University of California Regents have bought UC President Janet Napolitano’s story about how her office came to interfere with an audit of its performance ordered by the state Legislature, with regents saying they were disappointed by the scandal but prepared to move on after reprimanding Napolitano.

But there could be more fallout on two fronts: in the Legislature and in the governor’s race, where the frontrunner, Lt. Gov. Gavin Newsom, is an ex-officio UC regent.

That’s because Napolitano’s story seems so implausible. According to an independent report prepared at regents’ behest by former California Supreme Court Justice Carlos Moreno and the Hueston Henningan law firm, after state Auditor Elaine Howle sent surveys to UC campuses in October 2016 asking for their assessment of UC’s Office of the President, Seth Grossman, Napolitano’s chief of staff, and Bernie Jones, her deputy chief of staff, put out the word that they needed to review the responses. This was done even though Howle had emphasized the responses were supposed to be confidential. Subsequently, three campuses – UC Santa Cruz, UC Irvine and UC San Diego – revised their responses to make them more favorable to Napolitano’s office.

But Napolitano told the Legislature in May, and Moreno’s investigators more recently, that while she approved the plan to have her office review the responses, she did so because she wanted to ensure the responses were correct – not because she wanted to protect her image. She also said campuses had requested help.

Moreno’s report did not suggest the UC president was lying. But it found no evidence that campuses sought help with their responses. And it noted that UC Santa Cruz Chancellor George Blumenthal said that he was chewed out by Napolitano for his campus sending in a response to Howle without running it by her staff. UC Santa Cruz’s response was the harshest of any campus, giving Napolitano’s office one “poor” and three “fair” ratings out of the 10 categories in the survey questions. After Blumenthal’s telephone conversation with what he described as a “furious” Napolitano, UC Santa Cruz changed the “poor” and “fair” ratings to good and upgraded three “good” ratings to “exceptional.”

Napolitano said she remembers her conversation with Blumenthal as being routine, not angry. But Blumenthal’s account is consistent with other findings in the Moreno report, such as Napolitano’s declaration in a text message that Howle was on a “witch hunt.”

The two aides cited in the Moreno report resigned a week before the report’s release and declined substantive comment on the allegations against them.

Lawmakers unlikely to be satisfied with handling of scandal

The Legislature, which passed a bill last session subsequently signed by Gov. Jerry Brown making it a crime for a state agency to interfere with a state audit, could consider follow-up legislation. There’s considerable residual anger over Napolitano’s May testimony to a joint legislative hearing in which she repeatedly denied personal wrongdoing of any kind. Assemblywoman Catharine Baker, R-Dublin, vice chair of the Higher Education Committee, cited that testimony last week in calling for Napolitano to be fired.

In the gubernatorial race, UC-related sparks seem just as likely to fly. While Newsom told the Los Angeles Times that he considered regents’ decision to reprimand Napolitano “insignificant” – suggesting he wanted stronger punishment – he joined the unanimous vote to retain her as UC president.

This is tough to square with Newsom’s reported comments about how he would deal with corruption and ethical issues in state government: “I will not be known for being timid about this or anything else. Gov. Brown says reform is overrated; I say it’s underrated.”

As for Howle’s part, she wants regents to take additional actions beyond reprimanding Napolitano, according to a letter she sent to regents and an internal report by her office that were obtained by the Los Angeles Times.

Howle asked regents to “consider disciplining university employees who repeatedly interfered with a state audit, tried to hide their actions, misled investigators and withheld requested information until threatened with court action,” the Times reported.

At the regents’ Nov. 17 meeting in San Francisco, they began consideration of measures meant to “clarify and strengthen” how UC officials who report both to the regents and to Napolitano must deal with state audits.

Is University of California President Janet Napolitano attempting to scapegoat two of her top aides for a scandal that enraged the California Legislature? Or were the aides’ abrupt resignations last week a Napolitano message to regents and lawmakers that she realizes the gravity of the mistakes made by the UC Office of the President in interfering with an audit ordered by the Legislature?

This was the speculation touched off by Wednesday’s UC announcement that Seth Grossman, Napolitano’s chief of staff, and Bernie Jones, his deputy, had “resigned to pursue other opportunities.” Neither offered substantive comments to the media on their decisions.

Jones played a central role last year in getting three UC campuses to change their responses to state Auditor Elaine Howle, who had been asked by the Legislature to examine campuses’ relationships with Napolitano’s office – the latest of several attempts in recent years by the Legislature to get a better understanding of UC’s murky finances.

The responses were supposed to be confidential so Howle could get an unfiltered assessment of UC’s Office of the President. But at Jones’ direction, officials at UC Santa Cruz, UC San Diego and UC Irvine either dropped criticism or offered more positive descriptions.

The San Francisco Chronicle, which in May broke the story that emails confirmed interference with the audit, reported that Jones’ boss – Grossman – was CC’d on emails about responses to the audit and that Napolitano’s involvement in the attempt to protect her office’s reputation was direct and indisputable.

UC Santa Cruz’s initial response to Howle’s inquiry was perhaps the harshest of any campus. It rated the help from Napolitano’s office in four categories as either “poor” or “fair.” All were later changed to “good.” Ratings for three other services were changed from “good” to “exceptional.”

Santa Cruz response changed after Napolitano spoke with chancellor

The changes were undertaken in November 2016 – after Napolitano spoke with UC Santa Cruz Chancellor George Blumenthal.

“Per your conversation with Chancellor earlier today, we have already started the recall process of the State Audit Survey,” Ashish Sahni, Blumenthal’s top aide, told Napolitano in an email obtained by the Chronicle.

The resignations of Grossman and Jones were only the latest fallout from the spring scandal. After Howle told legislators she’d never seen such improper behavior from a state agency in her 17 years as auditor, they passed a bill making it a crime subject to a $5,000 fine to interfere with a formally requested state audit. Gov. Jerry Brown signed it into law last month.

Meanwhile, at the behest of UC regents, former California Supreme Court Justice Carlos Moreno continues to conduct an independent investigation into the scandal. There is no indication when he will submit his report; it is not on the agenda for the regents’ meeting in San Francisco on Wednesday and Thursday.

Moreno’s inquiry has so far seemed a low-profile, leak-free effort. But at the very least, it has the potential to embarrass Napolitano again over her handling of the scandal.

Howle – who discarded the campuses’ responses as worthless because of the interference – released the audit on April 25. The finding that initially spurred the most headlines was Howle’s assertion that the UC Office of the President hid $175 million in funds from regents and the public.

Napolitano was able to lessen the fallout from that finding by arguing that far from being hidden, the funds were dedicated to important programs.

But her assertion that audit responses were changed after individual campuses’ asked for help from her office were immediately challenged by state lawmakers at a contentious May 2 hearing. Less than 30 hours later, the Chronicle posted its story showing the changes had been orchestrated by Napolitano’s office – not initiated by the campuses.