Million dollar SRU budget discrepancy questioned

Jonathan Janasik, News Editor
February 20, 2014
Filed under News

In December, the Association of Pa. State College and University Faculties (ASPCUF) hired an accounting firm to check the State System of Higher Education’s (PASSHE) finances within seven schools including SRU and reported that PASSHE’s budgets were off by millions of dollars.

At the time, Pa. schools had been announcing plans to cut programs and retrench faculty members because of a large decrease in income. APSCUF hired the Boyer and Ritter accounting firm in order to organize a report about the status of PASSHE’s finances.

“There appears to be minimal accountability for budgeting at the University level with the PASSHE Board of Governors,” the report stated

After the report was finished, APSCUF announced the findings on their website’s blog.

“In every case, the accounting firm discovered that the university created affiliated entities or used foundations to take on debt for new construction. In many cases, the affiliated entities are taking on debt to pay for new dormitories and other lavish construction,” the APSCUF blog post stated.

APSCUF president Steve Hicks also commented on the findings of the report within the blog post.

“The universities and the State System must be good stewards of the public dollar,” Hicks explained. “Instead, their poor budgetary decisions are forcing students to double pay because universities are using both their tuition dollars and their fees to pay off debt on buildings. Our students, their families and the public deserve to know how their money is actually being spent.”

SRU president spoke out against the financial report in the Council of Trustees meeting shortly after it was released.

“I truly think it’s important to state publicly that PASSHE and Slippery Rock University found that the report contained errors, some misinterpretations, and should not be construed as a financial audit of our institution,” Norton said.

SRU Interim Vice President for Finance and Administration Molly Mercer noticed specific problems that the report had.

“I read the report and I have a number of concerns about it,” Mercer said. “The primary concerns I have boil down to two main points. The first was that the report was characterized as an audit, and it was not an audit. There was also a real lack of our budgeting process and that came through in statements and conclusions that were in the report that without having that understanding, were just inaccurate.”

Another problem that Mercer had with the report was that she believed that there were statements in the APSCUF blog post that did not come from information from the report.

According to Mercer, Boyer and Ritter only used about 12 consistent documents that they could get consistently from each university, where an audit would follow generally accepted auditing standards meaning that the company doing the audit would have full access to all books, records, processes, and policies within an organization.

“They didn’t have any of that, they were essentially reviewing a few documents without all of the context,” Mercer stated. “As a result, they were only able to draw certain conclusions because the only data that they had access to.”

Mercer explained that over the course of last year, the university’s administration frequently met with SRU APSCUF members and shared over 80 reports in order to answer questions about SRU’s financial situation.

Boyer and Ritter compared the budget request document to the actual financial results of SRU in a given year, Mercer said. The budget request document is prepared 10 to 12 months before the fiscal year starts, and it is used as a tool to begin to project what circumstances look like. At the point in time where the budget request is written, administration has no idea how many students will be enrolled next year because they don’t usually have the numbers for the current year’s enrollment at that point.

“Given the timing where it is prepared, there will naturally be discrepancies,” Mercer said. “It would have been more meaningful if Boyer and Ritter would have taken our actual budget that the Counsel of Trustees approved and compared that to our actual results.”

Although the Boyer and Ritter report was not an audit, Mercer explained that SRU is audited often.

“The university goes through an audit every single year,” Mercer said. “Our books are audited by an independent accounting firm and for decades we’ve had clean audits, no findings, we’ve had no management comments or recommendations to improve accounting practices.”’

Mercer stated that SRU administration has taken the budgeting process seriously and have been working hard to prevent given that Pa. schools have received flat funding for the past two years and has been proposed for next year as well.

Dr. Patrick Burkhart, President of the SRU chapter of APSCUF stated he had no comment because he had not heard of any criticism of the report.

Representatives from Boyer and Ritter and APSCUF were not available for comment.

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