Inside Probe of Unpaid Debts at CSUN Ordered

Cal State Northridge President Blenda J. Wilson has ordered an internal investigation into the school’s failure to account for most of the $675,563 in advances to employees and campus organizations that went uncollected and virtually unnoticed for years until flagged by state auditors.

Acknowledging that disclosure in The Times of the unpaid debts has raised questions about the school’s stewardship of public funds, Wilson asked CSUN’s top financial administrators to give a full accounting of the debts by May 9.

Auditors of the California State University found that CSUN had paid hundreds of employees $512,688 in salary, travel and so-called hardship advances through the end of the 1994-95 school year. In addition, several campus auxiliaries, including the University Foundation and Associated Students, owed an additional $162,875.

Most of the money has not been repaid.

At the urging of Cal State auditors, CSUN last year reduced the amount of the bad debts to $338,958, campus officials said, adding that the reduction was accomplished mostly through write-offs. The write-offs are now the subject of dispute between the school and the state Board of Control, which by law must approve the cancellation of debts owed state agencies.

University officials said about $275,000 of the debt originated from so-called hardship allowances to employees needing quick cash for emergencies such as auto accidents and earthquake repairs. Another $150,000 was payroll advances. The total of the two categories of advances was owed by 600 employees. Travel advances make up the rest of the employee debt.

As of mid-April, the salary and payroll debt had been reduced to $193,000, owed by 180 campus workers. School officials say they still cannot say exactly how much of the original debt was written off.

Wilson, in a campus memo issued Thursday, said she has asked Arthur Elbert, CSUN vice president for administration and finance, under whose watch the debt reduction was achieved, and Robert Kiddoo, interim controller, for an accounting of “collections to date, and the current balance of outstanding and/or uncollectable payroll, salary and travel advances.”

In her memo, Wilson referred to the April 18 story in the Times on the outstanding debts and noted: “It goes without saying that the university accepts a responsibility to manage public resources in strict compliance with university, system and state policies. The requested report, and any decisions which result from it, will reaffirm our commitment to strong financial responsibility.”

Her memo also said that CSUN payroll officers, responding to state auditors last year, blamed inadequate staffing, inadequate training and the earthquake for contributing to the backlog of outstanding debts. Wilson has since halted salary advances.

Kiddoo, a professor in accounting, was appointed interim controller earlier this year to “improve CSUN’s accounting systems and practices generally,” Wilson said in her memo.

Neither Wilson nor Elbert has agreed to be interviewed despite numerous requests over the past two weeks.

However, Kiddoo, reached by telephone, said he was still looking for documents relating to the advances. “We are a public institution. We will be accountable,” he added.

Bruce Erickson, the school’s director of public relations, has asked that all questions on the advances be submitted in writing.

Among the questions still unanswered is why CSUN employees and organizations have not simply been asked to repay the money they owe. CSUN has also been asked for the names of employees whose debt was written off.

Meanwhile, Kurt Soderlund, deputy executive officer of the State Board of Control, and Cindy Walton, the board’s government program manager, said CSUN did not obtain prior approval for the write-offs, which were made last year.

The Board of Control, an independent arm of the state controller’s office, must approve the write-off of uncollectable debts under the state Government Code. For Cal State schools, permission is required for debts greater than $1,000, said Ken Perry, financial director at San Diego State.

Erickson disputed the state board’s allegation by releasing a letter written by Linda Troutman, at the time CSUN’s accounting services manager, seeking permission of the state controller to write off $61,529.43.

In the May 9, 1996, letter, Troutman said the school could not collect the debts from employees either because the debts were more than 3 years old or because paperwork documenting the transactions had been stored in a campus office ruined by the Northridge earthquake.

“Although some of the individuals listed are active employees, the source documents supporting and clarifying the purpose of the accounts receivable are no longer available due to the January, 1994, Northridge Earthquake. Notification and dunning records supporting the collection effort were also lost in this catastrophe,” Troutman said in the letter.

The Board of Control approved Troutman’s request on Jan. 7, 1997, nearly eight months after the university informed the auditor that the bad debts had been reduced effective April 30, 1996.

Erickson said the school cannot yet account for the remainder of the bad debts because “we lost a lot of records that would have documented some of these accounts receivable.”