The Fresno State Athletic Corporation became the second non-profit auxiliary organization at the university this year to be ripped in an audit by the California State University chancellor’s office, which uncovered significant budget issues including recurring deficits as well as poor oversight and inadequate compliance with relevant policies.

It leaned into one overriding question: Should the Athletic Corporation, which supports the university’s athletics department and administers its $56 million budget, even exist?

Fresno State is the only CSU campus that operates athletics through an auxiliary organization. That reality, the CSU concluded, introduces additional complexities in governance, financial management and oversight, including the need for a standalone governing board and committees and separate policies and procedures.

“Based on our review, we were unable to identify a clear operational, financial or governance benefit associated with administering athletics through an auxiliary organization,” the CSU states, in its 32-page report that was released Monday.

In addition, the rationale for establishing the Athletic Corporation is unclear, according to the CSU, and it is unclear whether that rationale even remains applicable.

The non-profit was incorporated in 1982 to meet needs and regulations related to athletics programs at the university. It is supported primarily by service fees, contributions and game revenues. It has an elected board of directors, which includes university administrators, up to four community members and up to two student-athletes. The university’s chief financial officer serves as corporation board chair, and the university’s vice president for student affairs serves as the vice chair.

The CSU in its audit identified 45 recommendations, in areas ranging from organizational structure to financial sustainability and budget oversight, governance and internal control processes, sports camp administration and team travel. The university concurred with each recommendation, and corrective actions were started during the audit.

“We take the audit findings seriously and view them as an opportunity to strengthen Fresno State athletics,” said athletic director Garrett Klassy, who inherited the Athletic Corporation and its issues, as did his immediate predecessors. “Some of the findings involve longstanding Athletic Corporation and university administrative structures, while others identify areas where our policies, financial controls and operations need to improve.”

Significant unaddressed budget deficits

The Athletic Corporation has been running significant recurring deficits and has relied on external funding sources including the university to sustain operations, which may not be fully aligned with CSU policy for auxiliary organizations. It has reported operating losses the past three years of $11.1 million in 2022-23, $8.7 million in 2023-24 and $16.5 million in 2024-25.

Its budget management, seldom based in the reality of college athletics, has been the bane of athletics officials for years.

According to the review, athletics budgets historically have not aligned with actual spending patterns. Operating expenses in the 2023-24 and 2024-25 fiscal years exceeded budgets by 11% and 5%, respectively, indicating that budgets were developed based on unrealistic cost expectations. This, according to the CSU, was partly because sports operations budgets including team travel, meals, and uniforms and equipment were reduced to meet financial targets.

“But a plan to achieve those reductions was not developed, leading to ad-hoc adjustments and a reliance on transfers from the university and the BDF (Bulldog Foundation) to absorb higher-than-expected expenditures,” the CSU report states.

Initial Athletic Corporation budgets also included planned operating deficits of $1.4 million in 2023-24 and $3.8 million 2024-25, without clearly identified funding sources to support the shortfalls. A 2025-26 budget was presented as balanced and was approved, but it included a $4 million provision for university gap funding without an identified funding source.

As a result, the CSU concluded, athletics budgets have not consistently represented a financially sustainable plan at the start of the fiscal year.

A reserve fund to support athletics operations was never established by the Athletic Corporation or by the university, increasing its reliance on ad-hoc funding.

The CSU focused its audit on procedures that were in effect from Jan. 1, 2024 through March 27, 2026.

Not the first scathing review for a university auxiliary

Former vice president of administration and chief financial officer Deborah Adishian-Astone was chair of the Athletic Corporation in January 2024. She left the university at the end of that year. Adishian-Astone also served as executive director of the Fresno State Foundation, which is digging out from under a highly-critical advisory review by the CSU that was completed in January.

The foundation, which manages $315 million in donations and grants for the university, is addressing 46 areas in need of remediation, identified in the review by the CSU chancellor’s office.

As a result of the review and other factors, multiple foundation board members were not invited back at the end of their terms by the university president, including 30-year board member and chair Vinci Ricchiuti. Others chose to resign. New board leadership was established with the task of implementing the CSU-recommended reforms.

The Athletic Corporation review was conducted in accordance with the fiscal year 2025-26 audit plan, as approved by the CSU board of trustees. Among its objectives were to confirm compliance with regulatory requirements for the establishment of auxiliary organizations and to ensure compliance with relevant federal and state regulations.

It noted concerns with personnel structure, with Athletic Corporation and BDF personnel reporting to university personnel, an arrangement that may not be consistent with governance and legal expectations for separate entities, according to the CSU report. It also can blur accountability and oversight, the report noted. The audit also identified weaknesses in governance and internal control processes, including conflict-of-interest reporting and core financial processes. The issues indicate gaps in oversight and inconsistent application of policies and procedures, according to the report.

“We had already begun a comprehensive update of our policies and procedures before the audit and that work, along with the other corrective actions outlined in the report, is moving forward,” Klassy said. “Our focus now is on accountability, implementing those recommendations and building stronger systems for the future.”

Klassy, in his third year as AD, just signed a five-year deal worth at least $2.9 million that also has making strides in budget efficiency, among other goals, as part of his bonus structure.

Based on the results of the audit, the governance, risk management and control processes for the Athletic Corporation “were unlikely to provide reasonable assurance that risks were being managed and objectives were met,” according to the CSU report.

The first recommendation from CSU Audit and Advisory Services: Reconsider whether operating athletics through a separate auxiliary organization remains the most appropriate governance model, given the operating challenges this arrangement creates and the fact that no other CSU campus utilizes this structure.

The university concurred. It will conduct a review of the structure of the Athletic Corporation and determine if it should continue to exist or be closed, with the athletics operation becoming another department of the campus operations.

The review will be completed by Sept. 25, according to the report.

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