Janet Napolitano could face her roughest week in nearly four years as leader of the state’s flagship college system as lawmakers react sharply to a

Legislative oversight hearings could be held as soon as Tuesday, according to the San Jose Mercury-News, after state Auditor Elaine Howle’s second damning report in 13 months. Napolitano’s and UC regents’ reaction is far different to the second report than the first, suggesting new dynamics that could put Napolitano’s job at peril or lead to the revival of a 2014 proposal that would ask voters to strip UC of the independent autonomy it enjoys under the California Constitution.

UC regents had backed Napolitano in 2016 in her dismissive response to Howle’s complaint that UC had admitted out-of-state students who paid much more in tuition than nearly 4,300 California students “whose academic scores met or exceeded all of the median scores of nonresidents whom the university admitted to the campus of their choice.” Howle said UC officials did this for nearly a decade in response to the state’s reducing funding during the revenue recession and in lieu of even basic attempts to control costs.

Napolitano could have blamed policies she inherited. Instead, she blasted Howle’s report as inaccurate. Though Napolitano’s defense lacked exculpatory evidence, UC regents largely dismissed Howle’s findings, with Regent John Perez even saying the report reflected an unseemly bias again out-of-state students.

Napolitano, regents change tone from last harsh audit

Napolitano’s reaction to the new Howle report, however, is conciliatory. Her office challenges the assertion that $175 million in reserves was hidden, saying that the funds were committed to various tasks and couldn’t have been used to head off tuition hikes. Otherwise, its official response to the audit thanked Howle for her work and said her recommendations would be implemented.

Some regents and lawmakers expressed disbelief that they as well as the general public weren’t told of the reserves even as Napolitano was lobbying hard for tuition hikes.

“Unbelievable,” said Lt. Gov. Gavin Newsom, according to the Bay Area News Group. Newsom, a regent and an early front-runner in the 2018 governor’s race, said the era in which regents served as “lap dogs” for the Office of the President had to end and that regents should look hard at rescinding the tuition hike.

Perez declined comment.

The University of California enjoys a unique status among state agencies that goes beyond its constitutionally guaranteed autonomy. Taxpayers only directly pay for a little more than one-tenth – about $3.6 billion – of UC’s $32 billion budget. The rest largely comes from tuition, federal grants and reimbursement for services UC does for the federal government, including operating and managing three national scientific laboratories.

But Gov. Jerry Brown and legislative leaders still see UC as an agency using public dollars that needs to be fully accountable. This has led to eight recent audits, many of which – including the latest – depict UC as having few basic financial controls and as being unable to document how and why it divvies up the various funds it receives. Howle’s analyses have consistently shown a UC system with no interest in belt-tightening.

Bad blood remains from 2014 tuition hardball

Where the contretemps goes this week is anyone’s guess. Some coverage has suggested that Howle’s critique goes overboard. But Napolitano doesn’t have a history of strong relationships with state lawmakers, some of whom see her as behaving in imperious fashion, and that could be a stealth factor in how the Legislature responds to Howle’s latest audit.

In late 2014, when the UC president got UC regents to endorse a five-year, 28 percent tuition hike that would go into effect unless the Legislature increased UC funding, Sen. Ricardo Lara, D-Bell Gardens, and Sen. Anthony Cannella, R-Ceres, introduced a Senate constitutional amendment that they hoped would go before voters in 2016. It would have limited UC’s independence by giving the Legislature a veto on tuition hikes and pay raises for top UC executives, among other provisions.

The bill was shelved in 2015 after Brown and Napolitano reached a compromise on state funding. But resentment of Napolitano’s belief that she could push the Legislature around and try to embarrass it to get her way endures.

Napolitano’s success last fall in getting UC regents to approve a five-year, 28 percent tuition hike conditioned on how much state funding UC receives is what triggered the fight.

In his newly released state budget, the governor not only ignored her call for more funding, he indicated a preparedness to micromanage UC over whom it admits. The Los Angeles Times’ George Skelton depicted Brown as having …

… essentially stiffed UC President Janet Napolitano and the regents, who have threatened to raise tuition again unless the state chips in substantially more money.

Brown re-offered only last year’s deal: a 4% increase, or about $120 million, if the university keeps tuition flat. UC previously said that wasn’t enough. “The $120 million is not chump change,” the governor insisted.

And he threw in a new condition: No additional out-of-state students, who pay triple tuition, crowding out California kids. UC was “created by the people of California … for the citizens of the state,” he declared.

The populist quality of his admissions maneuver will serve Brown well politically — even if it goes against his normal posture of budget pragmatism. Out-of-state students pay so much in tuition that they shore up financing for UC and relieve pressure on the state budget.

Brown, Legislature > Napolitano, regents

But the insiders and UC watchers I have spoken with think the governor is playing three-dimensional chess and Napolitano is playing tic-tac-toe.

Brown and the Legislature want to get credit for tuition relief for the middle class. Napolitano wants to have a bigger budget but has yet to convince the public or the media that UC is in dire straits.

The governor just won a landslide re-election by making the case he is a careful fiscal steward of the state. Napolitano has no political base in California after years as governor and attorney general of Arizona and homeland security czar for the Obama administration.

Given these facts and circumstances, it’s difficult to see how Brown can lose this fight. The more interesting question is whether Brown will allow the UC president to save face by making some concessions. To this point, he’s not just content to accept the narrative of her as an adversary, he’s actively encouraging it.

Skelton thinks this may be the end game:

Brown wants to negotiate with Napolitano over university cost-cutting, which could include professors spending more time teaching and less researching.

But that would only be a further humiliation for Napolitano, who has repeatedly declared her intention to keep the UC system as one of the world’s great centers of research.

If Napolitano went along, it would also likely trigger a sharp reaction from the UC Faculty Senate.

The former Arizona gov may already regret challenging the current California gov so directly.