Auditor Says UNT Should Pay State Back $75.6 Million | KERA News

Auditor Says UNT Should Pay State Back $75.6 Million

Sep 25, 2014

According to a state auditor's report released today, the University of North Texas should be required to pay the state at least $75.6 million over the next 10 years as repayment for state funding it should not have received.

The university was able to receive extra funding, according to the report, by manipulating payroll expenditures and using state funds to pay employees whose positions were not eligible for state funding. 

"This report is accurate and it confirms what we presented at the state auditor and other state officials starting in February," University of North Texas System Chancellor Lee Jackson told The Texas Tribune. "This report has, after interviews with current and former finance administrators in Denton, confirmed the practices that we discovered and thought were inappropriate."

Documents examined by the state auditor's office found that these accounting practices, which the report describes as "not appropriate" and "not a typical practice at other higher education institutions," have been occurring since at least 2000. 

"Auditors were unable to determine precisely when the practice began or its original intent," the report said. Based on the investigators' interviews with former employees, it was determined that it may have begun as far back as the 1970s.

"Auditors did not identify any attempt by the university to conceal its activities or transactions," the report said. "However, university senior managers with fiscal responsibility should have known, or did know, that the university consistently exceeded its legislative appropriations."

The auditor's recommendation to require the university to repay at least $75.6 million was sent to the members of the Legislative Audit Committee earlier this week. It will be up to lawmakers in the coming legislative session to determine how to handle the information.

UNT President Neal Smatresk, who took his position in February, issued a statement responding to the report. "I believe Texas state officials will seek a thoughtful, fair resolution to this matter," he said. "A fair resolution will ensure there’s no adverse impact on our students and our mission to help transform the state by providing an outstanding education here at UNT."

The UNT System is investigating the matter, and its investigation is ongoing. Jackson noted, "A number of senior official left their positions in the early spring in the wake of our investigations."

System officials and a consultant hired by the system previously determined that the university received $83,461,691 in excess state funding between 2004 and 2014.

Jackson said that, over the years, budget discussions at the university and system have been hampered by the "clumsiness" of their accounting systems, which are in the process of being updated. The auditors also noted that multiple state processes failed to prevent, detect or correct the flow of excess money to the university over the years.

"This finding makes it clear that the numbers are still settling, and we expect they’ll continue to settle as we reconcile our books," Smatresk told the Tribune. "That would be, in my opinion, a good and thoughtful way to approach this — to let everything settle, let our state officials take a good look at this, and hopefully the chancellor and others can figure out a good and fair way of dealing with the issue."

Jackson said corrected statements of the university's budgets for fiscal year 2013 are expected to be released in the coming weeks.

"This issue is clearly in the state’s control," Jackson said, "and whatever the state of Texas decides is fair and appropriate, we will cooperate with them on."

-- by Reeve Hamilton with The Texas Tribune.

This story was provided by The Texas Tribune.