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The Chancellor’s Office Did Not Fully Inform Legislators and Students About CSU’s $1.5 Billion Surplus

Key Points

CSU has accumulated a discretionary surplus worth more than $1.5 billion from operating fund revenues, primarily from tuition.

The Chancellor’s Office failed to disclose this significant surplus as a resource when projecting CSU’s available resources to the Legislature or when consulting with students about the need to raise tuition.

Although the Chancellor’s Office has identified a portion of CSU’s surplus as a reserve for economic uncertainty, it has not adopted adequate policies to ensure that the amount of money CSU holds as a reserve and the manner in which it uses that money are appropriate.

CSU Accumulated a Surplus Worth $1.5 Billion, Primarily From Tuition

CSU Tuition Rate Increases From

Fiscal Years 2008–09 Through 2017–18 FISCAL

YEAR RATE INCREASE FROM THE

PREVIOUS YEAR 2008–09 $3,048 10% 2009–10 4,026 32 2010–11 4,440 10 2011–12 5,472 23 2017–18 5,742 5 Source: Analysis of CSU’s historical tuition rate information and records of related trustee meetings.



As of June 30, 2018, CSU had accumulated a discretionary surplus worth more than $1.5 billion in its operating fund. This surplus came primarily from tuition, which provided CSU with annual revenue ranging from about $1.4 billion to $2.9 billion during our 10‑year audit period from fiscal years 2008–09 through 2017–18. In total, tuition accounted for more than $23 billion, or 84 percent, of the approximately $27 billion in operating fund revenue CSU deposited in its outside accounts during this time. During these years, CSU requested—and received—increased funding from the State a number of times, and it also repeatedly raised student tuition. Although state laws enacted during the audit period required CSU to identify its available financial resources to legislators and to disclose alternatives to tuition increases to students, the Chancellor’s Office did not acknowledge CSU’s surplus in key documents it provided to legislators and students. As a result, legislators may not have been aware of critical information that was relevant to CSU’s funding requests. Similarly, students lacked information that would have enabled them to take full advantage of the opportunity to provide input and ask questions about the need for increased tuition.

As the Introduction explains, the value of the surplus CSU has in its investment account varies based on the amount of money each campus and the Chancellor’s Office transfers in and out of the account and on changes in the market value of its investments. As Figure 4 shows, CSU’s operating fund surplus grew by more than 400 percent over the last decade, a period during which CSU’s total funding from tuition revenue and the State’s General Fund appropriations also generally increased. Specifically, state funding for CSU declined from fiscal years 2008–09 through 2011–12 because of the economic downturn at that time, and to offset reductions in state support, CSU raised the cost of tuition during each of these years, as the text box details. As a result, the annual cost of tuition for a full‑time CSU undergraduate student increased by about 80 percent, from roughly $3,000 in fiscal year 2008–09 to almost $5,500 in fiscal year 2011–12.

Figure 4

The Growth of CSU’s Discretionary Surplus Coincided With an Increase in Tuition Revenue and the State’s General Fund Appropriations

Source: Analysis of CSU policy and bond financing documents. * From fiscal years 2008–09 through 2017–18, the amount of CSU’s tuition revenue increased because of the tuition rate increases that we show in the text box and because CSU’s enrollment increased.



† In September 2011, CSU transferred $700 million from its outside investment account to a state investment fund. CSU’s transfer made additional funds available to the State for cash borrowing purposes, and CSU reported that the state investment fund earned a higher rate of interest than CSU’s other investment options. CSU transferred the $700 million back to its outside investment account in April 2013.



From fiscal years 2012–13 through 2017–18, CSU’s surplus almost doubled as its General Fund appropriation increased by about 60 percent, from roughly $2 billion to $3.2 billion. The increase in the State’s General Fund appropriation to CSU in fiscal year 2013–14 was contingent on the State’s collection of additional taxpayer revenue. Proposition 30, known as the Schools and Local Public Safety Protection Act, noted that cuts to state funding for education had resulted in increased college fees, which hurt California’s college students. Although it did not provide direct funding for CSU, the proposition temporarily raised taxes and provided more revenue for public safety services and public education—specifically, school districts, county offices of education, charter schools, and community college districts. Based on the assumption that the proposition would pass and CSU would not increase tuition rates, the fiscal year 2012–13 state budget plan included increased future funding for CSU. Voters approved the temporary tax increases in November 2012, and in fiscal year 2013–14 the State increased its support for CSU by roughly $250 million. Consistent with state expectations, tuition rates remained at the fiscal year 2011–12 level of about $5,500 through fiscal year 2016–17, although CSU’s revenue from tuition continued to increase over that time because enrollment increased.

State funding has not directly contributed to CSU’s surplus because CSU does not have the authority to invest surplus General Fund appropriation money in its outside accounts; however, state funding has had an indirect impact because CSU used it to pay for expenses it otherwise would have to pay for using financial resources it holds in its outside accounts. CSU’s practice is to fully spend its General Fund appropriations on salary and benefit expenses by the end of each fiscal year. CSU had a total of $52.4 billion in expenses to its operating fund during our 10‑year audit period. As Figure 5 indicates, about half of the funding CSU used to cover those expenses—$25 billion—came from its General Fund appropriations. Once it exhausted its General Fund appropriations, CSU paid for remaining salary and benefit expenses with other funding sources.

Figure 5

CSU Used Excess Student Tuition to Build a $1.5 Billion Surplus in Its Operating Fund

From Fiscal Years 2008–09 Through 2017–18

Source: Analysis of CSU’s account data. * A minority of CSU’s funding—about 5 percent—came from sources other than the State’s General Fund appropriations or student tuition and fees, such as federal grants and investment earnings.

Most of the other half of CSU’s funding during our audit period came from student tuition and fees. Tuition supplied $23 billion, or 84 percent, of the operating fund revenue CSU held in its outside accounts from fiscal years 2008–09 through 2017–18, and fees supplied another $2.8 billion. In addition to using tuition to cover remaining salary and benefit expenses, CSU also used it for expenses such as supplies and scholarships. Unlike the state funding that CSU fully spent each year, tuition directly contributed to the surplus money that CSU transferred into its investment account. From fiscal years 2008–09 through 2017–18, the surplus money amounted to $1 billion. This $1 billion, along with the surplus operating fund money that CSU already had in its investment account as of June 30, 2008, and changes to the market value of CSU’s investments, brought the total value of its operating fund surplus up to $1.5 billion as of June 30, 2018.

