How did a Sacramento State travel audit miss lavish spending at CapRadio? Nobody looked | Opinion
After a 2023 California State University system audit found Sacramento State’s Capital Public Radio in financial shambles and with “unexplained travel,” CSU months later conducted a review of executive travel on the campus and gave it a clean bill of health.
Even though CapRadio’s General Manager Jun Reina appears to have been the fourth-highest paid employee on campus at the time and CSU auditors had already unearthed travel problems at the station, they chose to ignore CapRadio entirely as they examined executive travel on campus.
It took all of five pages for system auditors to conclude that all was well at Sacramento State as far as complying with executive travel guidelines was concerned.
“There were no reportable observations revealed during the review,” Vlad Marinescu, vice chancellor and chief audit officer, wrote to Sacramento State President Luke Wood on April 12, 2024. “I wish to express my appreciation for the cooperation extended by the campus personnel over the course of this review.”
No actual travel expenses were detailed in the audit. On Jan. 21, The Bee requested all audited travel expenses via the California Public Records Act. A month later, the CSU has yet to provide any of the records.
This cannot be dismissed as anything other than an intentionally narrow audit and a worrisome breakdown of the watchdog role of CSU auditors under the leadership of Chancellor Mildred Garcia. It was the CSU Board of Trustees that approved an audit of Sacramento State executive travel as part of an annual audit plan.
These trustees are responsible for overseeing a vast system, including 23 campuses statewide serving about 450,000 students a year. How are Garcia and her auditing team serving the trustees and the public by ignoring a known problem on any campus, and in this case, Sacramento State?
A missed opportunity
Garcia and her team missed a crucial opportunity to understand how the university’s own system of financial controls completely broke down when it came to CapRadio. And the same holds true for Sacramento State’s own followup audit of CapRadio completed in 2024, which found more than $500,000 in questionable travel spending by Reina that included trips to Scotland, Dubai and Fiji.
Every step of the way, the university has not asked a single tough question about itself in these audits. Is that really serving students, faculty, the trustees and the taxpaying public?
Both Garcia and University President Luke Wood declined to comment directly on the audit.
The paper trail of problems began to unfold in September of 2023, with the first of three Sacramento State audits. This was the CSU system’s review of CapRadio.
“We found that administration of (CapRadio) the auxiliary required significant attention,” the audit said. “Procurement and accounts payable policies were incomplete,” the audit said, including “travel and hospitality expenditures.”
Then, just a few months later, the CSU would conduct an audit strictly on “executive travel and hospitality.”
According to CapRadio’s public tax form and a Bee review of university salaries, Reina was the fourth-highest paid executive on campus based on information known at the time of the audit. The top-paid employees in 2022 were former football coach Troy Taylor ($504,013), former president Robert Nelsen ($488,972), Athletics Director Mark Orr ($336,722) and then Reina ($253,080).
The audit, meanwhile, avoided Reina as it examined the top three highest-paid executives, as well as vice presidents and deans.
Why?
“When developing this scope, it was determined that the system-wide Executive Travel and Hospitality audit would be limited to state employees,” CSU spokesperson Amy Bentley-Smith said.
Basically, Reina escaped the scrutiny of system auditors because of a technicality. He was an employee of the radio station. He was not an employee of the university, which holds the radio station’s license.
But for the CSU, this is a distinction without a difference. CapRadio is Sacramento State, as an auxiliary organization of the university. System auditors already knew that Sacramento State had loaned the radio station more than $8 million in university funds to shore up its finances. It had already found travel spending irregularities at the radio station.
Yet CSU simply chose to look the other way. Not only that, the audit did not provide details of any travel expenses incurred by these executives for students and faculty to judge for themselves. Again, this is how the CSU does travel auditing.
“The intent of audit reports is to communicate the objectives, scope, conclusions and recommendations (if applicable) of the audit,” Bentley-Smith said. “This does not require a detailed listing of all expense information, nor is it standard practice in Audit and Advisory Services or in other internal audit organizations to include such information in routine assurance audit reports.”
Bentley-Smith also said that the CSU was aware at the time of its travel audit that Sacramento State was conducting its own financial review of the radio station. But when Sacramento State released its followup “forensic” audit last summer, it also did not examine how the university itself had failed to flag inappropriate travel spending for many years. And for months, the university withheld details of Reina’s travels as well, saying the spending was part of a law enforcement investigation. It was only after Sacramento Bee attorneys repeatedly requested the information that the university released it last month.
CapRadio wants its money back and has sued Reina for more than $370,000. Meanwhile, the question of how both the CSU and its campus in Sacramento managed to never detect lavish travel spending by Reina going back as far as 2017 hasn’t been answered.
Three audits, no tough questions for Sacramento State
Auditors on behalf of the CSU have had three chances to ask tough questions about the university’s cost controls, or lack thereof. And each time, they have not.
CapRadio still does not think it can pay all its bills for another two years as it works to stabilize its finances. Sac State is facing $45 million in cuts, roughly a 10% slashing of its budget, based on Gov. Gavin Newsom’s initial spending proposal for the next fiscal year.
In Garcia’s defense, this audit of executive travel was one of the first done on her watch as chancellor. A review of nine other CSU audits of executive travel during the last three years showed that they all lacked actual travel information and were dispensed with in just a handful of pages.
Lax financial oversight does not serve the CSU, the trustees or the public. This run of weak auditing at Sacramento State rightfully raises suspicions about a broader problem.
If audits don’t search for, find and correct university problems, why even bother in the first place?