Audit: Fee spending at colleges is suspect
Is money being used for its intended purposes?
A state audit could not determine whether money collected for some fees at Arizona’s state universities was properly spent and also found instances of questionable spending.
The Arizona Auditor General’s Office said the money collected from some class fees, which are supposed to go toward actual expenses for individual classes, was deposited into combined accounts. Auditors also couldn’t determine if the revenue was spent for their intended purpose.
“Appropriate spending of class fee revenues could not be determined for most class fees reviewed,” auditors noted in the 82-page performance report released Friday.
The audit also flagged unusual spending of some mandatory fees, which are charged to all students to support specific services such as technology, recreation centers and athletics.
For instance, Northern Arizona University charges a $10-per-year “Green Fee” to fund “sustainable projects on
campus.” Green Fees generated $147,300 in fiscal 2016.
Auditors found $26,500 in Green Fee spending on items “that appeared unusual,” such as computer tablets for employees “to decrease the amount of paper used for their jobs” and manual treadmills for the campus recreation center. The university also bought hats for the grounds department that touted effective forest management.
Additionally, Green Fee revenue went to an educational-outreach campaign that included a boxed-wine competition “to reduce the stigma that boxed wine is not as good as bottled wine and eventually reduce the amount of glass Flagstaff consumes.”
NAU spokeswoman Kimberly Ott said the expenses were in line with regents’ policies, “but we welcome this report’s feedback to identify areas to improve, which is something that we continually look to do.”
The “Kind Wine Competition” used $3,280 in Green Fund fees to allow “sustainable wine packaging (to) have a greater voice on NAU’s campus,” according to the university.
Eileen Klein, president of the Arizona Board of Regents, which oversees the state universities, said that auditors overall found few “exceptions,” which are problems that have to be followed up on. The universities plan to follow the auditor’s recommendations for improvement, she said, and the board will review the issue at its February meeting. “I’m not as alarmed or concerned about the (audit) findings, because we had really been well into a review of the tuition- and fee-setting practices,” she said.
The audit comes as universities are increasingly relying on revenue from student fees, which are charged in addition to tuition.
Fees generated about $310 million in fiscal 2016 at Arizona State University, the University of Arizona and NAU. By comparison, the university system’s estimated overall revenue for fiscal 2017 is projected to be $5 billion.
At ASU, for example, mandatory fees make up $958 of the $10,792 tuitionand-fee rate for in-state undergraduates. The university also charges fees for some individual classes and “program fees” for enrolling in academic programs with higher operating costs — such as nursing and engineering.
Fees are controversial with students and parents because they add to the cost of attending college and have risen, along with the cost of tuition.
The regents made changes a few years ago to their policies regarding fees, including requiring the universities to provide more justification to the regents when they requested new fees or wanted to increase existing fees.
State auditors found that although the universities have established some fee-setting processes that are consistent with best industry practices for transparency and accountability, the universities should further improve their processes.
Among the audit’s other findings:
ASU spent half a million dollars from a student athletics fee on recruiting, which auditors said appeared inconsistent with the original uses agreed upon with the school’s student government. Auditors said that agreement stipulated that athletic fees not be used for salaries or recruiting. But in fiscal 2016, ASU spent $445,000 in fee revenue for recruitment-related expenses, including car rentals, lodging and airfare. ASU officials disagreed with the auditor’s findings, saying that the original agreement only prohibited employee recruitment.
ASU and the UA also required departments to give some of their fee revenue to central administration to cover administrative expenses, the audit said. Auditors said the regents should look at whether charging administrative costs as part of the student fee is appropriate.
The audit found an instance in which ASU spent class fees to support faculty research, which auditors said was not an approved use. It also found that $5,000 in fees for online criminaljustice classes went to at least two student workers. One assisted with faculty research. The other helped with inperson classes for which students didn’t pay fees. ASU told auditors the university corrected this error in November 2017.
Auditors also found at least two fees that never received regent approval. One was a $150 annual transportation fee at NAU to cover shuttle services. Another was a $100, onetime student support fee at the UA that goes toward career services. NAU officials said the transportation fee didn’t require approval from regents because it was only charged to students on the Flagstaff campus. UA officials said the one-time fee didn’t require regent approval. Auditors recommended regents decide whether to require board approval for all fees.