CCSF dealt $38.9M blow from state as City Hall squabbles over free tuition funding

City College of San Francisco must return nearly $39 million to the state after an external report made public Friday concluded the college inappropriately accepted funds for thousands of students enrolled in online courses that failed to meet state standards.

The $38.9 million that CCSF has to pay back over the next decade means that the college’s financial outlook is even bleaker than previously thought.

CCSF administrators were already facing a separate $35 million loss in state funding next fiscal year and have begun to shrink the college despite wide-ranging concern from both students and faculty. Then last week, Mayor Ed Lee dealt the school another blow when he announced he would only partially fund an effort to make tuition free for all students.

“To now get hit with this bill is concerning and disheartening,” said Board of Trustees President Rafael Mandelman, who spent months promoting a November ballot measure meant to pay for free tuition and regrow the college. Instead, the mayor plans to spend much of the money on new homeless services.

The latest fiscal challenge for CCSF is the result of a practice that was discovered, self-reported and corrected in 2014, according to college officials.

While the institution’s problems were still boiling to the surface that spring, then-Vice Chancellor Susan Lamb was alerted that certain online courses were not keeping records of student participation up to state standards.

Instructors may have communicated assignment deadlines, course expectations and other information to students, but if they did the information was not recorded in the college’s online database. Therefore, CCSF cannot prove it served thousands of students between 2011 and 2014.

Lamb, now the college’s interim chancellor, said she reported the practice to then-Chancellor Art Tyler at the time and ceased the practice. But she did not know how much it would cost the college until the report came down last week.

“I think the college is strong enough to handle it,” Lamb said. “It’s a definite impact, but can we handle it.”

Lamb said she would not know if the college’s class schedule would need to be reduced further until discussing the issue with the Board of Trustees. Administrators already have a five-year plan to reduce class offerings by a quarter.

Administrators were able negotiate with the California Community College Chancellor’s Office to repay the funds over 10 years rather than five, according to Mandelman.

“If we paid this back in one year, it would totally wipe out any reserves that we have,” Lamb said.

In light of the accreditation crisis at CCSF, many of the institution’s problems have been blamed on the Accrediting Commission for Community and Junior Colleges. The college has lost a third of its students since 2012. But this is not one of those problems.

“This is from City College’s old dark days,” Mandelman said. “This is something that is not the ACCJC, this is City College.”

CCSF received state funds for more than 5,381.05 Full-Time Equivalent Students — a calculation that includes units earned by both full-time and part-time students enrolled in the classes — that it will have to repay. The report shows CCSF has no documentation of their participation in the courses, which the state requires to receive funding.

“It was not evident that students both participated and/or knew about the instructional activities and expectations of the courses,” the report reads.

Lamb said the practice was “inappropriate” but unintentional. “People just didn’t understand,” Lamb said.

The interim chancellor said there is now stronger oversight at CCSF to ensure the practice does not happen again. College officials have been working to correct a slew of problems identified by the ACCJC and state auditors in recent years.

The positive changes are evidenced in state reports over the years. In April, the state’s Fiscal Crisis and Management Assistance Team found that the college was adequately funding its retirement plans and had enough in its budget reserves — a departure from previous years.

CCSF has also prepared a large self-evaluation report for the ACCJC that is meant to show it meets all of the standards required to hold onto its accreditation. The ACCJC is currently reviewing the college’s accreditation and is expected to decide whether it will remain accredited by February.

“The very fact that we discovered this practice at the time and reported it shows the very fact that we are making a commitment to doing the right thing and putting the controls in place,” Lamb said.

As for the free CCSF proposal, the Board of Supervisors will review a budget supplemental to pay for $9 million worth of free tuition on Tuesday, even though the mayor said he will not spend all of the money on the college next fiscal year.