Report 2012-113 All Recommendation Responses

Report 2012-113: California State University's Extended Education: It Is Unclear Whether Supplanting Occurred, and Campuses Did Not Always Document Their Adherence to Laws, Policies, and Procedures (Release Date: December 2013)

Recommendation for Legislative Action

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.

Description of Legislative Action

AB 716 (Chapter 252, Statutes of 2015) provides that supplanting occurs when an institution reduces the number of state-supported course offerings while increasing the number of self-supporting versions of that course. The statute also requires, to the extent possible, that each campus ensure that a state-supported course is offered for any course required as a condition of undergraduate degree completion for a state-supported matriculated student, and would prohibit all campuses from requiring a state-supported matriculated student to enroll in a special session course in order to fulfill a graduation requirement for a state-supported degree program.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Enacted

Recommendation #2 To: University, California State

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.

6-Month Agency Response

The Assistant Vice Chancellor of the CSU Office of Advocacy and State Relations met with the Chair of the Higher Education Committee on February 10, 2014, and discussed next steps. Also, the chancellor has approved the supplant language definition as recommended by the task force May 23, 2014. The task force was comprised of presidents, provosts, faculty, deans, and students.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The Assistant Vice Chancellor of the CSU Office of Advocacy and State Relations will meet with the Chair of the Higher Education Committee either February 10 or 11 to discuss next steps. Also, the chancellor has taken the additional step of assembling a task force with broad system representation to discuss supplant language to be introduced for legislation. The task force is comprised of presidents, provosts, faculty, deans, and students. The first meeting is scheduled for February 17 with a recommendation due to the chancellor by June 30.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #3 To: University, California State

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.

1-Year Agency Response

Executive Order 1099 has gone through the CSU formal approval process and was issued to campuses June 9, 2014. In order to provide oversight to ensure campuses' compliance with this law, the Chancellor's Office issued a memo to the campus presidents on October 30, 2014, requiring each campus to report whether any course or program supplanting occurred in the previous academic year. In addition, the Chancellor's Office generated a report of state support matriculated students in self- support courses for the previous academic year to compare the number of full-time equivalent students (FTEs). We are currently analyzing the information and working with campuses that have reported an increase in state students enrolled in self-support activity.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

Executive Order 1099 has gone through the CSU formal approval process and was issued to campuses June 9, 2014. In regard to oversight mechanisms, the Chancellors Office (CO) will send a coded memorandum to the campuses, citing the Education Code and Executive Order prohibitions against course and program supplanting and instructing them to report to the CO outlining whether there are any state-support courses that have been eliminated that are then being offered on the self-support side. Given the large volume of sections offered, we believe additional CO review and approval of courses systemwide would be cost-prohibitive and unworkable. We plan to issue the coded memo as soon as possible and will require the campuses to respond in time for us to include the results in our one-year follow up response.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The executive order is going through the CSU formal approval process and should be issued within the next several weeks. Campuses have been encouraged to use the draft version for guidance until the next version is issued.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #4 To: University, California State

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.

Annual Follow-Up Agency Response From October 2018

On October 5, 2018, the Chancellor's Office issued Executive Order 1099 - Revised. This revised Executive Order clarifies the procedures to be followed by each campus in offering extended education self-supporting instructional courses and programs. It also defines the term "supplant" consistent with California Education Code section 89708, as amended in 2015, and clarifies campus-reporting requirements related to extended education activities.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2017

The Chancellor's Office has been in discussions with stakeholders, who have expressed concerns with the draft policy. We have held a series of meetings over the past year, with the goal of settling the differences and moving forward with the finalization and issuance of the revised guidance. We anticipate issuing the guidance by December 2017, subject to final approval by Chancellor's Office administrators and final consultation with stakeholders.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2016

