Auditor Wants Texas College to Return $76M

     AUSTIN (CN) – The state auditor claims the University of North Texas should repay $75.6 million in state funding it got by manipulating payroll expenditures.
     In an investigative report released Thursday, Auditor John Keel recommended to the Legislature’s Audit Committee that the Denton-based school pay back the money over the next 10 years.
     Keel’s office investigated the school in response to a September 2012 anonymous complaint, and concluded that the school collected as much as $83.4 million too much from 2004 to 2014.
     The report claims the school manipulated payroll expenditures in the Uniform Statewide Accounting System after it exhausted its General Revenue Fund appropriations for salaries and wages.
     “Specifically, the University processed journal entries to reduce General Revenue expenditures for salaries and wages and offset those transactions by (1) using institutional funds to make cash deposits to the General Revenue Fund or (2) transferring expenditures to other accounts after the State had paid for benefits,” the report states.
     “The cash deposits the University made to the General Revenue Fund reimbursed the State for salary expenses but not for the state-funded benefits associated with those salary expenses. That practice violated the requirement that employee benefits be paid from the same source of funds as the salaries associated with those benefits.”
     Keel said the school has a “long-standing practice” of receiving such excess payments, that it may date as far back as the 1970s and “then became institutionalized over the years.”
     He claimed that personnel in UNT’s budget, accounting, purchasing and payment and payroll offices were involved in a “coordinated” effort to get the excess payments.
     “Those personnel tracked available appropriations, maintained spreadsheets to track cash refunds to the General Revenue Fund, determined which payroll accounts to credit, processed and approved transactions, and served as check signatories,” the report states. “The University’s budget office generally initiated the refund requests, which were approved by the vice president of finance and controller or the associate senior vice president for finance. Auditors did not identify any attempt by the University to conceal its activities or transactions. However, University senior managers with fiscal responsibility should have known, or did know, that the University consistently exceeded its legislative appropriations.”
     Keel did not spare state regulators for not catching the overpayments.
     He said Comptroller of Public Accounts Susan Combs’ appropriations control officers assigned to monitor UNT’s appropriations did not catch the problem. Keel said Combs told his office that the comptroller was in “the process of strengthening controls.”
     UNT System Chancellor Lee Jackson confirmed the report’s findings to Courthouse News. He said UNT reported the results of an internal investigation to Keel’s office this spring.
     “UNT had several senior finance leaders, who may have been well intended, but employed financial practices for a number of years that were clearly improper,” Jackson said. “We are working with state officials to achieve a fair solution to this matter – one that doesn’t harm future students and UNT’s mission to serve the region’s needs.”

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