Audit finds UCA cash converted, other woes

BY DEBRA HALE-SHELTON ARKANSAS DEMOCRAT-GAZETTE

A University of Central Arkansas vice president lost his job Friday after a state audit said that the university and the school’s primary advertising agency “appear to have converted public funds to private funds” as part of an effort to pay a football coach above the state salary cap.
After seeing the audit, Interim UCA President Tom Courtway eliminated the job of Joe Darling, a former senior vice president who recently had become vice president for enrollment management, UCA sources said.
The Arkansas Legislative Audit Division’s finding concerning the money conversion is one of seven the agency will refer to the prosecuting attorney for review, said Tim Jones, the division’s field audit supervisor.
“Some of these have to go by law to the prosecuting attorney,” Jones said.
The prosecutor then determines whether to take any action.
But first, the division will give the audit to a legislative committee next Friday.
The audit also found legal problems with $400,000 in bonuses paid to former President Lu Hardin, questioned the legality of parts of his nearly $1 million buyout and faulted the university for paying a business $139,000 to redesign its Web site without getting the state to review the plan.
Other findings ranged from a line of credit that didn’t have state approval to a former employee whose company benefited from her ties to UCA.
The sources, who spoke on condition of anonymity, said Courtway eliminated Darling’s job after seeing the audit and after another problem surfaced earlier this week. On Thursday, Courtway issued a statement saying UCA would honor academic-scholarship offers sent to prospective students despite recent letters Darling had sent to about 425 people to the contrary.
According to the 66-page audit released Friday, UCA had an employment agreement with its head football coach to compensate him annually for participation in a television program about UCA’s football team. He was to get $32,500, $25,000 and $25,000 for the 2007, 2006 and 2005 football seasons, respectively, the audit says. The problem was that those payments would have put his salary above the state’s salary cap for that position.
So, the private, nonprofit UCA Foundation Inc. agreed to pay the amounts by reimbursing the university, but UCA’s Internal Audit Office later discovered that UCA’s Athletic Department had billed the advertising agency the identical amounts for a football show “sponsorship.”
“Darling was in charge of the Vendor account and these sponsorship amounts corresponded with amounts Coach received for the television show,” the audit says.
The audit does not identify the coach or the agency. However, Clint Conque was head football coach during that time and remains so. Combs & Co. of Little Rock was UCA’s main advertising and marketing agency during that time as well.
“The Vendor paid the Purple Circle (part of the Foundation) in 2005 and 2006 and the Athletic Department in 2007 for amounts invoiced by the Athletic Department and simultaneously invoiced the University the same amounts to recoup payments to the Purple Circle and the Athletic Department,” the audit says.
“The Vendor invoices were submitted to the University for payment and coded as advertising expense. ... The university, using public funds, paid the Vendor. The University and the Vendor appear to have converted public funds to private funds, which the Foundation used to reimburse the University for contract amounts paid Coach for the television show.”
Darling did not return messages left Friday on his cell phone. Ben Combs, president and founder of Combs & Co., did not return messages left on his cell and work phones.
Hardin, who was UCA president from September 2002 until he tendered his resignation Aug. 28, 2008, also did not return a phone or e-mail request for comment. Courtway also did not return a call seeking comment.
In a written response that Courtway sent to Roger Norman, legislative auditor, on Thursday, Courtway said the UCA Foundation paid UCA $82,500 on April 16 “in full repayment of the sums identified in this Audit Finding.”
The response includes a brief comment by Darling in which he suggests “some revisions in the factual findings and/or the language” of that part of the audit report.
“UCA, as part of the University’s branding and marketing initiative, agreed to purchase sponsorships of the KATV/UCA Coaches Program. It was our determination that UCA’s branding messages within the show were a good advertising investment. As the audit report states, we paid invoices for two years to the UCA Foundation and one year to the Athletic Department ... per invoices given to us. ...
“We paid the sponsorship invoices as presented and had no subsequent knowledge or participation in the distribution of the sponsorship revenues,” Darling added.
The audit began as a routine, annual review of the university. Among the other findings, with notations when, according to Jones, the matter will be forwarded to the prosecutor for review:
“Due to a lack of management oversight, University financial statements were not completed until November 13, 2008, causing a delay in the audit process. A similar finding was reported in the 2007 audit.”
Hardin, while still president, got $300,000 and $100,000 bonuses from the university, putting his salary over the state cap. Hardin repaid the larger bonus, and a trustee covered the $100,000 payment. UCA also recouped withholdings. The report also notes that Hardin “provided the Board [of trustees] an unsigned document purportedly from three vice presidents supporting a $300,000 bonus in 2008,” though they later said they were unaware of the document. This matter will go to the prosecutor.
The audit questions whether the paid sabbatical and the healthinsurance premiums the board gave Hardin as part of a nearly $1 million buyout agreement “are supported by mutual consideration and/or constitute a gratuity. Further, Mr. Hardin’s sabbatical conflicts with University policy which requires employees granted a sabbatical return to work” afterward. The audit also refers to payments made to three other former employees who resigned “for services not performed” between Jan. 19, 2007, and June 30, 2009. This matter will go to the prosecutor.
In 2007, UCA accepted a $49,000 bid from a business to complete the first phase of redesigning the university’s Web site. UCA later contracted with it again to complete the second phase for $84,240 without obtaining legislative approval for technical contracts exceeding $100,000. UCA also paid $5,760 to the business in October 2008, meaning the total redesign cost was $139,000. Although the audit does not identify the business, it was Maumellebased Softwyre Inc. This matter will go to the prosecutor.
UCA’s advancing The Oxford American literary magazine a total of $700,000 since 2004 appears to conflict with Arkansas Constitution provisions, which say that the state should not pay the debt or liability of any corporation and that a corporation’s debt to the state should never be released. “As of report date, the University has not received any payment,” the audit says. This matter will go to the prosecutor.
Courtway’s response said in part that Warwick Sabin, an associate vice president at UCA, has taken over as magazine publisher and “is raising private funds to continue operations and pay back sums to the University.” Courtway also said UCA “is merely providing operating capital for an entity which enhances the prestige of the University and the learning of its students.”
UCA hired an executive director and a managing director for the Strategic Growth Institute, which it created in 2007. Three contracts were executed on UCA’s behalf between the executive director’s own Georgia-based company and other entities. This was in apparent conflict with a law that prohibits state employees from using their positions to get privileges unavailable to others. Further, the two former employees, who are not identified, were paid more than state law allows. This matter will go to the prosecutor.
UCA awarded special presidential scholarships without specific criteria totaling $577,171, which exceeded the budgeted amount by $225,574. (The board recently agreed to halt the no-criteria discretionary scholarships after this semester.)
UCA borrowed from a line of credit in fiscal 2007 without getting state approval and without paying the money back on time as state law requires. UCA borrowed more the next fiscal year. “However, as of report date there was not a loan balance,” the audit says.
UCA’s Internal Audit Office investigated cash shortages of $1,000 from a cashier’s drawer during fall registration Aug. 20, 2008, and $2,000 from a cashier’s drawer on Aug. 22, 2007. Neither that office nor the UCA Police Department were able to determine who was responsible for the missing cash. This matter is to go to the prosecutor.
Some of the audit’s findings, including details of Hardin’s buyout and bonuses, have been previously reported. His resignation followed two months of contention over the $300,000 bonus and other issues, including the memo he wrote supporting that payment.
Other issues arose after Hardin’s departure.
In November, UCA confirmed that Courtway had placed Barbara Anderson, executive vice president, on paid leave until the end of the year, when her job would be eliminated.
The move came about one month after Jim Purcell, director of the Arkansas Department of Higher Education, accused Hardin and Anderson of having misled him when he asked them whether UCA had borrowed money on a line of credit. Purcell said UCA had broken the law when it borrowed money the past three years without getting state approval.

