New Castle News

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March 5, 2014

SRU addresses alleged audit discrepancy

NEW CASTLE — As Slippery Rock University officials continue to tackle budget issues that include a potential deficit of up to $10 million, they’re also addressing concerns that a recent audit alleges a $1 million discrepancy.

The Association of Pennsylvania State College and University Faculties, which represents more than 6,000 faculty members and coaches at Pennsylvania’s 14 state-owned universities, commissioned an audit of seven of those schools that had claimed they need to lay off faculty members to balance their budgets: Cheyney, Clarion, East Stroudsburg, Edinboro, Kutztown, Mansfield and Slippery Rock.

The audit, which was done by the Harrisburg firm of Boyer and Ritter, indicates that each university created affiliated entities or used foundations to take on debt for new construction, “misleading the public about their financial difficulties,” according to the report on the faculty association’s website.

SRU President Dr. Cheryl Norton touched on the issue during her latest meeting with the council of trustees Dec. 13, saying the Pennsylvania State System of Higher Education and school officials found the audit contained errors and misinterpretations and shouldn’t be considered a financial audit for the university.

“In light of these workforce decisions, I want to be very clear that the budget situation we are facing is structural, multi-year and in no way the result of mismanagement of state resources as was alleged by a recent APSCUF-commissioned report,” she said in her report to the trustees.

The faculty organization’s report goes on to say it is troubled by the audit’s findings, and that the universities and the state system are mismanaging public funds.

“Every university is using a scheme to transfer debt to ‘component units,’ including the university foundations and student housing associations.

“Money that the public believes is dedicated to academics is instead going to these affiliates to pay for buildings,” said Dr. Steve Hicks, president of the Association of Pennsylvania State College and University Faculties.

The audit also claims that tuition, fees and state support funds are being transferred to those entities, directly and indirectly, and in many cases, the affiliated entities are taking on debt to pay for new dorms and “other, lavish construction.”

The “poor budgetary decisions” of the universities and Pennsylvania State System of Higher Education mean students pay double what they should, Hicks said in the report.

“Our students, their families, and the public deserve to know how their money is actually being spent.”

The audit concluded that there is a lack of oversight in the state system’s budgeting practices as well as a lack of quality budgeting.

The Association of Pennsylvania State College and University Faculties also commissioned Boyer and Ritter to examine the finances of the seven other state-owned universities.

Norton’s report to the trustees also said SRU officials are good servants of public resources, a fact confirmed by the university’s audit done by Clifton, Larson and Allen; their report highlighted a clean opinion of SRU’s finances and internal controls, she said.

In related budget issues, SRU is facing challenges that include declining enrollment, level state funding, increased personnel costs, rising operational costs and potential minimal tuition increases.

Norton also said the university is addressing the possible $10 million deficit as it looks ahead to 2015 through “strategic reductions in the workforce, cuts in operating budgets and increasing revenue opportunities.”

Some furloughs and/or changes in work assignments from 12- to 10-month contracts are expected, she said.

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