Last week, University of California President Janet Napolitano (pictured) and UC regents generated positive headlines with their decision to reduce tuition for in-state students – the first cut since 1999-2000 – as well as their success in getting a 4 percent funding hike from the state Legislature and Gov. Jerry Brown.

The announcement that total annual in-state charges would drop from $12,630 to $12,370 – a 0.5 percent reduction – was framed as reflecting both UC’s relative fiscal health and a truce between UC leaders and UC student activists.

Nevertheless, the UC system continues to have a murky financial future, with billions in unmet infrastructure needs and underfunded pension liabilities. And while some past UC presidents worked hard to establish strong relationships with other state leaders, Napolitano appears to have relatively few allies in the state Capitol, with many lawmakers still upset with the former Arizona governor over her office’s interference with an audit the Legislature had ordered. As for the governor, he has complained for years that UC is too quick to seek higher state aid or higher tuition and has never engaged in meaningful belt-tightening.

Against this backdrop, chances for a major increase in state funding seems a long shot – though that may change with a new governor in January.

Yet the need for such increased aid – or the billions that could be raised with future tuition hikes – is plain, many UC leaders believe.

In January, UC Berkeley Chancellor Carol Christ made a presentation to regents that amounted to a plea for much more funding. Christ said her campus had a $700 million backlog of needed maintenance alone. The San Francisco Chronicle reported that every campus except for recently opened UC Merced had at least $100 million in maintenance needs, topped by Berkeley, followed by UCLA at $677 million.

20 years of not funding pensions backfires

But Christ and other UC leaders face an even more daunting challenge in paying for pensions, especially given the coming wave of retirements in UC’s aging workforce. That’s because UC’s estimated $15 billion in unfunded pension liabilities is far bigger than it would have been were it not for the decision of UC officials to contribute nothing to the pension fund from 1990 to 2010.

UC’s pension system has more than 80 percent in projected funding for its long-term liabilities and is in significantly better shape than CalPERS or CalSTRS. Nonetheless, a September analysis by the Los Angeles Times noted how the 20-year pension payment holiday had backfired on UC. The analysis detailed how the steadily growing cost of retirement benefits was reducing funds available for “core fund” basic expenses. As of 2016, more than 5,400 retirees from the UC system made pensions of $100,000 or more.

Under pressure from the Brown administration, Napolitano’s office has taken some actions to rein in pension costs. UC employees hired beginning in July 2016 have a cap on how much of their final pay can be used to determine pensions. Earlier this year, regents also approved a plan to allow new hires to choose between having a defined-benefit pension or a 401(k)-style account.

But the plan’s fate is unclear after it faced strong objections from Assemblyman Kevin McCarty, D-Sacramento, and government unions.

Pressure is building on University of California President Janet Napolitano after the San Francisco Chronicle obtained two batches of official documents that appeared to show Napolitano was untruthful in her testimony at a joint legislative oversight hearing May 2 at the Capitol.

The focus of the hearing was a scathing audit prepared at the Legislature’s request and released by State Auditor Elaine Howle on April 25. It alleged Napolitano’s office had hid $175 million in reserve funds from the regents and the public while the UC president successfully orchestrated approval of a tuition hike. In her testimony, Napolitano succeeded in raising questions about the fairness of that allegation by asserting that most of the reserve dollars had been committed to worthwhile programs.

But Napolitano’s attempt to explain away Howle’s second most serious allegation – that her aides had interfered with the audit by rewriting comments from individual UC campuses to make them more favorable to Napolitano’s office – has backfired. She denied that there was any attempt to make her office look good and asserted that the remarks were revised to make them accurate and that campuses had sought guidance on how to respond.

The claim seemed shaky to some lawmakers, based on their subsequent questions. Napolitano’s office wasn’t even supposed to have seen the responses – audit officials specifically told UC campus authorities that their responses would be confidential.

But two Chronicle articles in the past week have made Napolitano’s remarks seem not just misleading but deceptive. They laid out how documents and emails from Napolitano’s aides to individual campuses didn’t reflect attempts to correct errors or give guidance. Instead, they sought for the responses to be rewritten to offer more praise for Napolitano’s office – just as Howle’s audit alleged.

7 UC Santa Cruz ratings of Napolitano office upgraded

The first article’s most telling detail was how UC Santa Cruz withdrew its official response after a conversation between Napolitano and Chancellor George Blumenthal.

The second article was based on official emails and documents that laid out Napolitano’s seeming determination to prevent individual campuses from giving Howle any ammunition with which to criticize UC and her office. Last year, Napolitano authorized the release of an unusual 31-page report denouncing a previous Howle audit that criticized UC’s system-wide decision to deny admission over the previous decade to more than 4,000 qualified in-state students in favor of admitting out-of-state and foreign students who pay far higher tuition – thus enabling UC to balance its budget without any belt-tightening.

“The surveys and previously unreleased emails show that administrators at UC Santa Cruz, UC San Diego and UC Irvine removed criticism of Napolitano’s office or upgraded performance ratings in key areas at the direction of Napolitano’s staff,” wrote Chronicle reporter Nanette Asimov. “The interference – including a system-wide conference call conducted by the president’s office to coordinate responses among all campuses – prompted Howle to discard all the results as tainted.”

The second batch of documents indicated why Napolitano may have been particularly perturbed with the responses of UC Santa Cruz officials and why she personally spoke with Blumenthal, the campus’ chancellor, about them.

The Chronicle article noted that after the Office of the President’s intervention, Santa Cruz officials upgraded the ratings they had given Napolitano’s office in seven categories. One “poor” rating was changed to “good.” Three “fair” ratings were changed to “good.” And three “good” ratings were changed to “excellent.”

On Wednesday, Assemblywoman Sharon Quirk-Silva called for Napolitano to resign. While several other state lawmakers have been harshly critical of the UC president, the Los Angeles Times reported that Quirk-Silva is the first to specifically say Napolitano must go.