The Chancellor’s Office Did Not Disclose CSU’s Surplus to Legislators and Students in Key Documents Related to State Funding and Tuition Rates

Despite the relationship between state funding and CSU’s surplus, the Chancellor’s Office has not fully disclosed the surplus to legislators when state law required CSU to provide additional detail about its financial resources. At the time of the 2006 change to state law that allowed CSU to manage tuition revenue in its own accounts outside of the state treasury, the Legislative Analyst’s Office (LAO) stated that the change could reduce accountability, and it recommended ensuring that CSU routinely report and clearly display tuition in budget documents. In certain budget acts, legislators specifically directed CSU to prepare projections of its available resources for the next three fiscal years. For example, the 2016 state budget act required CSU to submit this information to specified parties, including legislative committees that consider appropriations for CSU. Although the Chancellor’s Office provided the Joint Legislative Budget Committee and other legislative entities with projections of tuition revenue at that time, it did not include information detailing CSU’s accumulated surplus, derived primarily from tuition.

The Chancellor’s Office submitted to the Legislature in 2016 an academic sustainability plan (academic plan) that included projections of tuition revenue and General Fund appropriations, along with expenditures that would fully exhaust those projected sources of funding. However, the academic plan did not include the $1.4 billion surplus that CSU had accumulated as of June 2016 or an estimate of how the surplus might grow over the next three years. Instead, the academic plan indicated that if the State provided less funding than CSU requested and tuition rates did not increase, CSU would not be able to pay for certain expenses, including those related to increasing graduation rates and maintaining facilities and infrastructure. The trustees approved the academic plan, and the Chancellor’s Office submitted it to legislators in November 2016.

According to CSU’s assistant vice chancellor for system budget, the academic plan included all of the elements that the state budget act required. He indicated that the academic plan focused on recurring revenue sources because the Legislature and the Governor intended for the plan to demonstrate CSU’s long‑term ability to balance state funding and tuition and fee revenue with estimated enrollment in order to reach its future goals. However, according to a letter the Department of Finance sent to the chancellor and the chair of the trustees in April 2016, the intent was for the academic plan to inform the ongoing discussion between legislators and the trustees about CSU’s long‑term sustainability and about changes to university policies, practices, and systems that would advance the State’s goals for higher education. Moreover, the letter states that the Governor’s administration expected CSU to use its available resources to maintain affordability. Because the Chancellor’s Office did not disclose the extent of CSU’s available resources, legislators were unable to evaluate whether the surplus aligned with the State’s goals, consider whether CSU should use any of the surplus to offset the State’s appropriation, or discuss with the trustees any potential changes to CSU’s policies and practices that allowed it to accumulate a surplus from tuition revenue.

We also question the Chancellor’s Office’s assertion that only recurring sources of revenue are relevant to its projection of available resources. First, the Chancellor’s Office identifies CSU’s surplus as critical to sustaining campuses in light of the cyclical nature of their revenues. Further, as we discuss below, CSU has specifically designated a reserve for economic uncertainty intended to limit the impacts of recessions and support consistency in CSU operations. According to the associate director of accounting for the Chancellor’s Office’s financial services division, CSU’s $400 million reserve for economic uncertainty as well as the other portions of CSU’s surplus are a resource campuses can draw on to balance the budget when expenses exceed revenue. She indicated that campuses have the discretion to use any portion of their surplus based on their needs, which could include offering additional courses to help students graduate more quickly.Given that the Chancellor’s Office has essentially defined the surplus as an available resource, we would have expected it to disclose it in the academic plan.

Second, we find it problematic that the Chancellor’s Office believes only recurring revenue sources are pertinent to its funding requests to the Governor and the Legislature when CSU has included in those requests both recurring funding increases and nonrecurring, one‑time funding augmentations. In fact, in fiscal years 2016–17 and 2017–18, the Chancellor’s Office requested a total increase of about $530 million in permanent state funding and over $200 million in one‑time funding augmentations. At the time of these requests, CSU’s total surplus exceeded $1.5 billion. Had CSU informed the legislators of its surplus when presenting its budget requests, the legislators could have directed CSU to use a portion of its own money rather than requesting additional funding from the State. In fiscal years 2016–17 and 2017–18, CSU received $35 million of the one‑time funding it requested.

The Chancellor’s Office also failed to disclose the surplus to students when proposing to increase tuition, a source of revenue that directly contributes to the surplus. As this text box indicates, CSU increased tuition rates in academic year 2017–18 for the fifth increase during our 10‑year audit period. Since 2013 state law has required that CSU consult with students before increasing tuition rates to ensure transparency regarding its rationale for increasing tuition and its uses of tuition. Accordingly, when considering raising tuition rates for the 2017–18 academic year, the chancellor consulted with the California State Student Association (student association), an organization representing all CSU students that advocates for access to an affordable and high‑quality CSU education. The law directs CSU to consult with the students and provide students with information about alternatives to raising tuition so that they can provide input and ask questions. However, the Chancellor’s Office did not inform students about the discretionary surplus CSU had accumulated primarily from unspent tuition.

In fact, in the document the Chancellor’s Office prepared for the student association, it acknowledged only two alternatives to raising tuition: increasing state funding or reducing programs and services. The Chancellor’s Office also provided information about the proposed tuition increase and opportunities for public comment, and it reported that the public comments mostly opposed the tuition increase and that they focused on overall affordability, the State’s responsibility to fund CSU, and the need for CSU to be transparent in its use of tuition. Despite the public’s interest in increased transparency, the Chancellor’s Office did not acknowledge to the students that CSU had a surplus worth more than $1.4 billion at the end of fiscal year 2015–16. Although campuses and the Chancellor’s Office had to use a small portion of that surplus—roughly $126 million—to pay for expenses tied to existing contracts, up to $1.3 billion was available for campuses and the Chancellor’s Office to spend at their discretion.

In the tuition consultation document it provided to the students, the Chancellor’s Office stated that unless the State increased CSU funding or CSU raised tuition rates, fewer courses would be available and it might take longer for students to graduate. For example, the planned budget for an initiative that CSU launched in January 2016 to help students graduate more quickly was $75 million for fiscal year 2017–18. Had the Chancellor’s Office disclosed CSU’s $1.3 billion surplus, students might have asked why CSU could not use a portion of the surplus to pay for this initiative rather than seeking to increase tuition for that purpose. Ultimately, the trustees approved the tuition increase, and in academic year 2017–18 tuition for full‑time students increased $270, or 5 percent, raising CSU’s total annual tuition cost to about $5,700. CSU estimated that the increase would net about $78 million of additional revenue for fiscal year 2017–18.

