More than $2 million was misspent by a Sonoma State social service training program, according to audit results released by the university.
Meanwhile, the state university system is launching its own investigation of the California Institute of Human Services, an academic department at Sonoma State.
The top two officials of the institute were placed on paid leave in February, and Sonoma State has announced plans to shut down the program.
SSU officials said they will have to come up with $2.1 million from the campus budget to cover improper expenditures identified in the audit.
"There will be an impact, but we will try to make it as limited as possible," said Larry Furukawa-Schlereth, the campus vice president for finance and administration.
The issues involve expenditures that cannot be billed to federal agencies that made grants to the institute, and payroll and expenses for which there were no identifiable sources of funding.
Furukawa-Schlereth said the CSU investigation will try to determine what went wrong and who is to blame.
Tony Apollini of Santa Rosa and George Triest of Sebastopol, the institute's top two officials, didn't return calls seeking comment.
Other managers for the 27-year-old institute said they never had an inkling of problems and were stunned by the university's decision to close the program.
"We are accustomed to audits happening all the time," said Linda Blong, a project manager. "Our understanding is the audits had been very positive. Our understanding is the CIHS had had a clean audit record."