The Legislature's bill to clarify its intent regarding California Education Code, Section 89708, definition of supplant, was signed into law on September 3, 2015. The Chancellor's Office has been in the process of developing the final guidance for the campuses. We are currently in discussions with stakeholders and we expect to receive their response to the draft guidance by November 15, 2016. We anticipate issuing the guidance by December 2016, subject to approval by Chancellor's Office administrators and consultation with stakeholders.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From October 2015

The Legislature's bill to clarify its intent regarding California Education Code, Section 89708, was signed into law on September 3, 2015. The Chancellor's office is currently in the process of developing the final guidance for the campuses. We anticipate issuing the guidance by March 2016, subject to approval by Chancellor's Office administrators and consultation with stakeholders.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The Chancellor's Office will develop and issue final guidance if and when the legislature clarifies its intent regarding supplanting. No bills were passed in the previous legislative session that addressed this issue.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

The Chancellors Office will develop and issue final guidance once the Legislature clarifies its intent regarding supplanting. Currently, there are two bills under review by the Legislature.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The Chancellors office will develop and issue final guidance once the Legislature clarifies its intent regarding supplanting.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: University, California State

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.

Annual Follow-Up Agency Response From August 2015

The Chancellor's Office has finalized and issued Executive Order 1102, California State University Student Fee Policy. The policy requires the campus president to consult with the dean of extended education, including consideration of revenue and expenditure plans developed by the dean or designee and in consultation with the campus chief financial officer, prior to making determinations on extended education fees.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The Chancellor's Office issued Executive Order 1102, dated 7.22.15. Section IV. F. of this executive order requires campus presidents to consider revenue and expenditure statements that have been reviewed and approved by the campus chief financial office before making determinations on extended education fees. This section also requires the president to consult with the campus dean of extended education and notify the Campus Fee Advisory Committee of his or her decisions.

1-Year Agency Response

The CSU is currently revising CSU Fee Policy (Executive Order 1054) to further clarify and differentiate campus president responsibilities with regard to determinations on Category IV and V fees. This differentiation in responsibility will include consideration of revenue and expenditure plans as developed by the Dean of Extended Education (or designee) and in consultation with the campus chief financial officers. A draft executive order has been developed and is under review. We expect to present the revised CSU Fee Policy to the Board of Trustees for action at the May 19-20, 2015 meeting.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

The CSU is currently revising CSU Fee Policy (Executive Order 1054) to further clarify and differentiate the responsibility of campus presidents when making determinations on Category IV and V fees. This differentiation in responsibility will include consideration of revenue and expenditure plans as developed by the Dean of Extended Education (or designee).

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The CSU Fee Policy is being revised to better define campus presidents responsibility to consider revenue and expenditure plans before making a determination on self-supported extended education programs Category IV and V fees.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #6 To: University, California State

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.

1-Year Agency Response

The Chancellor's Office issued a memo to the campuses requiring the reporting of a complete inventory of self-supported extended education fees, including past and present fee rates, the total revenue collected for each fee, and the remaining balance of revenue collected for each fee.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The CSU Board of Trustees has delegated authority to campus presidents for the oversight and management of Category V fees, of which extended education fees is one such classification. CSU will continue to ask campuses to report on Category V extended education fees and available balances for total extended education fee revenue collections. CSU review of campus financial and student reporting systems resulted in a determination that the best way to implement collection of a complete inventory of campus extended education fees and fee rates is through a separate submission of individual campus reports as recorded in campus student systems annually. These separate reports will be filed with the System Budget Office and held for review for two years.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The CSU Board of Trustees has delegated authority for approval, oversight and management of self-supported extended education program fees to campus presidents. Campus responsibility to report on Category V extended education fees and available balances to the Chancellors Office remains. Based upon a review of campus financial and student reporting systems, it was determined that each campus will be required to report fees and balance annually to the System Budget Office.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

According to its senior budget director, the Chancellor's Office is revising Executive Order 1054. He indicated that as part of this revision, the Chancellor's Office will ask each campus to report annually a complete inventory of its self-supported extended education fees, including past and current fee rates, the total revenue collected for each fee, and the remaining balance of any revenue collected for each fee. The senior budget director also mentioned that the Chancellor's Office expected to issue the revised executive order by August 31, 2014.