Over $300,000 for an ill-advised photo op? Are we sure we want the government providing health care?

More American Workers Outsourcing Own Jobs Overseas

Treasury Department Issues Emergency Recall Of All US Dollars

Why doesn't the media call for the heads of drunk drivers like tougher gun laws? One valuable lesson I’ll take from a statistics course here at the Center of Learning was “statistics don’t lie, but statisticians do.” Suicides accounted for 55 percent of the nation's nearly 31,000 firearm deaths in 2005. There was nothing unique about that year -- gun-related suicides have outnumbered firearm homicides and accidents for 20 of the last 25 years. In 2005, homicides accounted for 40 percent of gun deaths. Accidents accounted for 3 percent. The remaining 2 percent included legal killings, such as when police do the shooting, and cases that involve undetermined intent.

Now for the simple arithmetic 31,000 fireman related deaths * 40% fireman homicides + 3% accidents = 13,330

16,885 people who died in alcohol-related crashes, 14,539 (86%) were killed in crashes where at least one driver or nonoccupant had a BAC of .08 or higher.

I’m not calling for the prohibition of the 1920’s, but where is our protection from drunk drivers? Why aren’t drunk drivers treated like those who carry guns with malicious intent? Drunk drivers are not innocent. We need to quit coddling them. They need to take responsibility for their actions.

13,330<16,885
Which is the greater evil?

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

March 19 (Bloomberg) -- Wal-Mart Stores Inc., the world’s largest retailer, plans to award $2 billion in extra compensation to about 1 million U.S. hourly workers this year after sales jumped in the recession (average of $2,000 per worker). The Arkansas-based retailer is benefiting from record sales in the fourth quarter that boosted annual revenue by 7.2% to $401 billion.

The amount of the bonuses, profit sharing, discounts and 401(k) and stock-plan contributions being given to employees compares with the $1.8 billion Wal-Mart distributed last year. Payments to employees include $933.6 million in bonuses today.

HT: Russ Roberts , who points out that "This is how capitalism once worked. Successful companies rewarded their employees and lousy companies disappeared."

According to the UCA Echo, in a recent meeting of the UCA board of trustees, trustee Rush Harding explained that the money for the buyout of past UCA president Lu Hardin's contract will come from existing, unrestricted monetary gifts to the foundation and other money given specifically for this purpose. There is not enough money yet but Harding was quoted saying, "We're going to have to find some folks in short order who believe in the university and the university's future..."

Really? I guess you're right, what better way to look to the future than pay off the old president another half million dollars after he resigned because he was publicly called out for forging a letter to the board.

In case you haven't heard: Lu Hardin resigned for "health reasons" after it was found that he had forged a letter to the Board of Trustees recommending that the board award him his $300,000 bonus early and without public disclosure.