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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

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Appendix A

Scope and Methodology

The Audit Committee directed the California State Auditor (State Auditor) to examine information related to CSU’s outside accounts and parking programs, including the balances of CSU’s outside accounts and CSU’s use of revenue from parking fees and fines. Table A below lists the objectives that the Audit Committee approved and the methods we used to address them.

Table A
Audit Objectives and the Methods Used to Address Them
1 Review and evaluate the laws, rules, and regulations significant to the audit objectives. Reviewed and evaluated laws and policies significant to CSU’s outside accounts and parking programs.
2 Review and evaluate the Chancellor’s Office’s role in overseeing the management and operations of the parking program at the following CSU campuses: Channel Islands, Fullerton, Sacramento State, and San Diego State. Specifically evaluate the aspects of the program related to setting and enforcing systemwide policies and procedures to ensure compliance with parking program statutes.

Reviewed policies and procedures related to campus parking programs and interviewed key officials at the campuses and Chancellor’s Office.
3 For the four campuses identified in Objective 2, perform the following:
  • Reviewed systemwide CSU student fee-setting policies and parking fee restrictions in staff collective bargaining agreements.
  • Reviewed campus policies, procedures, and practices for setting parking permit prices and for allocating parking permits, and interviewed campus parking officials.

a. Review and evaluate the policies, procedures, and practices for determining parking rates and fees and for allocating parking permits.

