Report 2012-113 Recommendations

To provide sufficient direction to the CSU Chancellor's Office and CSU campuses regarding the supplanting of state-supported courses or programs by self-supported courses or programs, the Legislature should enact clarifying statutory language during the 2014 Legislative Session regarding its intent for California Education Code, Section 89708. This clarifying language should include a definition of the term "supplant" and a description of how CSU should measure whether supplanting is occurring. The clarifying language should also require each CSU campus to take all reasonable steps to ensure that when it makes course or program offering decisions, those decisions do not force students attempting to earn a degree to take courses through extended education that are required as a condition of degree completion.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: prepare a statement of revenues and expenditures for the Bachelor of Science in Engineering Degree Completion Program for Electrical Engineering that we discuss in this report and, if necessary, increase or decrease that program's future fees to appropriate levels.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: revise its methodology for calculating the direct allocations component of its fees for extended education programs and base the calculation on direct costs that can be readily assigned to the programs and indirect costs that have been identified in its approved cost allocation plan.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: retain documentation to support the direct allocations it charges extended education programs.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: prepare and retain market studies to justify the appropriateness of its fee increases.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: conduct a study to determine the appropriate program reinvestment allocation percentage to apply to the individual fee it sets for each extended education program.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: retain documentation to support the established program reinvestment allocation percentage.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: revise its student fee policy to specifically require the development, appropriate consideration, and retention of statements of revenues and expenditures when establishing or adjusting future fees for self-supported extended education courses and programs.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, CSU Long Beach should immediately take the following action: revise its student fee policy to include its revised methodology for calculating the direct allocation component of the fee and its procedure for applying the established program reinvestment allocation percentage to the individual fees it sets for each self-supported extended education program.

To strengthen its oversight of payments made from the CERF trust account, CSU Long Beach should immediately take the following action: enter into a written agreement with the foundation that specifies, among other things, the functions the foundation is to manage, operate, or administer for the College of Continuing and Professional Education and the necessity for the foundation to administer the functions instead of the College of Continuing and Professional Education.

To strengthen its oversight of payments made from the CERF trust account, CSU Long Beach should immediately take the following action: review and document the appropriateness of the campus partners' allocation percentages using current data and, if needed, adjust the percentages.

To strengthen its oversight of payments made from the CERF trust account, CSU Long Beach should immediately take the following action: develop and retain partnership agreements that reflect the campus partners' allocation percentages.

To help the Chancellor's Office enforce state law that prohibits supplanting state-supported courses and programs, CSU Long Beach should immediately remind all relevant employees to notify the Chancellor's Office before converting state-supported degree programs to self-supported degree programs.

To minimize the risk that it appoints faculty who are not qualified to teach self-supported for-credit programs, CSU Long Beach should immediately establish and implement procedures comparable to those it uses for recruiting and appointing faculty to teach state-supported courses and programs.

To ensure that it sets self-supported extended education fees in accordance with state law and Executive Order 1054, CSU Sacramento should immediately take the following action: discontinue its practice of allowing the College of Continuing Education to submit fee proposals for ranges of fees instead of individual fees for extended education courses and programs.

To ensure that it sets self-supported extended education fees in accordance with state law and Executive Order 1054, CSU Sacramento should immediately take the following action: discontinue its practice of approving fee proposals for ranges of fees instead of individual fees for extended education courses and programs.

To ensure that it sets self-supported extended education fees in accordance with state law and Executive Order 1054, CSU Sacramento should immediately take the following action: prepare statements of revenues and expenditures for the ongoing programs we discuss in this report, and, if necessary, increase or decrease those programs' future fees to appropriate levels.

To ensure that it sets self-supported extended education fees in accordance with state law and Executive Order 1054, CSU Sacramento should immediately take the following action: revise its student fee policy to specifically require the development, appropriate consideration, and retention of statements of revenues and expenditures when establishing or adjusting future fees for extended education courses and programs.

To strengthen its oversight of payments made from the CERF trust account, CSU Sacramento should immediately take the following action: review and document the methodology it uses to allocate revenue to the campus partners.

To strengthen its oversight of payments made from the CERF trust account, CSU Sacramento should immediately take the following action: develop and retain partnership agreements that reflect the agreed-upon terms between the College of Continuing Education and campus partners.

To strengthen its oversight of payments made from the CERF trust account, CSU Sacramento should immediately take the following action: develop and implement written procedures for payroll.

To strengthen its oversight of payments made from the CERF trust account, CSU Sacramento should immediately take the following action: update its timekeeper manual.

