North Texas Daily

UNT could owe $83 million back to the state

UNT could owe $83 million back to the state

June 09
21:48 2014

Joshua Knopp / Senior Staff Writer

In the ongoing internal investigation into UNT’s finances, consulting firm Deloitte & Touche estimated that UNT could have received as much as $83.5 million more from Texas government than it should have over the past 10 years.

This discovery is part of a process that started in February after three top financial executives resigned for personal reasons on the same day that UNT announced it would be investigating irregularities in its budget. Soon after, the school hired Deloitte & Touche to perform the audit.

System chancellor Lee Jackson has said UNT’s financial problems were caused primarily by shoddy bookkeeping and inaccurate estimates of how much money was coming in.  UNT president Neal Smatresk had said in a letter to the university that administrative departments’ budgets are being cut by an average of 3 percent and academic departments by an average of 2 percent for the coming fiscal year. This was in light of April’s news that UNT had as much as $23 million less in the bank than officials had initially thought because of the same bookkeeping and budgetary practices.

Deloitte & Touche’s analysis found that, since the 2004 fiscal year, UNT has been receiving money from the state for employee benefits, and later, money for employee salaries, that they shouldn’t have been receiving. This practice peaked in 2011, when the university improperly received almost $16 million for employee benefits.

The university system still does not know how much, when or even if they will be required to pay this money back to the state, and neither the system nor the state knows how this went unnoticed for 10 years. On June 5, Gov. Rick Perry ordered all public universities to look into how their employee benefits are paid in light of UNT’s discovery.

The Board of Regents has been working to update their bookkeeping policy and technology since 2011, and their efforts have accelerated as the scope of the problem has become more and more clear. Jackson maintains that he does not think any embezzlement took place.

Smatresk was hired last December in part because of his experience as president of the University of Nevada at Las Vegas. During his time there, the school’s state funding was cut by $73 million over four years. He said nothing vital to education will be cut.

“We may drag our heels on replacing some people. We may not restock units that don’t have a clear educational use,” he said. “Most any organization can find a couple percent to trim one place or another.”

In previous interviews, Jackson said the bookkeeping problems were a matter of not writing everything down, or writing things down in the wrong place. For an organization of UNT’s size, with an annual budget of more than $500 million, every transaction needs to be documented and organized. Jackson said they were not.

The budgeting problems included overestimation, with financial executives making a budget that assumed they had more money than they did, both from the state and enrollment.

Both of these issues lead to frequent confusion over how much money UNT actually had and where it was coming from, a confusion which came to a head last November when a report that Willis Library could shut down caused an immediate, dramatic student response, even though it was primarily based on a miscommunication.

Since the audit started, the system has hired Janet Waldron as the new vice chancellor of finance and UNT has hired Bob Brown as the new vice president for finance, replacing Andrew Harris who was one of the three executives who resigned in February.

The audit will continue working to figure out how the errors went unnoticed for so long and who was at fault for making the errors in the first place.

Deloitte & Touche’s report of improperly received funds

Fiscal YearExcess funds received for employee benefitsExcess funds received for employee salary
2004$3,771,158.47

2005$3,932,879.69

2006$5,957,924.18

2007$7,355,312.10

2008$6,292,105.60

2009$11,995,455.56

2010$15,354,273.05

2011$15,952,248.61

2012$9,495,158.47$1,340,413.13
2013$323,563.87$954,009.76
2014$165,275.24$571,912.78
Total$80,595,354.85$2,866,335.67

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