In his annual report, auditor general Merwan Saher blames problems with the Campus Alberta plan on the Enterprise and Advanced Education Department.
"If there is one word, the word I would use is confusion," Saher said Tuesday.
"There isn't a clear structure for collaboration. There isn't a collective business plan for collaboration and there are no performance measures with targets to see if collaboration is working."
Saher said if the problems aren't fixed, the government will not fully achieve its goal of improving post-secondary education that costs $4.8 billion a year in taxpayer money.
His report recommends the department develop a business plan to clearly outline what it wants to achieve, how it will meet its goals, how much it will cost and where the money will come from.
The plan must include a way to measure the performance of Campus Alberta and the government should publicly release results and costs, Saher suggests.
Deputy premier Thomas Lukaszuk, who is also minister of advanced education, said his department has been working to make improvements since he took over the portfolio early this year.
Each school is to submit a three-year business plan and budget to the government by the end of the month, he said.
Each school is to sign off on Campus Alberta mandate letters sent out by the government by the end of September.
"Some of the processes need to be put in place and are being put in place," Lukaszuk said in an interview.
"I think you will see a great deal of satisfaction that the measures that have been put in place speak to the concerns he (Saher) found."
The province's budget for this fiscal year includes $147 million in funding cuts to colleges, universities and technical schools.
The auditor general also cited significant management problems at the Medicine Hat College of International Education. The program offers courses at campuses in other countries, including China, that allow foreign students to complete their studies in Medicine Hat.
The report said the college's president and board of governors failed to manage or recognize the risks of such a program. It noted people in the international division claimed more than $325,000 in travel expenses for the last three years without proper documentation.
Saher said the division operated independently and outside the college's management control — a situation that he described as "extraordinary."
"The result at the highest level is that the integrity of the college's academic credentials have been put at risk and in a nutshell board oversight of the division failed."
Last month, the board of governors of Medicine Hat College announced that Ralph Weeks was stepping down as president. No reason was given.
The auditor general's report is also critical how well the government has monitored an affordable housing project for people on low incomes. The project cost the province $1.1 billion over five years.
The report says the government did not fully document how it awarded project funding or ensure that money granted for the housing was used properly.
Saher said the province failed to show how the program affected demand for affordable housing or if the units are being used by people who need them.
"Many of the grant recipients we visited did not comply, in some aspect, with the grant agreement because they charged rental rates higher than allowed or had ineligible tenants living in affordable housing units," the report says.
Saher's report also said changes the government has made to its accounting practices will make it difficult to compare the budget this year with last year's numbers.
Alberta's opposition parties say the report's findings is more evidence that Premier Alison Redford's government isn't very good at managing, planning or budgeting.
"The latest auditor general's report shows that many Albertans have known for a long time, that the PC government, their ministers and the departments that operate beneath them are simply not doing their jobs properly," Smith said in a release.
New Democrat David Eggen said the problems in post-secondary education and affordable housing will not reassure people about how their taxes are being spent.
"We need clarity and honesty in the way we report on how our services are delivered, and I don't think we're getting that from this secretive PC government."
The Alberta Liberals say the auditor general's report shows the Redford government excels at only one thing — "causing confusion."
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