Recommendation #7 To: University, California State

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.

60-Day Agency Response

At the January 28-29, 2014 Board of Trustees meeting, the board approved an internal audit of Continuing Education. The proposed audit scope will include review of the processes for administration of continuing education and extended learning operations as self-supporting entities; budgeting procedures, fee authorizations, and selection and management of courses; faculty workloads and payments to faculty and other instructors; enrollment procedures and maintenance of student records; and reporting of continuing education activity and maintenance of Continuing Education Revenue Fund contingency reserves.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #8 To: Long Beach, California State University

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.

1-Year Agency Response

The College of Continuing and Professional Education (CCPE) reviewed the methodology with the CSU Long Beach management to ensure all appropriate direct and indirect costs are covered. The income statement has been prepared using the revised CCPE cost allocation plan as described in our response for Recommendation #9. The income statement was prepared using data from the upcoming cohort #4 which runs through FY 2016/17.

Supporting Documentation: Revised cost allocation plan methodology (Attachment A and B) and revised statement of revenues and expenditures for the Bachelor of Science in Engineering Degree Completion Program for Electrical Engineering (Attachment A)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

We concur that CSU Long Beach has substantially implemented this recommendation. CSU Long Beach prepared a statement of revenues and expenditures for the Bachelor of Science in Engineering Degree Completion Program for Electrical Engineering (program) showing that student fees needed to increase from $495 per unit to $650 per unit to cover program costs. However, CSU Long Beach stated that it "had no intention to increase the fee at this time". It also stated that it did not increase the fee because it had not marketed the program as such; that other external agencies provide substantial support to the program that help bring down program costs; and that as CSU Long Beach moves forward with implementing a new cost allocation plan methodology, it "may need to increase the fee at a reasonable rate."

6-Month Agency Response

The College of Continuing and Professional Education is reviewing the methodology with the CSU Long Beach management to ensure all appropriate direct and indirect costs are covered.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

To complete this action, the direct and reinvestment allocation methods and percentages must be established. As noted in the other comments below, each of these actions are under development. Once they are defined, the statement of revenues and expenditures will be completed using the format described in Executive Order 1054.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #9 To: Long Beach, California State University

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.

1-Year Agency Response

The College of Continuing and Professional Education has evaluated several models and developed a methodology for calculating direct allocations and a cost allocation plan that identifies and assigns indirect costs to the extended education programs.

Supporting Documentation:

Revised methodology for calculating direct allocations and a revised cost allocation plan that identifies and assigns indirect cost to our extended education programs. The assignment of indirect cost follows the audit recommendation of basing the allocation on a program's total direct costs. (Attachment B)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The College of Continuing and Professional Education has evaluated several models and developed a methodology for calculating direct allocations and a cost allocation plan that identifies and assigns indirect costs to the extended education programs. The College of Continuing and Professional Education is reviewing this methodology with the CSU Long Beach management to ensure all appropriate direct and indirect costs are covered.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

Three models have been developed and are under review for accuracy and reasonableness. Expectations are to have an agreed upon model implemented by June 1, 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #10 To: Long Beach, California State University

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.

6-Month Agency Response

A unique record identifier has been created in the campus fiscal records retention schedule to retain documentation to support the direct allocations charged by the College of Continuing and Professional Education to its programs. See record identifier number 2.15.2 in the campus fiscal records retention schedule. Attachment A.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

Once the allocation method has been chosen, it will be documented and retained.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #11 To: Long Beach, California State University

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.

