Financial Switch Ordered in Wake of Shortfall at Cal State Long Beach

The California State University chancellor’s office has ordered a restructuring of financial procedures at Cal State Long Beach after stripping the university president of fiscal authority following discovery of a $900,000 shortfall in the campus budget earlier this year.

Among the major recommendations was that a chief fiscal officer be installed directly under university President Stephen Horn, with the power to supervise and make major decisions regarding the budget.

“We feel it would strengthen (Horn’s) position,” said Louis Messner, assistant vice chancellor for budget planning. “Basically what we want to see is that there is sound fiscal accountability, and it’s going to take some time to assure us.”

Messner said most of the 18 other campuses in the Cal State system already have a chief financial officer with broad budget authority.

Plan Endorsed

He predicted that it would be at least six months before full fiscal authority is restored to Horn, who under the current limitations must obtain approval from the chancellor’s office for all major budgetary decisions.

In a press conference on the campus late Friday, Horn endorsed the chancellor’s recommendations and said he has already issued orders for their implementation.

“We are now confident that we have adequate monitoring systems to get the job done,” Horn said. “With these (new) systems, we feel we will have a much better handle on expenditures.”

The shortfall was discovered in April by campus administrators, who blamed it on what one called “an overly rosy estimate” of revenues expected by the university in fiscal 1985-86.

The chancellor’s report--released Friday after a weeks-long investigation by three members of the chancellor’s staff--went into more detail regarding the causes. Specifically, the report said, the shortfall was caused by allocations early in the year throughout the university that exceeded the authorized budget by more than $2.5 million.

‘No Procedures’

“There were no procedures in place that would alert management to the shortfall,” the report said. “Corrective action did not take place at an earlier date . . . because neither the budget director nor the business manager has direct line authority for the financial control of the campus.”

The initial projected shortfall of $2.5 million was whittled down to $900,000, Messner said, by a series of last-minute cost-cutting measures.

In addition to increasing the powers of the chief financial officer, the report orders the university to create a surplus fund to cover unanticipated expenses, institute more detailed financial reviews in individual departments, repay within three years the $900,000 it received from the chancellor’s office due to the shortfall and stop transferring funds from one campus division to another without regard to legislatively authorized budget categories.