After we shared our findings about CSU’s lack of transparency with the Chancellor’s Office, the associate vice chancellor of business and finance indicated that the Chancellor’s Office had developed a transparency website that presents additional information about CSU’s surplus. It published this website in May 2019. We acknowledge this effort as a positive step toward increasing CSU’s transparency. However, the website does not identify the portion of CSU’s surplus that is discretionary or the portion that comes from tuition. The goal of the website is to ensure that Californians know how CSU conducts its financial business, but it assumes a level of familiarity with CSU’s funds and investment authority that the general public may not possess. By providing this additional information as well as more context about its surplus, the Chancellor’s Office could better maintain the confidence of the Legislature, students, and the public; improve the effectiveness of future consultations with students about potential tuition increases; and enable legislators to base their decisions about CSU’s state funding on a more complete understanding of CSU’s resources.

The Chancellor’s Office Has Not Implemented an Adequate Reserve Policy

Although the Chancellor’s Office implemented a reserve policy in 2015, this policy lacks certain elements that would help ensure that the amount of money CSU holds as a reserve and the manner in which it uses that money are appropriate. The Chancellor’s Office considers both CSU’s $400 million reserve for economic uncertainty and other portions of its surplus to be critical reserves—or money to be used for campus operations and held for designated purposes—rather than surplus money that it does not need for current expenses. However, the parts of CSU’s policy related to its reserve for economic uncertainty do not address important issues, like establishing a minimum reserve amount or monitoring spending. Further, CSU’s reserve policy sets a maximum limit that applies only to its reserve for economic uncertainty; as a result, the policy offers only minimal guidance related to the other portions of CSU’s surplus. Given the significant amounts of money involved, we believe that CSU should establish a clear, comprehensive reserve policy that addresses all of the funding it identifies as a reserve.

We identified significant weaknesses in the parts of CSU’s reserve policy governing its $400 million reserve for economic uncertainty. For example, the Chancellor’s Office has made campus presidents responsible for ensuring that there are sufficient reserves in CSU’s outside accounts, in accordance with CSU policies, standards, and definitions; however, the reserve policy that the Chancellor’s Office approved does not identify minimum reserve levels. According to the LAO, there is no such thing as an objectively “right” level of reserves, and deciding a target level of reserves should involve considering factors such as the anticipated size of a future recession. Organizations such as the Government Finance Officers Association and the National Association of College and University Business Officers recommend establishing a minimum level of reserves, and some other universities adopt reserve policies that set a minimum level of reserves and require the universities to maintain it. In contrast, CSU’s reserve policy includes only a maximum limit. In accordance with CSU’s policy, as of fiscal year 2017–18, CSU systemwide could have held about $3.3 billion as a reserve for economic uncertainty. Further, the policy does not prioritize CSU’s reserve for economic uncertainty by requiring campuses to build that reserve before using surplus funds for other purposes. In fact, as we describe here, campuses have the discretion to use the reserve for economic uncertainty or any other portion of their surplus as they deem necessary.

CSU’s reserve policy is even more limited with respect to the remainder of the $1.5 billion surplus, despite the fact that the Chancellor’s Office considers this full amount a reserve. Although the policy limits the amount of the reserve for economic uncertainty, it allows campuses and the Chancellor’s Office to accumulate unlimited surplus amounts for other purposes. As of fiscal year 2017–18, more than a billion of CSU’s $1.5 billion surplus was designated for purposes such as maintaining facilities and developing CSU programs. The reserve policy does not require the Chancellor’s Office to monitor how campuses use their reserve amounts or report those uses to the trustees; instead, it only requires the Chancellor’s Office to review a summary showing how much money campuses are holding for various designated purposes, including as a reserve for economic uncertainty, at the end of each fiscal year. The policy also does not require the Chancellor’s Office to present an annual summary of CSU’s reserves to the trustees, although the Chancellor’s Office did provide detailed information about CSU’s reserves in a presentation it made to the trustees in September 2017.

The Chancellor’s Office has established additional guidelines for the use and reporting of some parts of CSU’s surplus, although these guidelines are outside of the reserve policy. For example, in fiscal year 2014–15, the Legislature discontinued an appropriation to CSU that was specifically to fund capital improvement projects; instead, CSU must now factor the costs of such projects into its overall fiscal planning and submit a comprehensive five‑year capital improvement plan to the Legislature each year. Beginning with the plan for fiscal years 2016–17 through 2020–21, the Chancellor’s Office has proposed to fund a portion of planned academic capital improvement projects with surplus designated for such purposes. As of fiscal year 2017–18, CSU had designated about $315 million of its $1.5 billion surplus for capital improvements and facilities maintenance. In April 2018, the Chancellor’s Office proposed that campuses use that surplus to fund 10 percent of the costs of capital improvement projects to correct critical infrastructure deficiencies. However, the plan CSU submitted to the Legislature did not indicate the full amount of the discretionary surplus CSU had available. Such context would help legislators evaluate CSU’s resources, its use of tuition to support capital project expenses, and its need for state funding for those expenses.

Notwithstanding the need for the Chancellor’s Office to strengthen CSU’s reserve policy, the fact remains that both CSU’s reserve for economic uncertainty and its remaining surplus are financial resources. In keeping with the intent of requirements that CSU inform legislators about its available resources and consult with students about tuition increases, the Chancellor’s Office should report the amount of the reserve for economic uncertainty and CSU’s rationale for accumulating it, as well as the amount of the remaining surplus. Further, the Chancellor’s Office should openly discuss with legislators and students alternative uses for these resources. Only by engaging in such discussions can the Chancellor’s Office ensure that CSU’s available financial resources are transparent to legislators and students in the context of decisions about state funding and tuition.

Recommendations

Legislature

To ensure transparency about CSU’s available financial resources, the Legislature should require the Chancellor’s Office to do the following, effective September 1, 2019:

Beginning in 2019 and no later than November 30 each year, provide relevant parties, including the Department of Finance and the Joint Legislative Budget Committee, with the current balance of the discretionary surplus that CSU has accumulated in its outside investment account that is attributable to its operating fund and to any other funds that are relevant to CSU’s budget requests; the balances of the surplus amounts in those funds at the end of the prior fiscal year; the projected balances of the surplus amounts expected to remain in those funds at the end of the current fiscal year; and the amount of, justification for, and safeguards over any funds that CSU deems a reserve for economic uncertainty.

