CSUN Gave Big Advances; Most Never Repaid

The cash-strapped Cal State Northridge campus advanced employees $512,688 in salary and travel expenses that were not repaid and little noticed for several years until state auditors flagged the outstanding debts during a routine audit.

Most of the money was paid to administrators and other employees in the form of salary, travel and so-called hardship advances, according to auditors responsible for the published report, prepared for the California State University Board of Trustees. Another $162,875 was owed to CSUN by its campus subsidiaries, such as the Associated Students and the CSUN Foundation, bringing the total debt to $675,563, auditors found.

Campus officials say about 600 CSUN employees received advances, mostly between 1991 and 1994.

Since the audit was released a year ago, very little has been repaid, CSUN officials said Thursday. However, at the urging of CSU auditors, about half of the CSUN debt has been eliminated, mostly by declaring loans uncollectable, school officials said.

Arthur J. Elbert, CSUN vice president of finance and the administrator responsible for keeping track of the school’s money, described the unpaid debt, through a spokesman, as “an old story.”

He declined to be interviewed. But in a four-sentence statement, he said despite the “small amount” owed, “it’s very important to safeguard the taxpayers’ funds. That’s why we have taken steps to clear this up. There is no question in my mind that these issues will never happen again.”

The financial arrangement has raised questions among faculty leaders who say they were unaware CSUN employees were allowed to borrow against future earnings.

“Holy mackerel. I have been here 28 years. I have never heard anything like that,” said James Goss, chairman of the Religious Studies Department and president of the CSUN Faculty Assn. “Would you tell me how I can get [an advance]?”

Shahid L. Ansari, a CSUN accounting professor who heads the Faculty Senate’s Education Resources Committee, said he too was not aware of the advance provisions or the school’s outstanding accounts. Both he and Goss are calling for university officials to reveal who received the advances and how many of the loans have been written off.

Cal State officials at Long Beach, Los Angeles, San Diego, Bakersfield and Fresno say they generally do not give salary advances. Employees are expected to use state-issued American Express corporate cards for their travel expenses.

CSUN President Blenda J. Wilson said in a letter to The Times on Thursday that the salary advances have been halted. Campus officials said they could not provide an accounting of how the money was disbursed or how much has been repaid. Wilson said she will release that information as soon as it becomes available. In the letter, she blamed the 1994 Northridge earthquake for temporarily disrupting record-keeping and fiscal controls.

Wilson would not agree to be interviewed for this story.

George Pardon, director of accounting at the CSU chancellor’s office, said there is no state-mandated repayment schedule for salary advances or other employee loans. “But we expect it to be within a financial year, certainly,” he said.

Pardon also said each campus is required to maintain an accounts-receivable ledger that clearly details how much employees received in payroll and travel advances.

CSUN spokesman John Chandler said he could not provide such an accounting. Reading from prepared notes, he said: “We believe [the main issue] and the dollar amount raised in the auditor’s report are a result of factors stemming from the earthquake and its disruption. At the same time, we think the report correctly shows some room in improvement in our record-keeping practices.”

School financial chief Elbert said the debt is not significant considering the university’s $160-million annual budget.

Cal State University auditors disagree.

“Untimely follow-up and collection of outstanding payroll receivables contributes to nonpayment of some debts; it also reduces the amount of working capital available to the campus,” the auditors said in their report, dated April 25, 1996.

CSU auditors found:

* As of November 1995, CSUN employees owed $425,000 in payroll and salary advances. Of that, $275,000 was so-called hardship advances for emergencies such as auto accidents and earthquake repairs, campus officials said Thursday. As of this March, that debt was reduced to $193,000 owed by 180 people. The school could not say how much was repaid and how much was written off.

* In December 1995, campus employees owed $87,688 in travel advances stretching back two years. By the end of this February, that amount was $22,428, Chandler said.

* Another $162,875 in long-standing debts was characterized by auditors as highly uncollectable because debts dated as far back as 1991. CSUN officials said Thursday those debts are connected to auxiliary campus operations, such as the University Foundation, operators of retail and food services at the school.

* Finally, CSUN officials failed to seek reimbursement for more than $5,000 owed to the school by employees who failed to turn over their $5-a-day jury service paychecks, saying it would cost too much to try to collect the money. The campus has since created a repayment system.

In April 1996, six months after first being warned by CSU auditors to clear up the lingering debt, CSUN administrators reduced the overall amount to $338,958, mostly through write-offs, Chandler said. CSU auditors will review the accounts later this year.

Richard West, senior vice chancellor for business and finance for the 22-campus CSU system, said CSUN’s uncollected debts were unusual but applauded the school for taking corrective measures.

West said if CSUN “wrote off more than what we think is appropriate, we’ll talk to them” after July when the CSU chancellor’s office has scheduled to conduct another audit. West said he plans to audit six to eight CSU campuses every two years. The CSU system has a $3.2-billion budget and 32,000 employees.

CSUN in January appointed former accounting professor Robert J. Kiddoo as controller to keep a closer rein on campus finances and review financial management, Chandler said.

“If you are asking are we perfect, the answer is, ‘No,’ ” Chandler said. “If you are asking have we done a good-faith effort, the answer is ‘Yes.’ ”