b. For the most recent 10 years, determine the annual number of permits issued and the reasons for any limits on the number of parking permits issued; annual parking program revenues and the sources of the revenues; and changes in parking fee rates and revenues, including the reasons for the changes.
  • Analyzed campus parking permit data, parking fee rates, and parking accounting data for fiscal years 2008–09 through 2017–18 and identified significant changes.
  • Interviewed parking officials to determine if campuses limit parking permit sales.
  • Compared trends in parking revenue to trends in permit sales, fee rates, and bond schedules for new parking facilities.
c. Assess the adequacy of parking available to students, administrators, and employees (faculty and support staff).
  • Reviewed campus occupancy assessments in campus transportation management plans or parking demand studies, and campus-collected data.
  • Identified industry best practices and compared them to occupancy assessments. Reviewed campus parking inventory reports and identified the number of parking spaces relative to the total number of enrolled students and campus employees. Compared the number of parking permits sold for students, residents, faculty, and staff to available parking spaces.
d. Determine the cost per parking space for each existing parking facility.
  • Reviewed parking accounting data and debt payment schedules.
  • Determined cost per parking space based on parking program operating costs and the debt costs of parking facilities.
e. Determine whether any parking structures are fully paid for and, if so, whether parking rates decreased as a result. Reviewed bond schedules and CSU audited financial statements and interviewed finance officials at the campuses and the Chancellor’s Office to determine if CSU has paid off any parking structures since 1995.
4 Determine whether the parking program complies with Education Code provisions pertaining to the allocation of parking revenues for the construction of parking facilities. For the four campuses identified in Objective 2, determine the following:
  • Reviewed parking revenue data to determine whether campuses allocated parking revenue in compliance with provisions of state law.
  • Identified and reviewed the provisions in the Education Code related to uses of parking revenues.
  • Obtained and reviewed policies and procedures the Chancellor’s Office and individual campuses developed related to the use of parking revenue.
a. Methods, criteria, and data used in determining alternate methods of transportation.
  • Identified the alternate transportation committee at each campus and any policies, procedures, or guidelines related to that alternate transportation committee.
  • Obtained parking demand studies and transportation management plans and interviewed key staff to identify the methods, criteria, and data campuses used to determine the effectiveness of alternate transportation programs.
  • Reviewed alternate transportation committee meeting minutes to identify methods, criteria, and data the committees used to determine alternate methods of transportation.
b. Frequency and evidence of the campus alternative transportation committee meetings and the extent to which the committee consulted with students and local government officials. Obtained and reviewed alternate transportation committee meeting minutes to determine the frequency of meetings during our audit period and the extent to which the committees consulted with students and local government officials.
5 Review and evaluate the parking fund expenditures for the four campuses identified in Objective 2 and identify the following:
  • Reviewed each campus’s parking demand studies and transportation management plans to determine whether the campus had studied alternate transportation and determined the associated costs of the studies and plans.
a. The extent to which the campus used parking revenue for the study, development, enhancement, operation, and maintenance of alternate methods of transportation.
  • Identified the annual costs to operate alternate transportation programs at the campuses for the most recent fiscal years available.
  • Determined the amount of parking revenue the campuses used for alternate transportation and planning documents by using the expenditure data for fiscal years 2008–09 through 2017–18 and parking program documentation.
b. The alternate methods of transportation funded by parking revenue, the year the programs originated, and the set-up and ongoing costs of the programs.
  • Reviewed program documents and campus Websites, and interviewed key officials to obtain an understanding of the alternate transportation programs funded by parking revenues at each campus.
  • Obtained alternate transportation program information from parking program staff and utilized contracts and expenditure data to identify, when possible, the cost associated with the establishment and operation of each program.
c. The extent to which the campus used parking revenue for parking facility acquisition, construction, and improvement.
  • Reviewed parking expenditure data related to parking facilities.
  • Reviewed state law and the CSU Legal Accounting & Reporting Manual to determine the campus funds used for parking facility acquisition, construction, and improvement.
  • Obtained accounting data from the Chancellor’s Office for each campus to determine the amount of parking revenue used for parking facility acquisition, construction, and improvement.
d. Whether funds or money received as parking fines and forfeitures were used exclusively for activities and programs as prescribed by the Education Code.
  • Reviewed fines and forfeitures revenue and expenditure data and state law.
  • Judgmentally selected expenditures for review at each campus based on the amount and type of expenditure to determine whether the campus used parking fines and forfeitures revenue in accordance with the Education Code.
e. To the extent possible, whether campus officers who enforce parking are given quotas for parking violations. Reviewed parking program policies, procedures, and practices at the four campuses and interviewed parking enforcement officers.
6 Identify any outside accounts held by CSU and perform the following:
  • Reviewed CSU’s reports of accounts outside the state treasury to identify the outside accounts CSU holds.
a. Identify the fund balances, funding sources, interest earned, and major category of expenditures for the most recent 10 years. Determine the reasons for any unusual trends.
  • Identified the balances of outside accounts CSU held as of June 30, 2018. For the investment account that constituted most of the money CSU had in outside accounts, identified revenue, interest earned, other revenue from investments, and expenses for fiscal years 2008–09 through 2017–18.
  • Reviewed account information and related financial documents to determine the reasons for unusual trends.
b. Determine whether interest or other earnings received from investments of parking revenues were properly deposited into the State University Parking Revenue Fund. In addition, assess the criteria or justification for the level of fund balance and the timing and amount of deposits, and assess withdrawals for reasonableness and compliance with relevant laws and rules.
  • Reviewed CSU policy and campus procedures for allocating interest earnings and reviewed a selection of the campuses’ interest earnings distributions to determine whether the parking funds received the appropriate portion of interest and earnings.
  • Reviewed state law, CSU policy, and campus accounting data to assess parking fund balances, deposits, and withdrawals for reasonableness and compliance with state law.
  • Reviewed the designated purposes for parking fund balances.
c. Determine the sources and uses of funds included in the CSU operations category and whether support staff salary savings are held in this account.
  • Reviewed account data to determine the revenue and expenses related to the CSU operating fund.
  • Reviewed budget documents and interviewed budget staff at the four campuses and the Chancellor’s Office to determine whether they held salary savings in CSU’s outside investment account.
7 Analyze and provide a comparison of laws, rules, policies, and practices related to oversight, controls, and accountability for CSU accounts held in the state treasury to outside accounts. Determine whether CSU’s outside accounts are more susceptible to abuse and, to the extent possible, whether the CSU bypassed or could bypass any state rules or its own policies by placing funds in outside accounts.
  • Analyzed, compared, and evaluated the laws, rules, policies, and practices related to the oversight, controls, and accountability for CSU’s outside accounts and state treasury accounts.
  • Reviewed existing audits related to the oversight of CSU’s outside accounts and reviewed information that CSU provided to legislators and other state entities about its outside accounts.
8 Review and assess any other issues that are significant to the audit. Reviewed documents that the Chancellor’s Office provided to legislators and students about CSU’s available resources and budget needs that are significant to the transparency of CSU’s outside accounts.

Source: Analysis of the Audit Committee’s audit request number 2018-127, as well as information and documentation identified in the table column titled Method.