Include in the capital improvement plans it submits annually to the Legislature information about the current balance of the surplus in CSU’s outside investment account that is attributable to its operating fund or other funds that hold operating revenue from tuition, as well as the projected balance of the surplus amounts expected to remain in those funds at the end of the current fiscal year.

Include in its consultations with the student association the full amount of the discretionary surplus CSU has accumulated to date in its outside investment account that is attributable to its operating fund and any other funds that hold tuition revenue; the rate of growth of these surplus amounts over the last three fiscal years; an estimate of the portion of the surplus amounts that came from tuition; the dollar amount to date that CSU is obligated to spend to pay for goods and services it has already received or expenses that are tied to existing contracts; a projection of the dollar amount of the surplus that will be available for campuses to spend at their discretion at the end of the current fiscal year; and the amount of, justification for, and safeguards over any funds that CSU deems a reserve for economic uncertainty.

Chancellor’s Office

To improve CSU’s financial transparency with students and other stakeholders, the Chancellor’s Office, with the approval of the trustees, should revise CSU policy by October 2019 to require that it publish information about CSU’s discretionary surplus. At a minimum, the Chancellor’s Office should do the following:

Identify the full amount of discretionary surplus that CSU has accumulated to date in its outside investment account that is attributable to its operating fund or other funds that hold tuition revenue, an estimate of the portion of the surplus amounts that came from tuition, and the dollar amount to date that CSU is obligated to spend to pay for goods and services it has already received or expenses that are tied to existing contracts.

Report this information to the trustees when it presents them with a summary of CSU’s reserves, at least annually.

Ensure that this information is easily accessible on CSU’s website and publicly available to all stakeholders, along with the information CSU provides about tuition rates and policies.

Revise its reserve policy to establish and justify a minimum sufficient level of reserve for economic uncertainty and require the Chancellor’s Office to provide additional oversight to ensure that CSU maintains that level. This oversight should include monitoring, approving, and notifying the trustees of any uses of the reserve for economic uncertainty.





The Chancellor’s Office Has Failed to Ensure That Campuses Consistently Plan for Alternatives to Costly Parking Facilities

Key Points

The four campuses we reviewed have built costly parking facilities that have had minimal impact on campus parking capacity while committing the campuses to significant long‑term debt payments. Although the campuses have raised student permit prices, student parking availability remains limited at some campuses.

The Chancellor’s Office has not ensured that campuses consistently implement alternate transportation strategies that could reduce demand for parking and improve access to campuses.

The Chancellor’s Office’s leadership is critical to ensuring that students continue to have adequate and affordable access to campuses in the future.

The Four Campuses We Reviewed Have Built Expensive New Parking Facilities That Only Minimally Increased Parking Capacity

According to CSU’s transportation manual, the campuses should strive to ensure equitable access by providing transportation opportunities for all students. Campuses can increase access by building and operating parking facilities and by offering alternate transportation options. The transportation manual recommends that each campus determine the most cost‑effective combination of parking and alternate transportation programs that will meet its needs. However, in response to rising enrollment, some of the campuses we reviewed have focused primarily on building new parking facilities. With each new bond‑financed parking facility, a campus incurs significant debt. This debt is typically accompanied by increased student parking permit prices to cover the costs, in part, because a campus must make debt payments for a single bond‑financed facility for 25 to 30 years. Over the past 10 years, all four campuses we reviewed constructed new parking facilities. During this time, the campuses increased student permit prices significantly—over 60 percent at two campuses.

Despite these increased permit prices, parking capacity has remained generally stagnant or declined because enrollment increases have outpaced the growth in the parking supply. CSU’s five‑year capital improvement plan measures parking capacity as the ratio of a campus’s parking spaces to its projected enrollment. We used a similar measure to assess parking capacity by comparing only student and residential spaces to enrollment because students are not eligible to park in all campus parking spaces. As Figure 6 shows, despite the campuses increasing their debt and raising student permit prices to invest in parking facilities, the improvements to student parking capacity have not kept up with the growth in enrollment.

Figure 6

Although Campuses Raised Student Permit Prices, They Only Minimally Increased the Number of Spaces Available to Students

Fiscal Years 2008–09 Through 2017–18

Source: Enrollment data, parking inventory reports, and debt payment schedules for each campus. * Sacramento State financed a parking structure in fiscal year 2017–18, but its first debt payment was not until fiscal year 2018–19. To capture the cost of the additional parking spaces, we include the scheduled debt payment here. † This calculation does not include 550 parking spaces that Fullerton leases in an off-campus facility. These spaces amount to about 6 percent of total student parking spaces.

Both Fullerton and Channel Islands have built facilities that increase student parking costs without significantly increasing parking capacity. Fullerton, for example, charged students the highest prices for semester parking permits of the four campuses in fiscal year 2017–18 yet had the lowest number of student parking spaces available relative to student enrollment—roughly two spaces for every 10 students. In 2010 it financed a structure with nearly 1,500 new spaces that increased its annual debt payment from $2.7 million to more than $4 million. Fullerton now plans to build another parking structure that will increase its parking supply by roughly 1,100 spaces and is estimated to open in fall 2020. That structure will increase student parking capacity to only about 2.6 spaces for every 10 students and will place an additional burden on student drivers by raising the price of student semester permits from $236 to $334 over two years, an increase of $98, or about 42 percent. Similarly, Channel Islands more than doubled its annual debt payment from about $70,000 to nearly $180,000 to add about 500 new parking spaces, yet its per capita parking capacity decreased during our 10‑year audit period because its enrollment increased at a faster rate.

Further, in one case, a campus built a parking facility that was not intended for students, despite their permit fees paying for those construction costs. Under a 2015 bond, San Diego State took on nearly $900,000 in annual debt payments to finance a 300‑space parking facility in a housing and retail development. This facility did not increase the campus’s student parking capacity because it is intended to primarily serve retail customers, as well as some campus visitors. Although students who purchase semester parking permits are not eligible to park within the new facility, the campus is using those students’ parking permit fees to make its debt payments related to the facility’s construction.

Student parking fees are significantly higher and increase more frequently than those of faculty and other represented staff. In fiscal year 2017–18, between about 40 percent and 70 percent of total enrolled students at the four campuses purchased semester student or residential parking permits. During this year, student semester permits at the campuses ranged in price from $168 to $236 per semester, while prices for residential permits at the four campuses ranged from $195 to $266 per semester. In comparison, staff and faculty permits ranged from only $59 to $119 per semester. Bargaining agreements limit the campuses’ ability to increase the price of employee parking to cover increasing debt and operational costs. Consequently, faculty permit prices have not increased at any of the four campuses over the past 10 years, while permit prices for other represented staff have increased by $7 to $9 only. Because campuses are limited in their ability to raise employee permit prices, they tend to raise student permit prices instead.