To help the Chancellor's Office enforce state law that prohibits supplanting state-supported courses and programs, CSU Sacramento should immediately remind all relevant employees to notify the Chancellor's Office before converting state-supported degree programs to self-supported degree programs.

To ensure that it appoints the best-qualified applicant from a pool of applicants as its policy requires, CSU Sacramento should
immediately follow through on its plans to establish a continuously open vacancy announcement for programs where the pool can be very limited.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, San José State should immediately take the following action: prepare statements of revenues and expenditures for the programs we discuss in this report, and, if necessary, increase or decrease those programs' future fees to appropriate levels.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, San José State should immediately take the following action: revise its fee proposal instructions to specifically require the development, appropriate consideration, and retention of statements of revenues and expenditures when establishing or adjusting future fees for each extended education course and program.

To ensure that it sets self-supported fees for extended education in accordance with state law and Executive Order 1054, San José State should immediately take the following action: discontinue its practice of setting its summer session fees for extended education courses and programs based on the fees set by the Chancellor's Office for state-supported summer session courses and programs.

To ensure that the CERF trust account bears a reasonable portion of the campuswide instructional technology upgrade project's costs, San José State should immediately determine the proportionate share of the project cost each stakeholder, including extended education, should bear and, if necessary, transfer funds back to the CERF trust account.

To strengthen its oversight of payments made from the CERF trust account, San José State should immediately take the following action: establish procedures instructing departments to demonstrate that each payment request is for the support and development of CSU self-supported instructional courses and programs. These procedures should include, at a minimum, the following:
- A requirement for departments to attach copies of documents such as purchase orders, work orders, and contracts to their requests for payments to demonstrate that direct costs for services or activities benefit self-supported instructional courses and programs; these documents should be easily traceable to those courses and programs.
- A requirement for departments to demonstrate that they assign indirect costs to self-supported instructional courses and programs according to a methodology that represents a reasonable and equitable distribution.
- A requirement for departments to retain documentation to support the development of the methodologies they use to distribute indirect costs to self-supported instructional courses and programs.
- A definition for reasonable and equitable distribution using one of the three common methods identified in the State Administrative Manual or methods developed by the campus and approved by the Chancellor's Office.

To strengthen its oversight of payments made from the CERF trust account, San José State should immediately take the following action: revise its funding model policy to define the term periodically.

To strengthen its oversight of payments made from the CERF trust account, San José State should immediately take the following action: perform periodic reviews of the allocation percentages in its funding model policy.

To help the Legislature clarify its intent regarding supplanting as identified in the California Education Code, Section 89708, the Chancellor's Office should immediately begin working with the Legislature and its staff to that end.

Until the Legislature clarifies its intent regarding California Education Code, Section 89708, the Chancellor's Office should immediately finalize its executive order pertaining to extended education. This guidance should identify appropriate oversight mechanisms for ensuring campuses' compliance with this law.

Within six months of the date the Legislature clarifies its intent regarding California Education Code, Section 89708, the Chancellor's Office should develop and issue final guidance to campuses regarding supplanting, including identifying appropriate oversight mechanisms for ensuring campuses' compliance with this law.

To effectively monitor and ensure that the campuses set self-supported fees in accordance with state law and Executive Order 1054, the Chancellor's Office should immediately take the following action: require campus chief financial officers to develop, and presidents to consider, the statement of revenues and expenditures described in Executive Order 1054 before making a determination on self-supported extended education program fees.

To effectively monitor and ensure that the campuses set self-supported fees in accordance with state law and Executive Order 1054, the Chancellor's Office should immediately take the following action: instruct campuses to report annually a complete inventory of their self-supported extended education fees, including past and current fee rates, the total revenue collected for each fee, and the remaining balance of revenue collected for each fee.

To effectively monitor and ensure that the campuses set self-supported fees in accordance with state law and Executive Order 1054, the Chancellor's Office should immediately take the following action: direct its internal audit staff to periodically conduct audits of the campuses' self-supported extended education fees to determine the appropriateness of the fees, including the methodology the campuses use to set the fees and the inventory they report to the Chancellor's Office.

To ensure that campuses spend their CERF trust account fund balances appropriately, the Chancellor's Office should immediately take the following action: reinstate its carry-forward fund policy, and starting with fiscal year 2012-13, require campuses to submit spending plans.

To ensure that campuses spend their CERF trust account fund balances appropriately, the Chancellor's Office should immediately take the following action: direct its internal audit staff to periodically review the campuses' extended education course and program expenditures.