Assessment of Data Reliability

In performing this audit, we relied on electronic data files that we obtained from the Chancellor’s Office and the four campuses we visited. These electronic data files related to CSU’s outside accounts, including the revenues and expenses of its operating and parking funds, and to campus parking and transportation programs. The U.S. Government Accountability Office, whose standards we are statutorily obligated to follow, requires us to assess the sufficiency and appropriateness of computer‑processed information we use to support our findings, conclusions, or recommendations. To perform this assessment, we compared accounting data to CSU’s audited financial statements and determined that they reasonably agreed. For campus parking program data, we assessed trends in the data and other related information, and determined the data to be generally reasonable. We did not perform accuracy and completeness testing of these data so they are of undetermined reliability for our audit purposes. Although we recognize that these limitations may affect the precision of the numbers we present, there is sufficient evidence in total to support our audit findings, conclusions, and recommendations.

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Appendix B

Additional Investment Account Data

The Audit Committee directed the State Auditor to determine and identify data and trends related to CSU’s outside accounts. We did this for the investment account that, as we explain in the Introduction, comprised the majority of the money CSU held in its outside accounts.

10-Year Investment Account Data Trends

Table B.1 presents the total discretionary and restricted revenue and expenses for the investment account from fiscal years 2008–09 through 2017–18. CSU’s discretionary surplus balance increased at a significantly higher rate than its restricted balance. We analyze the growth of the discretionary surplus in CSU’s operating fund earlier in our report, beginning here.

Table B.1
CSU’s Discretionary Surplus Grew at a Higher Rate Than Its Restricted Surplus

FISCAL YEARS 2008–09 THROUGH 2017–18
JUNE 30, 2009
JUNE 30, 2018
Discretionary $31,017,341,972 $258,080,820 $29,554,964,890 $300,445,695 $2,024,954,527 574%
Restricted 45,411,327,658 121,303,214 44,623,354,414 1,064,327,768 1,871,356,071 76%
Totals $76,428,669,630 $379,384,034 $74,178,319,304 $1,364,773,463 $3,896,310,598 185%

Source: Analysis of CSU’s account data.

Table B.1 also identifies the portion of revenue that came from interest earnings and other investment income. CSU’s investment earnings over the audit period generally aligned with changes in the yield rate for the State’s Surplus Money Investment Fund, which has the same requirements related to investment risk as most of the money CSU invests in outside accounts. At the time of the 2006 change to state law that allowed CSU to manage tuition in its own accounts outside of the state treasury, the Legislative Analyst’s Office noted that interest earnings that had previously accrued to the State’s General Fund would now accrue to CSU. Because of this loss to the General Fund, the Legislature sometimes reduced appropriations to CSU from the General Fund during the audit period based on an assessment of the amount of interest earnings CSU accrued.

Investment Account Data for the Campuses and Chancellor’s Office

All the campuses and the Chancellor’s Office transfer surplus money to the investment account. Table B.2 shows the surplus balance for each campus and the Chancellor’s Office as of June 30, 2018.

Table B.2
Each Campus and the Chancellor’s Office Had Millions of Surplus Dollars
As of June 30, 2018

AS OF JUNE 30, 2018
San Diego State $456,012,349
San José State 338,538,363
Chancellor’s Office 312,896,851
Northridge 290,709,351
Cal Poly Pomona 266,921,547
Fullerton 224,516,302
Cal Poly San Luis Obispo 224,037,783
Long Beach 219,540,259
Sacramento State 203,206,968
San Francisco State 191,722,085
Los Angeles 191,673,526
Chico 131,503,820
San Bernardino 112,130,542
Sonoma State 108,463,786
East Bay 103,531,505
Fresno 93,796,765
Stanislaus 84,898,924
Channel Islands 74,203,809
Dominguez Hills 69,202,929
Bakersfield 66,398,107
Humboldt 62,425,733
Monterey Bay 61,120,036
San Marcos 48,282,648
Maritime 21,773,540
Other 3,435,700
Total $3,960,943,228

Source: CSU’s investment activity report as of June 2018.

In addition to campuses and the Chancellor’s Office, the CSU Risk Management Authority and the CSU Institute transfer surplus funding to CSU’s investment account. The CSU Risk Management Authority is a joint powers authority created to provide insurance and risk management services, such as workers’ compensation and property insurance programs, for CSU campuses and auxiliary organizations. The CSU Institute is an auxiliary organization whose stated purposes include furthering CSU’s educational, research, and public service missions by performing functions such as administering educationally-related programs and assisting with the development of small business enterprises. These organizations are included in Table B.2 in the row labeled Other.

The total surplus balance in Table B.2 is the same as the investment account balance presented in Table 1 of the Introduction. This total is based on CSU’s bank statements. It differs slightly from the total surplus that Table B.1 presents, which is based on CSU’s account data. Because of the timing of transfers in and out of the investment account, values from the account data and bank statements are generally consistent but do not match exactly.