Despite the fact that students have been paying higher permit prices, the campus parking occupancy assessments conducted during our audit period suggest that student parking facilities often have poor parking availability at peak demand times. To determine parking availability, we evaluated occupancy assessments from a variety of sources, such as recent transportation management plans and parking demand studies, as well as data that parking officials provided. Some of these assessments noted that the parking facilities were at or near practical capacity—when 90 percent of available spaces are occupied—during the times when the campuses performed their reviews. When a parking facility is at or over practical capacity, drivers find it difficult to identify the few remaining spaces and may spend significant time looking for those spaces.

The lack of availability was more pronounced at some campuses than others. According to their respective assessments, Fullerton’s and Channel Islands’ observed parking facilities were at or near practical capacity at the time they were evaluated; further, some of their largest parking facilities—particularly student parking—were nearly or completely full. San Diego State’s transportation management plan indicates that although campuswide student parking was below practical capacity, some facilities were completely full during peak times. Similarly, according to parking data Sacramento State provided, individual parking facilities were full, although at certain times some student spaces were available elsewhere on campus. San Diego State’s assessment states that students tended to have less parking available than faculty and staff during peak times, while Fullerton’s data suggests that staff and faculty had generally similar parking availability challenges as students. However, all the campuses except Channel Islands provide more spaces per person for faculty and staff than for students, and faculty and staff can use their permits in student parking facilities at all four campuses.

Persistently high parking occupancy may affect students’ behavior: according to Fullerton’s 2015 parking demand study, finding parking in parking structures is extremely competitive, so students tend to arrive early to secure parking regardless of when their classes begin. Students then remain parked throughout the day, limiting vehicle turnover. As a result, Fullerton’s parking spaces do not serve as many students as they could. Fullerton’s January 2019 parking demand study asserts that the trend of full parking facilities has continued and, in fact, worsened.

Some campuses’ transportation management plans or parking demand studies note that if enrollment continues to increase, current parking capacity will be insufficient. However, the documents also stress that campuses can decrease their reliance on parking and their need for additional facilities if they implement more diverse transportation management strategies. We discuss such strategies below.

The Chancellor’s Office Has Not Ensured That Campuses Consistently Implement Alternate Transportation Programs

The Chancellor’s Office has not ensured that campuses consider programs that offer alternate modes of transportation before requesting to build new parking facilities; thus it has not verified that the campuses adopt the most cost‑effective and equitable responses to rising enrollment. As we discuss in the Introduction, the Chancellor’s Office requires campuses to use key documents to plan for and implement alternate transportation strategies and to justify building new parking facilities by demonstrating that a need exists even after implementing such strategies. Although the four campuses we reviewed cited alternate transportation strategies in certain plans, we found that some campuses did not implement many of these strategies. As Table 2 shows, the four campuses did not perform certain steps to ensure they used the most cost‑effective blend of parking and alternate transportation programs. In fact, two campuses—Channel Islands and Fullerton—failed to complete most of these key tasks and analyses.

Our review of Fullerton, for example, found that it has done little to ensure it considers alternate transportation. Although CSU policy requires campuses to reevaluate their master plans at least every 10 years, Fullerton’s most recent master plan is from 2003 and does not reflect the campus’s current conditions. In 2003 Fullerton projected that its enrollment would increase to 25,000 full‑time equivalent students over 10 years, yet, in fall 2018, it enrolled over 30,000 students. To accommodate enrollment growth, the 2003 master plan primarily focuses on building parking facilities—three of which Fullerton has since built—and it only briefly mentions that the campus should encourage the use of public transportation. In fact, until 2015 Fullerton’s key planning documents contained little mention of strategies for implementing alternate transportation. Although Fullerton performed a parking demand study in 2015 that recommended several alternate transportation strategies, such as establishing a transit center, campus shuttles, and a bike share program, it did not implement many of these strategies. Yet, Fullerton plans to build another parking facility in 2020—which we discuss previously—that will result in significant price increases for students.

Table 2

The Four Campuses Did Not Consistently Perform Key Tasks and Analyses to Ensure That They Used the Most Cost‑Effective Blend of Parking and Alternate Transportation Programs

Fiscal Years 2008–09 Through 2017–18

KEY TASK OR ANALYSIS CHANNEL ISLANDS FULLERTON SACRAMENTO STATE SAN DIEGO

STATE Identified alternate transportation strategies in key planning documents ♦ ♦ ♦ ♦ Analyzed how implementing alternate transportation strategies has decreased parking demand X X ♦ ♦ Performed recommended cost‑benefit analysis X X X ✔ Implemented strategies that plans or studies recommended for improving campus access X ♦ ♦ ♦ Used alternate transportation data to analyze the effectiveness of its programs in key planning documents X X X X Ensured alternate transportation committee met regularly X X ✔ ♦

Source: Analysis of CSU policy and manuals and campus parking program data. ✔ = Performed key task or analysis. ♦ = Partially performed key task or analysis X = Did not perform key task or analysis

Although the CSU transportation manual recommends that campuses compare the costs of building a new parking facility to other transportation management strategies, some of the campuses did not include such analyses in their plans or studies. For example, the transportation manual states that campuses can track program efficacy by using metrics such as the total cost of the transportation strategies, cost per trip, cost per participant, and rate of participation. The transportation manual adds that each of these metrics may be useful in developing the most efficient blend of transportation and parking investments. If three of the campuses had performed this cost comparison, they may have found similar results to what San Diego State included in its 2013 transportation management plan. San Diego State included the net cost to accommodate each commuter, whether by alternative transportation or different types of parking, which showed that the parking facilities are the most expensive.

In addition to not sufficiently analyzing other options before requesting to build new parking facilities, some campuses did not follow through on implementing alternate transportation programs recommended in their plans. Although some of the campuses’ transportation management plans or master plans included recommendations for alternate modes of transportation, the campuses did not consistently implement these recommendations, as Table 3 shows. The campus that implemented the least number of recommended transportation strategies—Channel Islands—also had the highest percentage of students and faculty driving alone to campus.

