Audit Says CSU Stashed Away $1.5 Billion And Raised Tuition

(AP) — The California State University system kept $1.5 billion in discretionary reserves while it raised tuition and lobbied the Legislature for more state funding, according to a report released Thursday by the state auditor.

Auditor Elaine Howle's report says that CSU accumulated the surplus from 2008 to 2018, primarily from student tuition. During that same time period, it nearly doubled student tuition at its 23 campuses but did not fully inform legislators and students about its surplus.

The audit's findings are the latest to tarnish the image of California's public university system. In a 2017 audit of the University of California, Howle found misleading budget practices and that administrators had kept tens of millions of dollars in reserves not properly disclosed to the public.

CSU Chancellor Timothy White said in a statement Thursday the report was misleading and mischaracterized the purpose of reserve funds, which help to deal with state recessions and cover the cost of maintenance or other expenses previously paid for by the state.

"It is irresponsible to imply that these one-time funds could have been used in lieu of ongoing revenue sources, such as state funding, or student tuition, for ongoing costs," White said. He also said it was incorrect to claim that CSU did not fully disclose the funds.

"The report's incorrect claim that the CSU failed to fully inform its stakeholders about fund balances overlooks dozens of presentations of publicly available reports that included information about these funds," White said.

The audit says the Chancellor's Office used the money to cover the cost of instruction and other operating costs. It said CSU kept the money outside of the state Treasury and did not disclose the surplus in key documents it provided to legislators and students.

"By failing to disclose this surplus when consulting with students about tuition increases or when projecting CSU's resources and needs to the Legislature, the Chancellor's Office has prevented legislators and students from evaluating CSU's financial needs in light of its unspent financial resources," the report said.

Tuition at CSU campuses rose from $3,048 in 2008-2009 to $5,742 in 2017-18.

The report also criticized CSU for building expensive parking facilities at four of its campuses, which did little to alleviate parking problems but resulted in higher fees for students. It said CSU raised the cost of parking permits as much as $236 per semester to pay for the new structures at its campuses in Sacramento, San Diego, Fullerton and the Channel Islands.

The report recommended that the Chancellor's Office be required to publish details of its discretionary surplus and take other steps to improve financial transparency, to ensure that details are easily available to trustees, legislators, students and the public.