6-Month Agency Response

The College of Continuing and Professional Education, when appropriate, will prepare market studies using a third party that researches other institutions to examine similar programs offered by local and national institutions for characteristics such as: Program Size, Program Duration, Cost per credit, Number of Credits, Delivery Format, Target Applicant, Curriculum

Market studies will be prepared to confirm fees are competitive in the continuing education marketplace. To assist in determining the best fee to fit the marketplace, we utilize market studies performed by the Educational Advisory Board. The Education Advisory Board (EAB) is known for providing best practice research and practical advice to leaders of academic affairs, business affairs, student affairs, advancement, continuing, online, and professional education, and community colleges across North America. As an example of a market study from EAB, find attached a study run for the College of Continuing and Professional Education on a Master of Arts program (Attachment D). The study is broken down into: a) Key Observations; b) Executive Summary; c) An example of a data sheet from one of the Universities in the study (Arizona State University)

A unique record identifier has been created in the campus fiscal records retention schedule to retain documentation on market studies for fee justification. The record identifier number is 2.15.3. (Attachment A)

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The College of Continuing and Professional Education (CCPE) marketing group will prepare selected marketing scans to justify the appropriateness of its fee increases for programs requiring special modifications.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #12 To: Long Beach, California State University

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.

6-Month Agency Response

After review, the College of Continuing and Professional Education program development costs will be built into the College of Continuing and Professional Education overhead cost pool as program development. (Attachment B)

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The study requires input from our campus partners before specifically identifying all its elements. It is underway and expectations are to have it concluded by June 1, 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #13 To: Long Beach, California State University

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.

6-Month Agency Response

After review, it was decided that the program development costs will be built into the College of Continuing and Professional Education overhead cost pool as program development. (Attachment B)

The documentation to support these costs will be retained. A unique record identifier has been created in the campus fiscal record retention schedule for the retention of these records. The record identifier number is 2.15.5. (Attachment A).

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

Once the program reinvestment allocation percentage method has been defined, it will be documented and retained.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #14 To: Long Beach, California State University

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.

6-Month Agency Response

CSU Long Beach updated its web page regarding the 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 in accordance with CSU Executive Order 1054. (Attachment C)

Additionally, a unique record identifier has been created in the campus fiscal record retention schedule for the retention of Category V fee related documentation, such as statements for revenues and expenditures that support the fee request/change. The record identifier number 2.15.4. (Attachment A).

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

CSULB has already begun ensuring that revenue and expenditure statements are prepared, considered, and retained. CSULB will revise its web page containing 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.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #15 To: Long Beach, California State University

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.

1-Year Agency Response

The statement of revenue and expenditures now follow the revised methodology as described in the response to Recommendation #9 and demonstrated for the Engineering Degree Completion program for Electrical Engineering in Recommendation #8. The student fee policy was revised and submitted previously in response to recommendation #14.

Supporting Documentation: Attachments A and B

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The College of Continuing and Professional Education is reviewing the methodology with the CSU Long Beach management to ensure all appropriate direct and indirect costs are covered.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The methodology for calculating the direct allocation component and establishing a reinvestment allocation percentage are under development. The models developed to date are under consideration to ensure accuracy and reasonableness before selection and implementation.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #16 To: Sacramento, California State University

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.

60-Day Agency Response

We have discontinued these practices. Please see memo attachment.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

In a memo dated January 16, 2014, to the dean of the College of Continuing Education (college), the campus associate vice president for Budget Planning and Administration stated that the college should not submit fee proposals for ranges of fees for extended education courses and programs. The memo also stated that the Budget Planning and Administration Office (office) will reject any such submission and that the office will not forward these fee ranges to the president for approval.

Recommendation #17 To: Sacramento, California State University

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.

60-Day Agency Response

We have discontinued these practices. Please see memo attachment.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

In a memo dated January 16, 2014, to the dean of the College of Continuing Education (college), the campus associate vice president for Budget Planning and Administration stated that the college should not submit fee proposals for ranges of fees for extended education courses and programs. The memo also stated that the Budget Planning and Administration Office (office) will reject any such submission and that the office will not forward these fee ranges to the president for approval.

