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California State University
It Failed to Fully Disclose Its $1.5 Billion Surplus, and It Has Not Adequately Invested in
Alternatives to Costly Parking Facilities

Report Number: 2018-127

June 20, 2019

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As directed by the Joint Legislative Audit Committee, the California State Auditor conducted an audit of the financial accounts that the California State University (CSU) holds outside of the state treasury (outside accounts) and its campus parking programs. This report concludes that the CSU Office of the Chancellor (Chancellor’s Office) has failed to fully disclose financial resources that it holds in outside accounts, and it has not ensured that campuses fully explore options for alternate methods of transportation (alternate transportation) before investing in expensive parking facilities.

As of June 30, 2018, CSU had accumulated a surplus of more than $1.5 billion, which consisted primarily of unspent tuition revenue. During the same decade that this surplus was growing, the annual tuition for students attending CSU campuses nearly doubled, and the State increased annual appropriations to CSU as a result of additional voter-approved taxes. Although the Chancellor’s Office considers CSU’s surplus to be necessary reserves that it has designated for specific purposes, the $1.5 billion in these outside accounts is available for CSU to spend at its discretion to support instruction and other operating costs. 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 Chancellor’s Office has also failed to ensure that campuses follow CSU policy that requires each campus to consistently plan for or implement alternate transportation options—such as public transportation, shuttles, or bike share programs—before investing in additional parking capacity. The campuses we visited—Fullerton, Channel Islands, Sacramento State, and San Diego State—have generally relied on building additional parking facilities to address growing demand due to increasing enrollment. Campuses often pass the resulting building and maintenance costs on to students, many of whom pay increased sums for parking permits but experience little or no improvement in parking availability. For example, from fiscal years 2008–09 through 2017–18, Channel Islands increased parking  prices by 34 percent while parking capacity actually decreased by 21 percent because enrollment outpaced the growth in parking supply. As CSU’s enrollment continues to increase, it must investigate and adopt the most sustainable and cost-effective transportation solutions available.

Respectfully submitted,

California State Auditor

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