$70,000 Taken From Students in CSUN Error

NORTHRIDGE — Cal State Northridge officials mistakenly took nearly $70,000 in 1996 state income tax refunds that were owed to more than 700 students, university officials have acknowledged. CSUN claimed the money to collect alleged student debts--even though the students owed nothing.

The tally could climb much higher after the state completes all of its income tax returns. And despite learning of the problem four months ago through student complaints, no effort was made to halt the diversion of income tax refunds until inquiries were made by The Times.

CSUN Interim Controller Robert J. Kiddoo said the names of hundreds of students were reported to the state Franchise Tax Board by mistake, the result of either human error or computer software problems. The school has returned $69,823.55 to students, he said.

Campus finance officials last week began efforts to halt the so-called tax refund offset, which is administered by the Franchise Tax Board.

The state controller is authorized to collect funds owed to state agencies such as CSUN by taking the money from tax refunds and California Lottery winnings. Last year, the state collected $44 million in unpaid debts from 403,000 income tax filings on behalf of 170 government agencies.

CSUN submitted its list of debtors to the state board on Dec. 1, 1996, said Stephanie Levy, manager of the CSUN Student Aid Office. The list consisted of 6,963 students, who allegedly owed a total of $3.2 million.

School officials say they do not know how many students were mistakenly labeled campus debtors. Kiddoo said the school must now check the entire list for errors.

Hundreds of remaining state income tax refunds to CSUN students are still being processed, state records show.

Kiddoo said campus workers were reluctant to retrieve the list from the state when they learned of the errors this past winter because they “didn’t want to cause a problem.” Also, they were uncertain whether the state would return the list, he said.

Computer programmers are still trying to figure out what happened, Kiddoo said.

But CSUN should have alerted state authorities as soon as they discovered the problem, said Jim Sheppard, spokesman for the Franchise Tax Board.

“We don’t want to be in the business of offsetting someone’s refund when a student doesn’t owe any money,” Sheppard said. “Any time an agency has a problem, they have to go through their accounting books and make corrections immediately. They have to correct their records and inform us.”

Most agencies, he said, have a policy of returning mistakenly diverted refunds within 48 hours.

“If the university was aware of the problem months ago, then that is when they should have notified us,” Sheppard said.

So far, the school has received 1,484 refunds owed to CSUN students, totaling $158,000, Kiddoo said. Of those refunds, 713 were mistakenly diverted and the money, $69,823.55, returned to students, he said. The remainder was actually owed for items such as tuition, rent and lab fees.

Ironically, the collection effort came as the result of a California State University audit published last year that called for reforms in the way CSUN handles its money. Auditors criticized Cal State Northridge for not collecting unpaid student debts through the income tax offset provision.

Kiddoo said now the school’s effort will likely cost more, to correct the snafu, than it will earn.

Students who said they had never missed a payment to the campus expressed anger at being reported as delinquent debtors to state income tax officials.

“It’s a shame that a university administration that prides itself in its business and accounting programs can’t handle its own books or take responsibility for its mistakes,” said Debi Berzon-Leitelt, a senior majoring in sociology. “I want the university to absolve me because it is not my fault. I feel like a highlighted deadbeat.”

The Sherman Oaks woman, who wants an apology from the school, only recently received her $95 refund after calling CSUN officials to complain. The first student complained to the school in late January, said Levy, manager of the Student Aid Office.

“It is just unbelievable that this could be done to you,” said Donna Martin, a sociology major. She received a letter from the Franchise Tax Board last month saying her $214 income tax refund had been forwarded to CSUN to cover her debt.

“I don’t owe the university a penny,” said Martin, 44.

Martin, who waited three weeks for a refund and an apology after calling the school, received her check June 7. “But there is no apology, no mention of interest for the money they have withheld in error,” Martin said.

The current disclosures represent the second incident of bookkeeping troubles at CSUN in recent months.

The Times earlier this year reported that the school, through lax record-keeping, had allowed $675,000 in unpaid debts to accumulate, mostly through outstanding travel and salary advances to employees. As of last month, the debt was reduced to less than $80,000.

In an effort to rectify the problem, the school wrote off $81,000 in alleged debts owed by current and past employees. A dozen current employees included on the list, which was made public by the state controller’s office, said they owed the school nothing.

CSUN President Blenda J. Wilson, after completing an investigation of the problem, acknowledged lax record-keeping and other past problems keeping track of state money. Art Elbert, CSUN’s vice president of administration and finance, later apologized to faculty members for the mistake.

In the case of the tax refunds, the school is writing to the Franchise Tax Board--but not to the students--apologizing for the error.

“For someone in the university to send a notice to the Franchise Tax Board, this is the government, saying that you owe money when you don’t, and then take away your tax refund is incredible,” Martin said. “I have an excellent credit. I resent my name and my husband’s name being smirched this way.”

State officials say they do not report alleged debts to any credit rating service or target the debtors for special audits. But Martin said the mistake has already caused embarrassment to her family because she and her husband filed a joint tax return.

“There is so much incompetence going on in this university,” Berzon-Leitelt said. “We are here to learn some skills to go on with our life. Here they don’t even know how to send their bills or balance their books.”

Levy said her office has been working diligently with students.

“When they bring it up, we refund them as soon as possible,” she said. “When there’s a problem, we apologize to the students. We write to them regarding the situation. We have sent letters to the students in several cases.”

The mistaken debt problem apparently began even before CSUN sent the list of alleged debtors to the state.

Berzon-Leitelt said she received a letter from the school in October saying she owed $264. When she told a campus official she did not owe any money, she was told to ignore the letter.

The university put her on the debtors list anyway, Berzon-Leitelt said.