Forensic accounting report by Dr. Howard Bunsis, Professor of Accounting, Eastern Michigan University

CFA-LA contracted Dr. Howard Bunsis to complete a forensic accounting of Cal State LA finances and he presented his report on September 12, 2019. You may request a copy of the full report from CFA or go to bit.ly/BunsisReport2019. Here are some highlights of the report.

• Cal State LA and the CSU System are in excellent financial condition (Aa2 bond rating), as both Cal State LA and the System have solid reserves and positive cash flows each year. In 2018, the CSU System had $2.7 billion in unrestricted reserves and generated $462 million of excess cash flows.

• In 2018, Cal State LA had between $131.8 and $191.7 million in reserves, or 3.2 months of expenses in reserve, and $19.2 million in excess cash flows, giving the campus financial stability and flexibility.

• Given the excess cash flows and solid reserves, the need for impaction, budget cuts, or layoffs is not supported by the evidence.

• The State appropriation ($166.1 million in 2019), the largest revenue source, has increased for the last several years and is slated to increase for 2020.

• The alleged strict walls between the four auxiliaries and Cal State LA do not exist; these are self-imposed restrictions. In addition, the auxiliaries have significant unrestricted reserves ($17 million) and solid cash flows ($4 million) that further enhances the financial stability and flexibility of Cal State LA.

• The recent increase in enrollment was met by a substantial increase in full time and part-time Lecturer faculty. While the percentage of tenure-track faculty has increased by 71% since 2013, the overall percentage of tenured & tenure-track faculty are up only 7%.

• In comparison, the percentage of full-time Lecturer faculty has increased by 153% during the same period. Moreover, graduate teaching and part-time adjunct teaching increased 14% and 83%, respectively.

• There has also been an increase in the number and average pay of management employees. The mean increase in administrative salaries from 2017-2018 was 3.5%, higher than the rate of increase for assistant and full professors, though the salaries of associate and lecturer faculty increased by 5%.

• Average salaries for most Cal State LA faculty are lower than at peer institutions, including other CSU campuses, with the exception of Cal State LA assistant professors, who are earning 4.1% more than their peers at comparable institutions.

• Since 2007, there have been steady increases in high school GPA and SAT scores of Cal State LA applicants as well as increases in the 1 year retention rate and the 5 and 6 year graduation rates. These numbers indicate that there was no need to declare impaction. These improvements are especially significant given that Cal State LA has more Pell Grant-eligible students (67% of the student body) than any other CSU campus.

The findings of the Bunsis report indicate that Cal State LA has the financial and human resources to invest more in student success and faculty support. While hiring of tenure-track faculty increased, the increase in Lecturer faculty has been double that rate. This suggests the campus needs to invest more in hiring tenured and tenure-track faculty. In addition, instead of cutting student access to higher education by declaring impaction, we should continue to educate the students and communities we have served for decades and provide them with the support they need to succeed.