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Cal U spending triggers state audit

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By Richard Gazarik
Thursday, March 29, 2012
 

California University of Pennsylvania's sprawling $59 million convocation center has become a lightning rod for critics who say they welcome an audit of spending at the school where a building boom has been riddled with cost overruns and revenue shortfalls.

The audit was ordered by state System of Higher Education Chancellor John Cavanaugh after he received eight anonymous complaints about university spending and a critical letter signed by several people, including state Rep. William Adolph Jr., R-Delaware County, an accountant and chairman of the House appropriations committee. Adolph did not return calls seeking comment.

Cavanaugh, who oversees the 14 state universities, outlined what led to the audit in a letter to state Rep. Pete Daley, D-California, a graduate of the school and a member of its board of trustees.

Neither California University spokeswoman Christine Kindl nor state system spokesman Kenn Marshall would comment about the specifics of the audit, but Marshall said it is not a routine review.

"This is a special situation," Marshall said.

Daley said he's concerned the state-of-the-art center, with its 80-foot tower displaying text messages and images, has saddled the school with more debt than it can handle. He said he welcomes the state review.

"I hope it's not a perfect storm," Daley said. " They come up with these (building) ideas and then the budget comes apart."

The 142,000-square-foot center, visible from almost any point on campus, received a $19.1 million grant from the state system, Marshall said. In 2009, the system financed $23 million through a bond issue, he said. The center also received a $1.5 million in grants from the Washington County Industrial Development Authority and the state's Redevelopment Assistance Capital Program.

Marshall said the university pledged $12.3 million toward the center but came up $10 million short. Last year, the state system financed $15 million more so the project could be completed, Marshall added.

"At that point, the project was well under way," he said.

Robert Thorn, vice president of finance and administration at the school, said the additional $15 million was needed "due to a funding shortfall and additional enhancements to the facility." After construction began, the school authorized a series of design changes totaling more than $6 million that included installation of a movable floor to convert the facility from an athletic venue to a conference center, Thorn said.

He said the changes were aimed at increasing revenue at the site.

Marshall said the university, not the state system, is responsible for the debt incurred to date.

Kindl said debt payments -- totaling $2.55 million a year -- are made from the school's general operating budget and funds specifically earmarked for academic programs, a practice Marshall said is permitted by the state system.

Kindl said the school expects the center's $1.1 million annual operating costs "will be paid by revenue generated by events booked at the facility."

But since it opened in December, only $11,400 in revenue has been raised by 17 events at the center, according to university records.

Total attendance at nine basketball games was only 3,100, records indicate.

?

An exhibition titled "Leonardo da Vinci Machines in Motion" is expected to attract more than 20,000 people before it closes May 6, Kindl said. But because the event is free, the university will not generate any revenue from it. The exhibit consists of 40 replicas of machines designed by da Vinci.

Daley said he worries unchecked spending could jeopardize the school's future.

"We don't have deep financial alumni pockets to dig into," he said.

In 2005, a university-backed study recommended building a smaller center with arena seating for 3,500, but officials decided to build a larger center holding 6,000 spectators, according to records.

Kindl said initial bids for the project were lower than expected.

"In other words, it was possible to get more for our money," she said, explaining why the larger facility was constructed.

Dr. Michael Slavin, president of the California Chapter of the Association of State College and University Faculties, said construction projects such as the convocation center are being funded at the expense of students and faculty at the school with 7,400 undergraduate and 2,000 graduate students.

"I'm tired of academics paying the bills," Slavin said.

Slavin said that at the same time the campus is expanding, enrollment is down 2.7 percent at the school where tuition, room and board and fees run about $23,000 a year.

"That's a lot of money the university is losing out on," Slavin said.

Students' feelings about the convocation center are mixed.

Rachel Hull, 20, of Seven Springs said she was eligible last semester to receive one-on-one voice lessons as part of her music minor, but those classes were closed to all except music majors for the spring semester.

"We got the convocation and all the fancy stuff, but funding for music is getting cut. I was told funding was being redirected to the convocation center," Hull said.

But Alexandra Brooks, vice president of the Student Government Executive Board, said she's not heard any student concerns regarding the center.

"It's going to bring a lot of attention to the university," she said.

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