Cal State Fullerton Audit Alleges Misuse of Funds

A state report accuses officials at Cal State Fullerton of mismanaging funds, spending scholarship money on meals, entertainment and car washes and circumventing hiring and contracting procedures to give work to friends.

“Although many of the problems we identified may not seem significant in isolation,” said the report released Tuesday by the state auditor’s office, “collectively they demonstrated serious mismanagement on campus.”

In a response, Cal State Chancellor Charles Reed downplayed the auditors’ conclusions. “As a result of our review and investigation, we did not find any serious mismanagement at the university,” said the head of the 22-campus system. “We do agree that there were errors of judgment and mistakes in some instances.”

School president Milton A. Gordon said in a statement that he agreed with Reed.

Among other items in their report, auditors said that when Gordon was asked to sign a statement under penalty of perjury, he refused.

Ann Campbell, director of investigations for the state auditor’s office, said the perjury statement--which is a written account of what Gordon had told investigators--is routine, and it is rare for someone to refuse to sign.

In a news release, Cal State officials said signing such a statement is “a misuse of process, and the refusal to sign it is a matter of principle.”

The investigation began two years ago, with a tip to the auditor’s whistle-blower hotline. Campbell said the investigation was delayed two months when auditors learned that some employees were being told to inform their supervisors if investigators contacted them.

The 58-page report documented the misuse of about $1 million. The report says university employees from July 1994 through June 1998 spent $104,000 on food, flowers, gifts and parties that should have gone for educational use.