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Appendix C

Additional Parking Program Data

The Audit Committee directed the State Auditor to identify data and trends related to the campus parking programs.

Parking Program 10-Year Data Trends

Table C.1 presents the annual number of permits sold by the four campuses that we reviewed; their total annual parking program revenues including fees and fines; changes in their revenue and parking fee rates; and their expenses for parking facility acquisition, construction, and improvement. Permit prices are for semester permits. The parking permit prices for CSU’s represented staff were lower than student prices and changed less frequently because the staff’s collective bargaining agreements place limits on when and how much the campuses can adjust prices.

Table C.1
Parking Program Data by Campus
Fiscal Years 2008–09 Through 2017–18

Channel Islands
2008–09 $1,184 $100 $708 $145 $100 NA 1,666
2009–10 1,288 288 791 145 0% 100 0% NA 1,877
2010–11 1,326 74 640 145 0 108 8 NA 1,983
2011–12 1,445 97 561 145 0 108 0 NA 2,077
2012–13 1,755 75 713 160 10 108 0 9,738 2,523
2013–14 1,993 280 598 180 13 108 0 10,606 2,556
2014–15 2,276 165 862 185 3 108 0 11,469 2,512
2015–16 2,404 191 1,234 190 3 108 0 11,900 2,541
2016–17 2,707 186 2,009 195 3 108 0 12,656 2,627
2017–18 2,824 605 2,975 195 0 108 0 13,247 2,599
Percent Change 139% 505% 320% 34% 8% 36% 56%
2008–09 $11,473 $3,130 $6,949 $144 $58 69,172 9,752
2009–10 10,367 3,224 7,703 162 13% 58 0% 92,887 11,088
2010–11 12,473 3,180 10,604 220 36 58 0 87,982 11,424
2011–12 13,419 6,068 10,851 220 0 58 0 100,013 11,370
2012–13 12,809 7,592 10,591 220 0 58 0 89,154 11,826
2013–14 13,168 5,172 12,886 229 4 58 0 98,272 11,826
2014–15 13,079 8,344 10,127 229 0 58 0 102,531 11,957
2015–16 13,417 6,291 9,606 229 0 58 0 101,061 12,186
2016–17 14,306 4,382 11,085 236 3 67 15 96,899 12,372
2017–18 14,425 4,334 11,993 236 0 67 0 98,285 12,051
Percent Change 26% 38% 73% 64% 15% 42% 24%
Sacramento State
2008–09 $8,358 $2,146 $8,763 $108 $68 55,071 12,173
2009–10 8,753 2,334 10,594 153 42% 68 0% 51,016 13,061
2010–11 8,704 2,265 12,574 156 2 68 0 49,548 13,091
2011–12 8,851 2,380 18,459 159 2 68 0 51,471 12,997
2012–13 8,580 2,867 19,928 159 0 68 0 51,399 13,137
2013–14 9,116 2,386 23,045 162 2 68 0 53,918 13,126
2014–15 9,364 2,214 26,090 165 2 68 0 52,239 13,126
2015–16 9,838 2,584 29,117 168 2 72 6 52,668 13,091
2016–17 10,299 2,688 32,171 171 2 77 7 51,241 12,150
2017–18 10,539 21,325 16,470 174 2 77 0 47,581 13,812
Percent Change 26% 894% 88% 61% 13% 14% 13%
San Diego State
2008–09 $10,139 1,698 $12,761 $135 $103 56,225 15,047
2009–10 10,242 1,867 18,880 135 0% 103 0% 51,022 15,018
2010–11 9,374 1,699 22,682 135 0 103 0 57,067 14,746
2011–12 9,312 2,701 24,928 135 0 103 0 52,283 14,356
2012–13 9,479 2,978 26,012 135 0 103 0 54,568 14,361
2013–14 9,738 2,917 27,794 135 0 103 0 53,489 14,318
2014–15 10,289 2,621 20,080 135 0 103 0 59,696 14,238
2015–16 12,261 2,632 27,181 162 20 106 3 54,636 14,127
2016–17 11,141 5,197 28,679 165 2 111 5 50,406 14,439
2017–18 15,332 4,369 28,420 168 2 111 0 48,214 14,197
Percent Change 51% 157% 123% 24% 8% 14% 6%

Source: Analysis of parking program accounting data, permit data, and parking inventories.

NA = The data was unavailable because Channel Islands replaced its permit management system in 2012, according to Channel Islands.