Recommendation #18 To: Sacramento, California State University

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.

6-Month Agency Response

We are providing a spreadsheet that lists the expenses for each year incurred with respect to the MS in Geology. These include 2010-11 (pre-launch), 2011-12 and 2012-13. In addition, we projected the expenses for 2013-14 and 2014-15. Most students completed their coursework by Fall 2013 and are now moving to the thesis stage. The revenues and expenses related to courses and thesis supervision for this year and the revenues and costs associated with thesis supervision for next year have been projected.

The documentation also shows that the forecasted surplus over five years (development to graduation of this cohort) at the present time is $55,324.33. This represents 13.26% of the projected cumulative revenues. Barring any other unforeseen expenses, this residual would be split evenly between the College of Natural Science and Mathematics and CCE. The residual of 6.6% to CCE would be used as a development fund to start other projects.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

In process, we expect to complete by June 10, 2014

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #19 To: Sacramento, California State University

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.

60-Day Agency Response

The student fee policy and procedures were revised on January 13, 2014. Please see the attached documents or linked on our Student Fee Advisory Committee webpage at http://www.csus.edu/aba/sfac/.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

CSU Sacramento's Student Fee Policy, effective January 13, 2014, states in part:

** "The review process includes the development of a statement of revenues and expenditures for consideration by the President ... prior to establishing, adjusting, or abolishing a campus student fee."

** "The associate vice president for Budget Planning and Administration or his/her designee is responsible to conduct a review of the reason for the [fee] request, the proposed fees, and the required revenue and expenditure statements. ... For extended education courses and programs, development, appropriate consideration, and retention of statements of revenues and expenditures is required when establishing or adjusting fees."

** "All supporting documents provided for the fee submittal and the President's approval/denial memo will be retained per the campus' retention policy."

Recommendation #20 To: San Jose, California State University

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.

1-Year Agency Response

SJSU has completed the preparation of the statements of revenues and expenditures as required in the audit finding. We have emailed to the State Auditor the 2 pro-forma financial statements as requested, along with a cover letter from the Dean of IES detailing the fee setting approach for these programs undertaken by IES in their budget planning this past Summer

For the Medical Product Development Management program, we completed the revenues and expenses statements for the seven years from 2008 to 2015. We calculated the fee for this program and made adjustments to bring it to appropriate level based on the considerations detailed by the Dean of International and Extended Studies.

For the Global Studies Online program, we completed the revenues and expenses statements for the four years from 2010 to 2014. This program has only one remaining student finishing up in the Fall of 2014 and will be discontinued after that.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

Within two weeks, IES will finish the reconstruction of the revenues and expenses pro-forma statements of past programs discussed in the audit report.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The College of International and Extended Studies is preparing the statements in question and will use the new calculations as basis for future program fees. This project is directly managed by the Interim Associate Dean of The College of International and Extended Studies, to be completed by end of May 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #21 To: San Jose, California State University

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.

6-Month Agency Response

Our procedure and methodology to set fees requires using a template worksheet for the development and appropriate consideration of statements of revenues and expenditures for each extended education course and program.

AVP of Finance instructed IES to use new methodology for setting fees.

We added records retention requirements to Finance webpage for procedure and methodology for setting fees.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The College of International and Extended Studies is working with San José State University Central Finance to revise the fee proposal instructions as per the specific requirements in this audit recommendation - to be completed by end of May 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #22 To: San Jose, California State University

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.

6-Month Agency Response

Fees for Summer Sessions of 2014, and hence forth, are no longer based on the fees set by the Chancellor's Office for state-supported summer session courses and programs.