Table 3

Some Campuses Have Not Implemented Recommended Strategies for Improving Campus Access

RECOMMENDED STRATEGIES CHANNEL ISLANDS FULLERTON SACRAMENTO STATE SAN DIEGO

STATE Bicycle racks/bicycle storage ✔ ✔ ✔ ✔ Tiered semester parking permit pricing X ✔ X X Subsidized public transit ✔ ✔ ✔ ✔ Annual transportation surveys to evaluate if a program is successful X X X X * Elimination of semester parking permits to encourage using alternate transportation one or more days per week X NA NA NA Online parking passes/pay‑as‑you‑park mobile application X ✔ NA NA Real-time parking availability/parking lot capacity information X NA NA X Bike share program X X ✔ ✔ † Campus shuttles providing trips around campus/local areas ✔ X ✔ ✔ Transit center where public transportation, campus shuttles, and bike shares are easily accessible and centrally located NA X NA NA Designated short‑term parking locations to increase turnover NA ✔ NA NA Carpool incentives ✔ ✔ ✔ ✔ Percent who drive alone to campus‡ 82% 74% 69% 58%

Source: Analysis of campus parking program information, CSU transportation demand management studies, and parking staff confirmations. ✔ = Implemented X = Not implemented NA = This strategy was not specifically recommended in the campus’s recent plan or study. However, campuses may implement strategies that are not specifically recommended. * San Diego State completed three transportation surveys of their campus population, but not on a regular, annual basis. † Although San Diego State implemented this program during our audit period, it does not currently exist.



‡ The percentages are from the campuses’ most recent plans or studies that include this information, which they completed in 2013 through 2017.

Channel Islands likely implemented so few recommended strategies in large part because it did not establish the required alternate transportation committee until 2017. State law requires each campus to have an alternate transportation committee that investigates and considers alternate modes of transportation. These alternate transportation committees are a vital mechanism for campuses to identify and monitor alternate transportation programs. However, CSU lacks a systemwide policy specifying the makeup of the committees, the frequency of required meetings, or the types of issues that should be discussed at those meetings. At the campus level, only Sacramento State and Fullerton have established policies for the governance of their alternate transportation committees. According to Sacramento State’s Transportation Advisory Committee Charge, the committee is responsible for all aspects of the campus’s transportation, including reviewing and critiquing existing transportation programs and exploring and recommending new programs.

Because CSU lacks such a systemwide policy, we found inconsistencies in how often the campuses’ committees met. Channel Islands and Fullerton were able to provide evidence that they held only three and four alternate transportation committee meetings, respectively, in the 10 years of our audit period. Further, as we mention above, Channel Islands did not establish its alternate transportation committee until 2017, even though state law has required such a committee since the campus’s inception in 2002. The parking directors for both Channel Islands and Fullerton asserted that despite their lack of alternate transportation committee meetings, they had attended meetings with other campus committees at which they provided updates on campus parking and transportation. However, given that these campuses did not implement many of the recommended alternate transportation strategies, we question the effectiveness of this approach. In fact, according to Channel Island’s transportation management plan, the campus lacks coordination and communication, which hinders the transportation programs. By comparison, Sacramento State and San Diego State provided evidence for at least 50 and 17 meetings, respectively.

We identified similar inconsistencies in the membership of the alternate transportation committees. Although state law requires alternate transportation committees to consult with students and local government officials, not all campuses required their committees to include representatives from these groups. Channel Islands indicated that they invited students, but Sacramento State and Fullerton were the only campuses with policies that require student representatives. In practice, San Diego State generally has only parking and administrative staff serving on its committee. Moreover, only Sacramento State required community members to be a part of the committee. Although Channel Islands’ committee met with a regional transportation commission, San Diego State’s and Fullerton’s committees did not meet with local government officials.

Campuses are unaware of the effectiveness of their alternate transportation programs because they do not regularly use their data to analyze the effectiveness of their programs or to make decisions about building new parking facilities. The transportation manual recommends that campuses consistently collect data about participation rates in alternate transportation programs and the commuting habits of campus populations to determine if the programs have decreased parking demand. The campuses provided examples of data they collect, but they could not demonstrate that they use the data to monitor the effectiveness of alternate transportation programs. For example, Sacramento State records the numbers of carpool permits sold, the number of regional transit passes issued, and the number of students riding campus shuttles, but it has not used this data to analyze the effectiveness of its transportation programs in a transportation management plan or a parking demand study.

One of the reasons the campuses may have inconsistently implemented alternate transportation methods is because most of the campuses have unreliable revenue streams to fund alternate transportation programs, and in many fiscal years, the expenses of these programs are greater than their revenues. The transportation manual notes that successful transportation management programs are financially sustainable and have long‑term, stable sources of funding. However, under current state law and CSU policy, the revenue available for alternate transportation programs comes primarily from the drivers the programs seek to decrease in number. Specifically, the campuses generally fund their alternate transportation programs with parking fines revenue, which is inherently limited and inconsistent.

Campuses may use parking fee revenue for alternate transportation, but only after they have satisfied debt payments; the campuses must also use parking fee revenue to fund parking operations, maintenance, and repairs because the parking programs are self‑supported. As Figure 7 shows, from fiscal years 2008–09 through 2017–18, the four campuses together collected $321 million from parking permit fees, nearly 12 times more than the revenue they collected from parking fines. During this period, the campuses’ annual debt payments for their existing parking facilities alone amounted to more than three times what they spent on alternate transportation programs.

Figure 7

From Fiscal Years 2008–09 Through 2017–18, the Four CSU Campuses Spent Significantly More on Operating Parking Facilities Than on Alternate Transportation

(In Millions)

Source: Analysis of Education Code sections 89701 and 89701.5 and accounting records from each campus. * Alternate transportation expenses do not equal revenue from parking fines because such revenue tends to be limited and unpredictable

from year to year. The parking programs covered the $2 million shortage for alternate transportation expenses using their surplus from

revenue they collected before fiscal year 2008–09.



Although the current restrictions on CSU’s use of parking fees may have contributed to the campuses’ difficulty investing in alternate transportation, one campus has established an additional funding stream. The transportation management plans for two campuses suggest that they should seek funding through local government partnerships or grants to fund their alternate transportation programs. Further, the campuses can use excess revenue generated from the sale of parking permits to support alternate transportation. Each campus has a surplus of unspent parking fee revenue, ranging from nearly $3 million at Channel Islands to $20 million at San Diego State, which they designate for broad purposes such as facilities maintenance and construction. However, campuses could use a portion of this surplus money for alternate transportation. Alternatively, they can adopt transportation fees. For example, Sacramento State instituted a transportation fee for it to use exclusively for alternate transportation. Students—who will pay the fee—approved it by student referendum.

