North Texas Daily

State audit recommends school repay $75.6 million

State audit recommends school repay $75.6 million

September 25
20:15 2014

Joshua Knopp / News Editor

After an internal UNT audit discovered about $83.5 million had been taken from the state inappropriately over the past 10 years, the State Auditor’s Office recommended today that the school be charged $75.6 million over the next 10 years.

However, UNT president Neal Smatresk said that closer investigation into the 2013 and 2014 fiscal years reveal that UNT’s initial estimate may have been too high.

The inappropriate withdrawals were announced in April as part of an ongoing investigation into university finances after they began investigating irregularities in February. Three top financial officials promptly resigned Feb. 19, the same day the school announced its plans to investigate itself.

The $83.5 million was made up of excess funds drawn for employee benefits and employee salary. Neither the university nor the state knew how they’d both missed so many inappropriate withdrawals for so long. Gov. Rick Perry ordered all public universities to look over their employee benefit systems last June in response to UNT’s revelations.

Smatresk said the numbers were estimates, and it now looks as though the practice ended two years earlier than they had initially thought. The audit had first reported that UNT drew $1.2 million and $737,187 more than it should have in fiscal years 2013 and 2014, respectively, but it appears now that may not be the case.

Smatresk said looking further back in time is impractical because of the amount of work the financial office is already doing and because of the poor accounting methods from earlier years.

At the same time, the practice may have begun a much longer time ago than 2004. According to the Auditor’s report, interviews with former employees revealed that the school may have been drawing more from the state than it was entitled to since the 1970s.

The State Auditor’s Office came to the $75.6 million figure on the assumption that UNT’s initial $83.5 figure was accurate. Essentially, the office took the initial figure and subtracted $7.9 million that may have been counted twice during calculations.

Auditors also highlighted state offices that were supposed to catch these errors, such as the State Comptroller’s Office and the auditors themselves.

System chancellor Lee Jackson is in ongoing negotiations with the state to reach a final number for the school to pay back. He was unavailable for comment, but confirmed for the Fort Worth Star-Telegram that the report’s findings were accurate. He said he expects the repayment amount to drop further as UNT’s financial picture continues to clear, but did not want to speculate on the final payment amount.

Smatresk said he does not think the university will have to pay any punitive damages and will only have to repay what was inappropriately taken, not only because the state also didn’t catch the errors in question but also because the money was spent in the service of the state regardless.

“From the moment we knew about this, people moved to stop the practice, and from the moment I knew bout this, we moved to take very strong corrective action,” Smatresk said. “We feel like we’ve taken a very strong proactive stance. We’ve investigated ourselves. We’ve taken corrective action that was appropriate.”

NTDaily TV Calah Kelly reports:

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