As evidence of compliance, we are submitting (1) The 2014 fees proposal ; (2) The approval of the 2014 fees proposal ; (3) A written confirmation from the Associate Dean of IES that fees are no longer based on the fees schedule of the Chancellor's Office.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

San José State University Central Finance has confirmed with the Deputy Provost and the Interim Dean of The College of International and Extended Studies that The College of International and Extended Studies will discontinue using the regular session fees set by the Chancellor's Office as basis for The College of International and Extended Studies summer session fees. We will submit to the State Auditor the new fee schedule for Summer 2014 as confirmation of compliance when it comes out in May 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #23 To: University, California State

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.

6-Month Agency Response

The CSU resumed excess carry-forward report procedures and directed campuses with excess balances for the 2012/13 fiscal year to prepare expenditure plans in accordance with carry-forward policy. Initial review of campus carry-forward balances was completed in January 2014 and a notification to campuses whose balances exceeded the normal thresholds established by policy was transmitted on February 25, 2014. Campuses were asked to submit completed reports to the System Budget Office by March 28, 2014.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The CSU will reinstate its carry forward policy within the month. Campuses will be directed to prepare expenditure plans in accordance with this policy from fiscal year 2012/13 forward. A preliminary review of campus carry-forward balances was completed. Also, within the month, guidance will be sent to campuses with balances exceeding established thresholds.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #24 To: University, California State

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.

60-Day Agency Response

At the January 28-29, 2014 Board of Trustees meeting, the board approved an internal audit of Continuing Education. The proposed audit scope will include review of the processes for administration of continuing education and extended learning operations as self-supporting entities; budgeting procedures, fee authorizations, and selection and management of courses; faculty workloads and payments to faculty and other instructors; enrollment procedures and maintenance of student records; and reporting of continuing education activity and maintenance of Continuing Education Revenue Fund contingency reserves.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #25 To: San Jose, California State University

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.

60-Day Agency Response

The campus had originally allocated $13.2 million of the $28 million NextGen project to the CERF fund (as per audit report page 56). We have now reduced this amount by $4 million to result in a total of $9.2 million allocated charges to CERF. Complete details of new allocation methodology, and of the return of $4 million from NextGen to CERF, are being sent separately to CSA via email.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

According to an internal "note to file" provided by the campus, San José State determined that the distribution [or proportion] of courses taught online was the appropriate method for allocating costs for its NextGen project. The campus calculated that about 1/3 of the courses taught online during Fall 2013 were extended education and about 2/3 were state-supported. By applying these proportions, the campus reduced extended education's share of the NextGen project's cost from $13.2 million to $9.2 million, resulting in $4 million being returned to the campuse's CERF fund.

Recommendation #26 To: San Jose, California State University

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.

1-Year Agency Response

SJSU has fully complied to audit recommendation #26. The Academic Affairs Division (AAD) has put in effect their Guidelines, posted to the Academic Planning and Budgets website; training for Deans, Chairs and analysts have been completed.

Specifically, this recommendation is in 4 parts as follows:

a) A requirement for departments to attach copies of ...

b) A requirement for departments to demonstrate that they assign...

c) A requirement for departments to retain documentation support...

d) A definition for reasonable and equitable distribution..."

For (a), AAD specifically requires that "For direct costs of services or activities benefiting self-supported instructional courses and programs, such as in purchase orders, work orders, and contracts... the documentation should be easily traceable to those courses and programs, and attached to requisitions. They should also be kept on file and will serve as the basis to support the top-down cost apportionment calculation by AAD."

For (b), AAD specifically states "In order to ensure that direct costs and indirect costs of self-supported instructional courses and programs, e.g. purchase orders, work orders and contracts... are reasonably and equitably charged to CERF, AAD will apportion costs throughout the year in a manner that resembles the enrollment split of state-support enrollment vs. self-support enrollment, as per the principle of allocation in these Guidelines. Please note that this action ensures that SJSU also complies to Recommendation(d).

For (c), AAD specifically states "Departments are responsible for retention of documentation to support the development of the methodologies used in the submission of fee proposals. The pro-forma distribution of indirect costs to self-supported instructional courses and programs should follow the principle of allocation as outlined in these Guidelines and must be retained on file as required in the State Audit Report."