To Ensure That Students Continue to Have Adequate Access to Campuses, the Chancellor’s Office Will Need to Increase Its Leadership and Oversight

Our review indicates that the Chancellor’s Office has not consistently provided the leadership and oversight necessary to ensure that campuses implement alternate transportation programs. CSU adopted a revised systemwide sustainability policy in 2014 that, among other things, commits CSU to encouraging and promoting the use of alternate transportation. In addition, a 2018 follow‑up assessment of CSU’s progress towards its sustainability goals (sustainability assessment) found that transportation costs can be a significant affordability barrier to students and that other transportation options, such as walking, biking, and public transit, can offer significant cost savings over vehicle‑based commutes. Nonetheless, like some of the campuses we reviewed, the Chancellor’s Office was generally skeptical about the effectiveness of alternate transportation programs. Although San Diego State and Sacramento State generally agreed that implementing alternate transportation could reduce the number of students driving to campus, the Chancellor’s Office, Channel Islands, and Fullerton each expressed doubts about the programs. For example, CSU officials cited concerns about students who had to drive because of job or family commitments.

However, neither the Chancellor’s Office nor the campuses regularly assess commuting preferences of students to be able to support this position. Specifically, the campuses do not conduct annual transportation surveys that would allow them to regularly evaluate their students’ commuting habits. Further, the sustainability assessment that CSU itself performed found that while many factors related to commuter behavior are outside of the university’s control, campuses have a number of tools that can influence travel choices and encourage students and staff to use more sustainable transportation options. For example, Channel Islands’ parking director asserted that because the campus is located about five miles from the nearest urban development, students, faculty, and staff do not typically bike, walk, or use other alternate modes of transportation. However, Channel Islands could implement other strategies that its parking demand study and the transportation manual recommend, such as tiered permit prices or real‑time parking information. These strategies do not depend on location.

The inconsistencies we found in the campuses’ planning and implementation of alternate transportation options demonstrate the need for more oversight by the Chancellor’s Office. Although the Chancellor’s Office established the policies requiring campuses to plan for and implement alternate transportation strategies before building new parking facilities, it did not require campuses to provide the required information before it approved funding for new parking facilities. Instead, the Chancellor’s Office’s director of long‑term finance in the Financing and Treasury office stated that her office discusses parking needs with the campuses on a project‑by‑project basis and informally asks for information on alternate transportation programs as necessary. However, we question the effectiveness of this approach, given how inconsistent some campuses were in implementing alternate transportation programs.

With CSU planning to increase enrollment in the next few years, the Chancellor’s Office and campuses must be proactive in identifying and providing expanded transportation options. According to CSU’s fiscal year 2019–20 operating budget request, it aims to increase its resident enrollment by 3 percent to 5 percent annually over the next decade. Notably, Channel Islands plans to more than double its enrollment by 2025, and Fullerton and Sacramento State are already operating above the enrollment capacity set in their current master plans. If CSU meets its enrollment goal, it may need to support an additional 100,000 students by 2023. The potential for such growth highlights the importance of CSU adopting cost‑effective transportation solutions to provide its students with adequate access to its campuses.

Recommendations

Legislature

To ensure that students have equitable access to campus and that campuses provide the most cost‑effective mix of parking and alternate transportation options, the Legislature should require the Chancellor’s Office to include the following information related to transportation, by campus, in its comprehensive five‑year capital improvement plan:

The number of parking facilities each campus intends to construct over the next five years and the alternate transportation strategies that the campus considered and implemented in determining the need for those parking facilities.

The total annual cost for each alternate transportation strategy the campuses considered and implemented compared to the annual cost of constructing, operating, and maintaining a new parking facility.

The cost per student served by those alternate transportation strategies compared to the cost per student of constructing, operating, and maintaining a new parking facility.

The number of students served by each of those alternate transportation strategies compared to the number of students to be served by a new facility.

Information on whether and to what extent alternate transportation strategies have decreased parking demand in the last three years and whether the campus has demonstrated that the parking demand justifies a new parking facility.

A cost‑benefit analysis showing the appropriate mix of transportation strategies to ensure that the campus provides students with the most cost‑effective access.

Chancellor’s Office

To ensure that campuses thoroughly investigate and consider alternate transportation strategies, the Chancellor’s Office should immediately enforce its policy and require campuses to submit the following information when they request to build new parking facilities:

Up‑to‑date master plans and transportation management plans that include as key components their plans for implementing alternate transportation strategies.

Information on whether and to what extent their alternate transportation strategies have decreased parking demand and evidence that projected parking demand justifies building a new parking facility.

The Chancellor’s Office should update its policy by October 2019 to require campuses to submit the following information when requesting to build a new parking facility:

The total annual cost to implement each alternate transportation strategy compared to the annual cost of constructing, operating, and maintaining a new parking facility.

The cost per student served by those strategies compared to the cost per student of constructing, operating, and maintaining a new parking facility.

The number of students served by each of those strategies compared to the number of students served by the new facility.

Information, including participation data, on how the campuses have implemented alternate transportation strategies during the last three years.

The Chancellor’s Office should not approve any request to build a new parking facility unless the requesting campus has submitted this information and the Chancellor’s Office has reviewed and approved it.

To ensure that campuses’ alternate transportation committees are consistent systemwide, the Chancellor’s Office should adopt systemwide policies, by October 2019, to detail the following:

The frequency of required meetings. The policy should require meetings at least biennially.

The composition of committee members. The policy should require that the committees include student representatives.

The committees’ responsibilities. These responsibilities should include the assessment of alternate transportation programs based on participation data and recommendations in the campuses’ transportation studies.

The Chancellor’s Office should also require that, by October 2019, the campuses publish the names of committee members, the committee meeting minutes, and the committee meeting schedule on their parking and transportation services websites.

To ensure that campuses have a stable source of funding for investing in alternate transportation programs, the Chancellor’s Office should update its policy by October 2019 to require campuses to include in their master plans or transportation management plans the potential revenue streams they will explore to secure a stable source for funding these programs. Examples of such revenue streams could include parking fees that they have reprioritized for alternate transportation, a stand‑alone student transportation fee, local government partnerships or grants, or surplus parking revenue.

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OTHER AREAS WE REVIEWED

To address the audit objectives approved by the Joint Legislative Audit Committee (Audit Committee), we additionally reviewed the subject areas listed in Table 4. The table indicates the results of our work in those areas that do not appear in the other sections of this report.

