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Criminal inquiry sought on FAMU

A state audit finds that the university cannot account for tens of millions of dollars.

By SHANNON COLAVECCHIO-VANSICKLER
Published March 20, 2007

TALLAHASSEE - Lawmakers are calling for a criminal investigation into the financial mess at Florida's only historically black public university after a new audit shows the long-running problems remain unsolved.

Midway through the first public discussion of a draft audit of Florida A&M University operations, Sens. Ronda Storms and Jeremy Ring said the state should launch a criminal investigation. The audit found a list of problems involving tens of millions of dollars.

"This is over our heads," said Ring, D-Margate. "I mean, this is sounding like Enron."

Rep. William D. Snyder, R-Stuart, asked state university system chancellor Mark Rosenberg, "What's the worst-case scenario here for Florida A&M?"

Rosenberg replied: "There would be a decision not to fund it. And without that funding, the university would cease to exist."

"Thank you," Snyder said. "I'll leave that hanging in the air."

The operational audit, released last week, covers the budget year that ended last June. That's about 18 months after FAMU trustees hired Castell Bryant to right the ship of her alma mater.

A financial audit that delves deeper into FAMU's spending and revenues is under way. But the operational audit found 35 areas of concern involving more than $50-million in undocumented and unexplained expenses and revenues - including more than $40-million that was never approved by the FAMU board of trustees. The school has a $394-million budget.

"Back in the days of bank telling, we would call that a kitty," said Storms, R-Brandon. "A slush fund."

Ted Sauerbeck, audit manager for the state auditor general's office, said the money wasn't necessarily misspent.

"We're still trying to get a handle on what those things were," he said.

FAMU has struggled for years with its bookkeeping. Professors have gone unpaid, federal grant money has been returned because the school couldn't show how it was spent, staffers have been arrested for falsifying financial aid documents.

Bryant, who was not available for comment Monday, arrived 25 months ago with the goal of straightening out the mess following the ouster of president Fred Gainous.

She found multimillion-dollar budget deficits. The federal government said the university wasn't complying with financial aid regulations.

Bryant cut sports programs and scholarships, and fired more than three dozen employees, including the head football coach. She also fired eight nontenured professors from the nationally recognized business school.

Bryant insists she is making progress, while conceding there is much to be done. The school has 30 days to respond to this latest audit.

The audit suggests that for every hole Bryant and her staff plugged up, there are more leaks.

Among the findings:

- Nearly 1,000 items are missing, including computers and printers worth $2.7-million.

- Long-distance phone logs weren't maintained, and auditors found three charges totaling more than $6,500 that included calls made between midnight and 7 a.m.

- There is a $2.7-million discrepancy in financial aid fee transactions, and the ledgers for student activity, health and athletic fees were off-balance by about $5-million.

- FAMU officials also could not produce receipts for what they claimed were $1.8-million in athletic ticket sales.

Audit manager Sauerbeck said FAMU officials told his department the receipts were in a box near the concession area that was "inadvertently" thrown out during a cleaning.

"I'm sure it was inadvertent," Storms said, with sarcasm. "When documents are being carried out by the boxes for $1.8-million in sales, I think time is of the essence. They're currently flagrantly disobeying the laws."

Rosenberg told the audit committee he is creating a task force of state university experts to help FAMU start fixing the problems before the new president, James H. Ammons, arrives this summer.

"I don't think a fluff task force is what we need now," Rep. Susan Bucher, D-West Palm Beach, said. "Don't you think it's time that this Legislature impose on this university to get it fixed?"

Sen. Al Lawson, the only black member of the audit committee, said his alma mater has suffered from inconsistent leadership since the departure of president Frederick Humphries in 2001.

"I'm just embarrassed that we didn't have a board of trustees with the competence to get in there and roll up their sleeves and make sure that financial office was in order," said alumni president, Dr. Alvin Bryant.

"Now that we have a competent president coming, I think we have a chance to get this turned around."

Shannon Colavecchio-Van Sickler can be reached at 850 224-7263 or svansickler@sptimes.com.

What's next?

The Legislative Audit Committee agreed Monday not to recommend action until FAMU responds to the findings of the preliminary audit. The school has 30 days.

FAMU's finances: a time line

Florida A&M University's troubles go back a decade:

1997: The state threatens to decertify the FAMU Boosters because the fundraising group fails to give audited financial statements to the state for two years.

1997: A number of adjunct professors go without pay for several weeks because the school has overspent its $1-million adjunct faculty budget by $500,000.

1997-1999: A state audit shows poor accounting methods and spending guidelines that cost the FAMU foundation $350,000. The report raises questions about then-president Frederick Humphries and other top administrators using money for Christmas gifts and jewelry.

1998: The FBI, U.S. Department of Education and Florida Department of Law Enforcement investigate missing money at the financial aid office.

1999: Two dozen adjunct faculty members in the College of Arts and Sciences complain they have not been paid for three consecutive pay periods, prompting then-chancellor Adam Herbert to write Humphries demanding a fix.

1999: A state audit shows the financial aid office awarded $300,000 more than was authorized, paying students who didn't qualify academically and giving too much money to students who did.

2000: Federal authorities arrest a financial aid officer charged with soliciting and accepting bribes from students in exchange for submitting fake records for extra aid. At least two other employees and 13 students are thought to be involved in the scheme, which dates to 1996.

2000: The school hires an associate dean, then learns he has been convicted of raping a 13-year-old girl in Texas. He resigns when it becomes public.

2001: FAMU's longtime education dean is charged with stealing $60,000.

2001: State auditors investigate why Humphries used most of the money in accounts for two $1-million chairs at the business school on student scholarships and not faculty.

2003: New FAMU president Fred Gainous fires the administrator of a federal grant after an internal inquiry uncovers questionable spending, including tens of thousands of dollars spent on trips for Humphries, who is working as a consultant.

2003: Gainous discovers Humphries' construction budgets since 1990 are off by more than $3-million. About $1.5-million is used to pay contractors who have not been paid in years.

Summer 2005: Professors at FAMU's law school threaten to stop teaching after as many as 10 professors go weeks without getting paid.

January 2007: FAMU trustees name James H. Ammons, former FAMU provost, as president. He will take office this summer.

Feb. 2: Interim president Castell Bryant gets a call at home that adjunct faculty members have not been paid. She puts together a task force to determine how many have not been paid.

Feb. 9: The first checks go out to adjuncts.

March 14: The state auditor general releases its draft audit of FAMU finances for the 2005-06 year, and finds nearly three dozen problems with accounting, personnel, record-keeping and financial management.

March 19: The chancellor of the state university system announces a task force to address FAMU problems. Some lawmakers call for a criminal investigation.

Sources: Interviews, inspector general reports, meeting minutes and Times archives. Compiled by staff writer Anita Kumar and researcher Kitty Bennett.

[Last modified March 20, 2007, 05:55:25]