For (d), see (b) above

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The Vice Provost of Academic Budget and Planning is taking the lead to develop the new allocation model for direct/indirect costs, which will be ratified jointly by Finance and the Division of Academic Affairs, and then implemented in all SJSU colleges. The AVP of Finance will then instruct all campus personnel to include documentation of allocation as appropriate along with all requests for payments.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

- San José State University Central Finance has re-iterated to campus departments that attachment of full documentation continues to be an important required AP procedure, and that, whenever appropriate and possible, departments' charges against CERF should reflect the benefits to CERF programs.

- The College of International and Extended Studies is working with San José State University Central Finance to revise the corresponding instructions to campus departments - to be completed by end of May 2014.

- San José State University Central Finance has re-iterated to campus departments that they need to retain full documentation of their methodology for indirect costs of self-supported programs.

- The campus has developed a method for allocating costs to CERF that is reasonable and equitable, as detailed in the submitted documentation of the return of funds from NextGen to CERF (as per audit recommendation #25)

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #27 To: San Jose, California State University

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.

6-Month Agency Response

We are submitting the written report of the 2014 review of the funding model, in which the frequency of review is specified as every 2 years.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The San José State University funding model will be periodically reviewed every 2-years. The campus is currently undertaking the current round of review.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #28 To: San Jose, California State University

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.

6-Month Agency Response

As evidence of compliance, we are submitting the full documentation of the completed 2014 review of the funding model.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The AVP of Finance has added this review function to the tickler file of the Finance calendar - it will be performed periodically every 2 years. The campus is currently undertaking the current round of review of the allocation percentages.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #29 To: Long Beach, California State University

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.

1-Year Agency Response

An agreement was developed between the College of Continuing and Professional Education and CSULB Research Foundation.

Supporting Documentation: Attachment C

California State Auditor's Assessment of 1-Year Status: Fully Implemented

We concur that CSU Long Beach substantially implemented this recommendation. CSU Long Beach provided a copy of a June 2014 agreement between the College of Continuing and Professional Education (CCPE) and the Research Foundation (foundation) regarding the foundation paying the salaries and benefits for certain CCPE employees. Although the agreement did not identify the reason why the foundation paid the salaries and benefits rather than the CCPE, we identified the reason on page 63 of our report.

6-Month Agency Response

A draft agreement was developed by the College of Continuing and Professional Education and is now being reviewed by the CSU Long Beach management.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The CCPE is working with the Research Foundation to develop this agreement.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #30 To: Long Beach, California State University

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.

1-Year Agency Response

Pre-audit, the campus partners shared a percentage of revenue to offset the indirect cost they incurred to support a program.

Based on the audit Recommendation #9, we now have a revised cost allocation plan. The campus partner indirect costs incurred to support a program are now contained within an indirect cost pool (called Campus Partner Overhead) and assigned to a program using the auditor's recommended direct cost allocation method.

Supporting Documentation: Attachment B

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

Corrective action still in progress.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The CCPE is currently reviewing campus partner allocation percentages to ensure that the rates are appropriate. A draft analysis will be completed in the coming months. Numerous meetings will need to be conducted with partners to conclude the final analysis and agreement on potential adjustments.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #31 To: Long Beach, California State University

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.

1-Year Agency Response

The College of Continuing and Professional Education has developed a Memorandum of Understanding (MOU) template between CCPE and the campus partners that clearly indicates the indirect costs incurred by the campus partner in support of a credit program will be covered through the development of an indirect cost pool and assigned to a program using the direct cost allocation method. Please refer to Recommendation #9 for details on the campus partners cost pool development and assignment to programs. Additionally, a unique record identifier has been created in the campus fiscal record retention schedule.