* Parking facility expenses in a given fiscal year include annual debt payments, as well as one-time costs for construction, maintenance, acquisition, and improvement. These expenses do not include parking operations or alternate transportation, which we present in Figure 7.

This column includes the permit prices for represented staff only. Faculty permit prices remained unchanged during our audit period and were $98 at Channel Islands, $59 at Fullerton, $69 at Sacramento State, and $119 at San Diego State.

Sacramento State’s unusually high percent change for parking facility expenses is due to its upfront contribution for its new parking structure in fiscal year 2017–18. Without this cost, the 10‑year percent change would be 31 percent.

Cost per Parking Space

Table C.2 shows the annual cost per parking space for each existing parking facility at the four campuses. The facilities with outstanding debt have a higher cost per space because of the annual debt payment.

Table C.2
Average Annual Cost Per Parking Space By Campus

Channel Islands Parking Lot A3 $578 $217 $795
Student Housing Lot 1 98 676
Student Housing Lot 2 112 690
All other paid-off facilities*   578
Fullerton Eastside Structure 703 1,154 1,857
Nutwood Structure 549 1,252
State College Structure 787 1,490
All other paid-off facilities*   703
Sacramento State Parking Structure 2 361 370 731
Parking Structure 3 590 951
Parking Structure 5 659 1,020
All other paid-off facilities*   361
San Diego State Parking Structures 3 and 7 473 413 886
South Campus Plaza 3,009 3,482
All other paid-off facilities*   473

Source: Analysis of parking program financial data, debt payment schedules, and parking inventory reports from each campus.

* For this category, the number of facilities and spaces per facility varies by campus. The important distinction is that none of the spaces in this category have outstanding debt.

Sacramento State financed Parking Structure 5 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.

The debt payment per space is unusually high because the South Campus Plaza parking facility is a six-story structure with only 300 spaces, while the other structures that Fullerton, Sacramento State, and San Diego State financed since 1995 have an average of 1,900 spaces.

Alternate Transportation Programs

Each of the four campuses we reviewed offered a variety of transportation options for commuters, but only some options were likely to reduce the number of single occupancy vehicles on campus and were funded using parking revenues. Table C.3 shows the alternate transportation programs that the four campuses generally funded with parking revenue and that were likely to reduce the number of single occupancy vehicles on campus. The table also includes the year these programs originated, and the start-up and ongoing costs associated with the programs. Other programs the campuses offered would likely not significantly reduce the number of single occupancy vehicles on campus, such as car sharing programs (i.e. Zipcar) and electric vehicle parking and charging stations. Moreover, other programs were not included in the table if they may reduce the number of vehicles on campus but were offered at little or no cost to the campus. For example, Sacramento State promotes student discounted tickets on Amtrak, but does not have a formal agreement in place with Amtrak and does not sell Amtrak tickets. Finally, all four campuses allow bicycling in designated areas on campus and provide bicycle infrastructure, such as bike racks and designated bike lanes or paths. Because we did not use this information to draw conclusions, we did not assess the reliability of the data.

Table C.3
Alternate Transportation Programs, Start Year, Startup Cost, and Ongoing Costs by Campus

Channel Islands
Local Transit Subsidy 1999 $0 $460,000
Shuttle to Local Transit 2014 0 25,000
Local Transit Subsidy 2003 $0 $269,600
Shuttle to Off-site Parking 2017 0 285,900
Commuter Program 1991 Unavailable 29,500
Sacramento State
Local Transit Subsidy 1996 $0 $804,800
Multi-Location Shuttle 1989 Unavailable 533,500
Commuter Program 1995 0 3,300
San Diego State
Rideshare 2009 $950 $3,750
Local Transit Subsidy 2001 0 93,400
Multi-Location Shuttle 2008 0 22,000

Source: Parking program contracts, financial documents and data, and program staff confirmations.

Unavailable = Campus was unable to provide information.

* We generally used the most recent annual costs as ongoing annual costs varied from year to year.

Fullerton and Channel Islands contract for professional shuttle services and San Diego State and Sacramento State operate their own shuttle service, which requires vehicle purchase or lease. San Diego State and Sacramento State made their initial vehicle purchases before our audit period. To provide context for the cost of this type of purchase, Sacramento State paid $178,000 in December 2014 for two 30‑foot transit buses.

Sacramento State’s local transit subsidy program is funded with a transportation fee that is separate from its parking revenues. We listed this program in this table to demonstrate that a local transit subsidy is provided at all campuses.

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