The University of California system is receiving a substantial increase in state funding despite a recent audit finding that administrators had been hiding a $175 million surplus from lawmakers.

According to The Daily Bruin, the 2017-2018 budget approved last week by Democratic Governor Jerry Brown boosts funding for the UC system by $131.2 million, in keeping with a deal struck with UC President Janet Napolitano in 2015 that forestalled tuition hikes for two years.

"It’s clear that the [UC system] can pay for additional students out of their discretionary budget."

That agreement, however, had been premised on the system’s claims that it would be forced to raise tuition by as much as five percent each year for five years without a massive infusion of cash, but an audit ordered by state lawmakers earlier this year appears to cast doubt on that assertion.

[RELATED: UC to investigate claims that Napolitano tampered with audit]

The State Auditor’s report released on April 25 found “more than $175 million in undisclosed restricted and discretionary reserves” amassed surreptitiously by the UC Office of the President, which even created a secret budget to spend some of the reserves on things like inflated administrative salaries and improvements to the president’s residence.

The San Francisco Chronicle reports that state lawmakers have been sharply critical of the slush fund, pointing out that $175 million would have been enough to enroll 35,000 students in UC schools.

“There is more money out there to fund more California students at UC,” declared Democratic State Assemblyman Phil Ting. “It’s clear that the Office of the President themselves can pay for additional students out of their discretionary budget.”

Napolitano responded to the audit by saying that she welcomes its “constructive input” and plans to implement the recommendations contained in the report, though she also objected that it “fundamentally and unfairly mischaracterizes UCOP’s budget practices and processes.”

[RELATED:Lawmakers propose defunding Evergreen State amid protests]

UC spokesperson Claire Doan confirmed in a statement to the Bruin that the system plans to implement all 33 recommendations contained in the State Auditor’s report, but Gov. Brown is looking for extra assurance by placing a hold on $50 million of the recent funding increase.

The monies will only be released once the UC system meets several conditions, including full adoption of the State Auditor’s recommendations, curtailment of benefits for some administrators, and a commitment to greater transparency in its budget process.

Even with the additional funding, however, tuition at UC schools is already slated to rise

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