Supporting Documentation: Attachments B, D-1, D-2 and F

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

A new partnership template has been developed. The methodology is now being reviewed with the CSU Long Beach management. Corrective action is still in progress.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The CCPE is developing a new partnership agreement template that will clearly reflect partner allocation percentages. The CCPE will also ensure all partnership agreements with campus partners are retained.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #32 To: Sacramento, California State University

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.

6-Month Agency Response

We are providing a memo from the Dean of the College of Continuing Education to the Provost discussing the methodology.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

In process, we expect to complete by June 10, 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #33 To: Sacramento, California State University

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.

6-Month Agency Response

We have previously provided Memorandums of Understanding (MOU) between the College of Continuing Education and the campus partners (Academic Affairs and Academic Colleges) for the different programs offered by the College of Continuing Education. We are now also providing partnership agreements with the College of Business Administration for academic years 13-14 and 14-15 to complete this recommendation.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

We have developed Memorandums of Understanding (MOU) between the College of Continuing Education and the campus partners (Academic Affairs and Academic Colleges) for the different programs offered by the College of Continuing Education. Please see all of the various attachments. There are still more MOUs being developed specifically for the individual colleges. Those will be complete by June 10, 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #34 To: Sacramento, California State University

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.

6-Month Agency Response

We are providing payroll procedures for processing special pay provided for CCE faculty. We are also providing the State Controllers Office Personnel/Payroll Information System manual section to go along with how payroll is processed for CCE faculty.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

In process, we expect to complete by June 10, 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #35 To: Sacramento, California State University

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

60-Day Agency Response

We have recently updated the timekeeper manuals. Please see the attachements.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

CSU Sacramento updated it timekeeper manual as of January 2014.

Recommendation #36 To: Long Beach, California State University

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.

60-Day Agency Response

A memo was sent to all relevant employees on January 30, 2014 to remind them of the requirement to notify the Chancellor's Office before converting state-supported degree programs to self-supported degree programs.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #37 To: Long Beach, California State University

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.

1-Year Agency Response

Based on the recommendations by CSA on the hiring of lecturers in CCPE, Faculty Affairs has outlined various steps and informed the Associate Deans in the Colleges that effective Fall 2014, the existing stateside procedures will be implemented for the recruitment and appointment of lecturers to teach in CCPE programs.

Supporting Documentation: Attachments E-1and E-2

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

Corrective action is still in progress.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

Faculty Affairs will work closely with CCPE to identify and implement a process for hiring lecturers to teach in CCPE programs that will mirror the stateside process. For incumbent faculty, the process includes an updated CV and SC-1 form that is provided by the College and submitted to CCPE prior to providing a contract. When there is no incumbent and a recruitment is required, the College is responsible for that lecturer recruitment, including advertising the position and following the state-side recruitment process for lecturers. This process includes having the College collect all of the required hiring documents from the candidate. The College then approves the candidate and informs CCPE and delivers the requisite documents to CCPE. These documents must be attached to the CCPE contract and retained. The College also retains a copy of these documents as they may be needed at a later date for a state-side hire for that same lecturer. Faculty Affairs will work closely with CCPE on outlining this entire process prior to Fall 2014 hiring.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #38 To: Sacramento, California State University

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.

60-Day Agency Response

New Provost Harmsen notified Deans, Department Chairs and Academic Program Directors of their responsibilities and procedures to convert state-supported degree programs to self-supported degree programs or request new self-supported degree programs. Please see the February 5th memo.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #39 To: Sacramento, California State University

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.

6-Month Agency Response

The continuous open vacancy announcement was completed during February 2014. Here is a link to the announcement. http://www.csus.edu/hr/facultyvacancies/Cont.%20Open%20PT%20Vacancies-2014.pdf

It can also be located from our home page, Faculty & Staff, Human Resources and Jobs, Faculty, Continuously Open Part-Time Vacancies (bottom of page).

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

In process, we expect to complete by June 10, 2014.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

All Recommendations in 2012-113

Agency responses received are posted verbatim.