A state audit says tighter regulations are needed on student fees at California State Universities after finding colleges, including Cal Poly, raised fees without accountability, and used the money to pay for faculty salaries and accreditation needs.

Statewide, Cal Poly San Luis Obispo has the highest student fees at $4,201 per year among the 23 CSU campuses, while Fresno State has the lowest at $847. Although the CSU board of trustees sets tuition, each school is allowed to establish or increase fees in line with needs.

The audit, released Thursday, investigated four CSU campuses — Cal Poly, San Jose State, Chico State, and San Diego State — and found student fees being used for “core CSU functions,” which should be paid for by tuition and state funding, according to the report.

Cal Poly spent nearly $31 million of its student fees on academic salaries and benefits in 2018-2019, according to the report, which pulled university records.

San Diego State spent $14 million, which is more than 90% of its student success fees. San Jose State spent $6.8 million on salaries and benefits for academic advisers and supervisors. Chico State pays its student assistants with the fee, the audit reported.

When Cal Poly proposed a fee increase to liberal arts students in 2014, the report found that it could not justify raising the fee. At the time, liberal arts students were paying $378 less than students in other majors.

“When we asked the associate dean of the College of Liberal Arts the rationale for the proposed 2014 fee increase, her only explanation was that the college wanted to increase its fee to the same amount (as other students),” auditor Elaine M. Howle wrote in the report.

It also found universities did not follow protocol when establishing new fees.

“Cal Poly did not collect or consider required recommendations from a campus committee before the president made decisions about any of the five proposed fee changes we reviewed,” Howle said.

“However, because the Chancellor’s Office does not review increases to mandatory fees and its oversight of new fees has lacked rigor, it did not intervene in any of the cases to ensure that the campuses followed the fee policy’s requirements.”

Although campuses must get approval from the Chancellor’s Office before establishing new fees, campus presidents do not need the authorization to increase existing fees. The audit found that current chancellor policies are vague and allow campuses to get away without justifying specific fee amounts.

“As a result, we found that campuses have not sufficiently justified their needs when determining and setting the number of proposed fees or increases to existing fees,” the report says. “Campuses also have not sufficiently demonstrated that they have no other way to pay for those needs.”

Tuition increase better for students?

If the CSU raised tuition instead of fees, it might be better for students, the audit found. Some scholarships and financial aid only cover tuition costs and not fees. The CSU’s own State University Grant only awards up to the cost of tuition.

About 480,000 students attend the 23-campus CSU system.

CSUs began significantly raising fees after the state budget crisis in 2007, which reduced the amount of state aid each campus received, according to the report. On average, fee amounts increased by 56% from 2011 to 2020.

Adjusting for inflation, the CSU now receives more combined funding from the state and tuition per student than it did before the 2007 budget crisis.

Yet, colleges have not decreased their mandatory fees, and they have no incentive to do so, according to the audit. The report recommends the state Legislature impose regulations that would prohibit campuses from spending students fees on anything outside its core functions, which are providing instruction and academic support.

“Implementing this restriction could require increases to tuition, state support, or both to prevent negatively affecting students who receive instruction and other academic support that campuses are currently funding with fee revenue,” the report says.

Howle also recommends a law requiring campuses to hold binding student votes before establishing or increasing a fee and making the Chancellor’s Office verify the results.

CSU chancellor, Cal Poly respond

CSU Chancellor Timothy White responded to the audit with concerns that the recommendations, if implemented, would undermine the trustees.

He said the CSU had followed all laws regarding how fees can be used.

“The proposed changes in authority of the Board of Trustees to govern the CSU warrant careful consideration and discussion with the appropriate legislative committees,” he said in response to the report.

The Chancellor’s Office did indicate it would change its policies, according to the audit.

White said he takes seriously keeping student costs to a minimum and said the university system has a strong record of managing its resources correctly.

“The CSU continues to work with other state and federal institutions and entities on financial aid solutions that help students reach their education goals, in particular by addressing the total cost of attendance.”

Cal Poly spokesperson Matt Lazier said the report ignores that it costs more to provide a hands-on polytechnic education.

“We strongly disagree with the audit report,” Lazier said. “Cal Poly has always been clear and forthright about its need for additional revenue beyond state funding in order to meet the higher cost of its unique, hands-on polytechnic education.

“The state historically provided Cal Poly with additional funding for these higher-cost programs,” Lazier said in a statement. “However, that funding was eliminated years ago, forcing the university to ask students to support a greater portion of the programs through student fees.”

He said the university has always sought input from students and remained transparent in how its fees are used, dedicating committees to the task.

“The report criticizes the university’s transparency, even as it details how the university sought student input throughout its five mandatory fee creation or increase proposals since 2012 — and listened closely to that input by not advancing a proposed new fee and a proposed fee increase after they were both not endorsed in separate advisory student votes.”

CSUs facing budget cuts

The report comes at a time when CSUs are experiencing an abrupt cut to revenue and preparing for less funding because of state deficits due to the coronavirus pandemic.

White announced Tuesday that campuses would primarily be online for the fall, further cutting revenue.

Fresno State has already paused new hiring and is considering how to move forward.

“Like other universities across the nation, we have experienced a significant loss of revenue in areas such as dining, housing, parking, athletics, Save Mart Center, and other auxiliary operations,” President Joseph I. Castro told The Fresno Bee in April.

“In addition, the state of California has delayed its assessment of tax receipts, which will delay the final 2020-21 state budget allocation to the California State University until early fall.”

This story has been updated with a response from Cal Poly spokesman Matt Lazier.

The Education Lab is a local journalism initiative that highlights education issues critical to the advancement of the San Joaquin Valley. It is funded by donors. Learn about The Bee’s Education Lab on our website.

This story was originally published May 14, 2020 at 2:19 PM.