Table 4

Other Areas Reviewed as Part of This Audit

The Chancellor’s Office Established Appropriate Practices to Safeguard CSU’s Outside Accounts The practices the Chancellor’s Office has established to safeguard CSU’s outside accounts resemble practices the State uses to safeguard accounts within the state treasury and generally appear adequate. State law and policy protect state treasury accounts by requiring practices that include separating account‑related duties; reconciling the banking records of state entities with state treasury bank statements and records from the State Controller’s Office; and annually providing the Governor with a statement of funds, revenues, and expenditures for the prior fiscal year. Similarly, state law and CSU policy and practices protect CSU’s outside accounts by requiring the separation of duties; the reconciliation of banking statements and campus accounts; quarterly reports to the trustees; and annual reports to the State Treasurer’s Office, the State Controller’s Office, the Department of Finance, and the Legislature.



As we describe in the Introduction, in 2017 the Legislature gave CSU authority to make investments that may provide greater returns, albeit with greater risk, and it required CSU to adopt additional practices to safeguard such investments. For example, the Legislature required CSU to establish a committee to provide advice and expertise on investments, to limit the amount of money it invests in higher‑risk securities, and to provide the Legislature with an annual investment report. CSU has met these requirements. In addition, the Legislature restricted CSU to using the money earned through higher‑risk investments for capital outlay and maintenance expenses, and it prohibited CSU from requesting state funding to compensate for higher‑risk investment losses or from citing such losses as justification for raising tuition. Because CSU began using its authority to make higher‑risk investments in the last year of the audit period, we were not able to evaluate its compliance with these restrictions.

Campuses and the Chancellor’s Office Can Accumulate or Reallocate Salary Savings According to CSU’s accounting manual, the Chancellor’s Office manages a process that allows CSU to use the full amount of its General Fund appropriation each fiscal year to pay for salary and related benefits expenses (salary expenses). Because salary expenses exceeded the amount of the appropriation from fiscal years 2008–09 through 2017–18, campuses and the Chancellor’s Office also used other sources of revenue, such as tuition, to pay for salary expenses. CSU is exempt from state law and policy that would require it to spend certain amounts of funding for the salary expenses of specified employee positions that the Department of Finance approved. Therefore, if the Chancellor’s Office and campuses have salary expenses that are less than the amounts they budgeted for those expenses, they determine whether to hold the resulting surplus (salary savings) in CSU’s outside investment account or reallocate it to pay for other expenses.



According to the budget officer for Sacramento State and the director of budget and finance for San Diego State, those campuses do not centrally track salary savings because they do not budget by position. Both Sacramento State and San Diego State allocate budgets by division, and divisions use any salary savings either for other costs or as a contribution to the campuses’ surplus. The interim assistant vice president of financial services for Channel Islands, assistant vice president of resource planning and budget for Fullerton, and budget director for the Chancellor’s Office each track salary savings. Our analysis of their budget documents found that salary savings for fiscal year 2017–18 were approximately $5.6 million for Fullerton, $3.3 million for the Chancellor’s Office, and $1.7 million for Channel Islands, representing about 1 percent of each of their budgeted expenses. In addition, the Chancellor’s Office documented that most of its salary savings came from management‑related positions rather than staff positions.

The Campuses Appropriately Spent Parking Fines and Forfeitures Revenue State law places restrictions on how parking programs can use parking fines. Specifically, campuses can use revenue generated from parking fines to administer the fines and forfeitures program and for the development, enhancement, and operation of alternate transportation programs. Our review of selected expenditures from each campus’s parking fines and forfeitures fund for fiscal years 2014–15 through 2017–18, totaling 40 expenditure items, found that each campus had generally spent revenue generated from fines and forfeitures appropriately and in accordance with state law. The campuses’ expenditures included payments for public transportation subsidies, parking enforcement operations, citation processing, and campus shuttle services. In addition, some campuses used revenue from parking fines to pay for a transportation management plan or a parking demand study: Fullerton used $137,000 of parking revenue to complete a parking demand study, according to information Fullerton provided, and San Diego State used $127,000 of parking revenue to complete a transportation management plan.

The Campus Parking Programs Do Not Impose Quotas for Parking Violations

State law and regulations grant CSU the authority to enforce parking on its campuses by issuing parking citations to those who violate campus parking rules. Because the parking programs benefit from revenues generated from parking fines, a risk exists that the programs may impose citation quotas—a minimum number of citations required per day—on parking enforcement officers to increase revenue. However, state law prohibits parking enforcement officers of any state agency, including CSU, from adopting any policy that imposes a citation quota. Our review of the parking regulations and interviews with enforcement officers at each campus found that the campuses did not require citation quotas. Further, according to some of the parking enforcement officers we interviewed at the four campuses, enforcement officers will sometimes forgive students for their first infraction, using it as a warning and a teaching tool for students so that they do not receive an actual citation for a violation. CSU Appropriately Disbursed Earnings From Parking Revenue Investments As the Introduction states, campuses contribute to CSU’s investment account, which generates interest earnings. CSU ensures that the participating campus parking funds receive the appropriate amount of earnings from such investments. Every month, the Chancellor’s Office creates an earnings report summarizing total earnings by campus. Campuses then calculate the amount each fund contributed to the investment account and use the monthly earnings report to determine the earnings each fund receives. Our review of the participating parking funds at each campus found they received their proper share of earnings. The Chancellor’s Office reported in its accounting records that San Diego State distributed $2.2 million, Fullerton distributed $1.1 million, Channel Islands distributed $102,000, and Sacramento State distributed $2.3 million in interest earnings to their respective parking funds during our audit period. Although the parking deposits and withdrawals for each campus tend to vary depending on upcoming projects, daily parking operations, and unplanned maintenance, we found them to be reasonable. However, we note that the campuses had a surplus of unspent parking fee and fine revenue ranging from $3 million at Channel Islands to $28 million at San Diego. As we discuss here, CSU’s reserve policy, which applies to the parking fund surplus, is inadequate to ensure that the amount of money CSU holds as a reserve and the manner in which it uses that money are appropriate. Although the campuses designate these funds for broad purposes such as facilities maintenance and construction and economic uncertainty, campuses could use a portion of this surplus money for alternate transportation.



We conducted this audit under the authority vested in the California State Auditor by Government Code 8543 et seq. and according to generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives specified in the Scope and Methodology section of the report. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Respectfully submitted,



ELAINE M. HOWLE, CPA

California State Auditor

Date: June 20, 2019

Footnotes





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