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Education

FAMU's financial sorrows deepen

Trustees say the mismanagement could threaten the school's existence.

By DAVID KARP
Published February 26, 2005

The finances at Florida A&M University remain a mess more than a year after the school promised to put its books in order.

Interim president Castell Bryant told FAMU trustees Friday the school's financial picture looks "grim," "disappointing," even "frightening."

The mismanagement has grown so bad that it could threaten the historically black school's existence, trustees said. They worried that the federal government could cut off financial aid money. They wondered whether FAMU would have to drain its reserves to pay bills.

An accounting report by outside auditor KPMG has confirmed "our worst fears," said newly-elected trustee chairwoman Challis Lowe.

"Our financial systems are in disarray," she said.

Even after KPMG examined the school's records, the university was not able to account for how it spent millions of dollars in public money.

Officials know they are losing money on campus housing, but couldn't tell trustees whether they had lost $1.7-million or $4-million. FAMU's athletic department will spend $3.5-million more than it takes in this year, even though officials know it doesn't have the money.

"That is unconscionable," Lowe said.

FAMU athletic director Joseph Ramsey, who on Monday announced his resignation, said the department ran deficits because other officials didn't want to borrow money or cut sports programs.

"You spend money you don't have?" asked a flabbergasted W. George Allen, who was appointed to the board last week. "That's the best game in town."

KPMG's report shows that FAMU did not balance its books and often could not track how it spent money. The auditors suggested conducting a forensic review of FAMU's accounting procedures.

This fiscal year, the university spent at least $51.1-million more than was budgeted. It paid staff $19.5-million less in salaries than state records said it should. KPMG could not explain the discrepancy.

Auditors found that FAMU staff could not find reconciled bank accounts for the second half of 2004, had mixed up credits and debits on ledgers and could not provide budget policies. Daily cash reports had figures that were crossed out and marked with correction fluid.

The U.S. Department of Education also reported that FAMU was not complying with regulations governing federal aid. The vast majority of FAMU students get financial aid. The department recommended wholesale changes and said FAMU should repay some funds.

"If our financial aid is taken away, we don't have students. Therefore, we don't have a university," Lowe said.

None of the problems are new.

More than a year ago, the FAMU board promised changes after auditors found its books were off by $1.8-million. Students were getting financial aid checks months late. State Chief Financial Officer Tom Gallagher cut off pay to FAMU's president and 18 administrators when they were late in turning over financial records.

The board reacted in September by firing president Fred Gainous, who was supposed to repair the university's financial woes. He lasted on the job two years.

"The situation has not improved," Lowe said. "A year and a half later, the situation has not improved."

"This is deja vu," said trustee Pamela Duncan. "We have been here before."

In December, the board selected Bryant, a former member of the state Board of Governors and an administrator at Miami-Dade Community College, as interim president. Since then, she has forced out Love Collins, vice president for development under Gainous, and Ramsey, the athletic director. She also hired a new human resources director and consultants to review athletics and information technology.

Bryant said her goal is to finish the fiscal year in June without running a deficit.

"The new interim president is pushing hard," said state Sen. Victor Crist, who grilled Bryant about FAMU's finances at a recent legislative hearing.

He asked if FAMU had fired the incompetent "dead weight" that caused the mess.

"These aren't little screwups," Crist said in an interview Friday. "They are big ones. There are people who were blatantly incompetent in their jobs."

Bryant promised Crist he would see change within a year.

Sen. Stephen Wise, a Jacksonville Republican, asked if auditors had forwarded a state audit to prosecutors for a criminal investigation.

They had not.

David Karp can be reached at 1-800-333-7505, ext. 8430, or karp@sptimes.com

[Last modified February 26, 2005, 01:16:05]