LONG BEACH – Questions stemming from public expenditures on a multimillion-dollar computer system have prompted California State University officials to adopt new ethics rules.

Trustees of the 410,000-student raised the bar yesterday on conflict-of-interest regulations after a state audit found more than $200 million in cost overruns, multimillion-dollar contracts awarded with no bids and university managers with financial ties to software companies that won the contracts.

The computer project, initially a $445 million deal, involves installation of a common software system by Pleasanton-based PeopleSoft at CSU's 23 campuses. The project is designed to coordinate personnel information and handle student records.

Last spring, after a yearlong investigation, state auditors released a report on the project that questioned how CSU officials embarked on a multimillion-dollar venture without a feasibility study or business plan. The audit prompted some lawmakers to request a criminal investigation into allegations raised in the findings.

A legislative oversight committee characterized CSU officials as arrogant. The committee said the computer system won't be fully installed until 2006 and will cost $662 million.

Lt. Gov. Cruz Bustamante queried CSU officials yesterday about the new policies and whether they will cover conflicts that were alleged by state auditors.

"My concern was that when you hire highly trained employees to do a job, and they have outside work, which is their right, when you turn around and need them, they have to recuse themselves," Bustamante said after the meeting.

CSU Chancellor Charles Reed said the university system will seek legislation to codify the ethics rules.

CSU administrators have defended their performance on the new computer system, claiming the price of the system is $445 million, not the higher figure cited by investigators, and that the audit's estimated cost mistakenly included maintenance, operations and upgrades. However, officials have noted that they have been cooperating with the auditors' mandates – including upgrading the university system's ethics policy.

CSU spokeswoman Colleen Bentley-Adler said trustees' vote to expand the conflict-of-interest rules was routine.

CSU has had an ethics policy for decades and by law must update it. Yesterday's updating included expanding the number of employees who must comply with financial disclosure rules, which vary by campus, and which of the 17 categories of disclosure they must comply with.

San Diego State University, for example, will require disclosure from 77 employees ranging from the president to associate librarian and head coaches.

At Cal State San Marcos, financial disclosure will be required from 91 employees, ranging from the president to the director of student health services to university police officials.

In addition, designated employees will be required to take training on conflict-of-interest rules.

Tightening ethics rules was one of 30 requirements made by state auditors. CSU officials have until mid-March to implement the auditors' recommendations.