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Audit ordered of excessive reserves at selected California Community Colleges
Summary
Senator Bob Archuleta won committee approval for an audit to examine unusually large unrestricted reserve balances at a cross‑section of community college districts and Calbright College, and to evaluate whether reserves are affecting student services and equity.
Senator Bob Archuleta asked the Joint Legislative Audit Committee to review the growth of unrestricted reserves at California Community Colleges and to audit five districts plus Calbright College to assess whether unusually high reserve balances are diverting funds from students and instruction.
Why it matters: Archuleta and faculty unions said reserves rose sharply after the 2018 funding formula change and subsequent pandemic relief, leaving some districts with reserves well above recommended levels while programs and jobs were constrained. Faculty witnesses said the statewide average reserve was about 37% of general fund operating expenditures, above the academic guidance of roughly two months (about 16.7%).
Audit scope: State Auditor Grama Parks described proposed objectives to measure reserve growth from fiscal year 2018‑19 through 2025‑26, determine reasons districts hold higher balances than chancellor’s office guidance, evaluate the chancellor’s office oversight role, and assess effects of high reserves on students and staff. Parks estimated about 2,600 audit hours.
Support and concerns: Sarah Thompson (Faculty Association of California Community Colleges) and Kaye Purnell‑Trishner (California Community College Independents) urged the audit and asked that Calbright not be exempted. The Chancellor’s Office did not oppose an audit but asked the committee to consider the legitimate reasons districts hold higher reserves (disaster risk, volatile revenue sources, potential deferrals) and to account for receivables that are not cash.
Committee action: After questions about methodology and district selection, the committee voted to approve the audit request. Parks said his office will select districts for geographic diversity and size and will coordinate to avoid impairing accreditation or duplicating other official reviews.
