Au­di­tors blame GPC money mess on top ex­ecs

The Covington News - - Front page - GABRIEL KHOULI

State au­di­tors don’t be­lieve fraud was a cause in the mas­sive over­spend­ing at Ge­or­gia Perime­ter Col­lege that led to mil­lions in bud­get cuts and cost 282 em­ploy­ees their jobs, but rather lay the blame on a bud­get­ing process man­gled by top ex­ec­u­tives.

GPC (Ge­or­gia Perime­ter Col­lege) be­gan spend­ing more money than it earned in fis­cal year 2009, rack­ing up $21.8 mil­lion in over­spend­ing over four years, yet each mem­ber of GPC’s for­mer fi­nan­cial team claimed to be un­aware of the over­spend­ing, ac­cord­ing to the au­dit, es­sen­tially pass­ing blame down the line. How­ever, the au­dit found that of­fi­cials not only should have known but could have pre­vented the is­sues.

The au­dit, con­ducted by Univer­sity Sys­tem of Ge­or­gia of­fi­cials, was long-awaited as school of­fi­cials and the pub­lic sought ex­pla­na­tion for how

See Au­dit, 8A

the school ended up hav­ing to make more than $25 mil­lion in cuts to bal­ance this school year’s bud­get.

For­mer pres­i­dent An­thony Tri­coli, who re­signed as pres­i­dent af­ter the cuts were an­nounced and took a job at the univer­sity level, did al­lege fraud by his fel­low for­mer em­ploy­ees, but au­di­tors did not find any in­stances of fraud. Rather, the ul­ti­mate blame for the fi­nan­cial mess was laid at Tri­coli’s feet.

“We con­cluded that se­nior GPC ad­min­is­tra­tors failed to per­form cer­tain key fidu­ciary du­ties,” the au­dit stated. “Chief among these fidu­ciary du­ties was re­spon­si­bil­ity to un­der­stand and man­age the in­sti­tu­tion’s fis­cal af­fairs. Re­spon­si­bil­ity for the in­sti­tu­tion’s man­age­ment rests with the pres­i­dent.”

The au­dit’s con­clu­sion is what many sus­pected — namely that Tri­coli and other’s “em­pha­sis on en­roll­ment growth and pro­gram ex­pan­sion took prece­dence over sound fis­cal prac­tice as man­age­ment and lead­er­ship pri­or­i­ties.”

How­ever, that fi­nan­cial re­spon­si­bil­ity, and blame, also rested on the chief busi­ness of­fi­cer, as­sis­tant vice pres­i­dent for fi­nan­cial and ad­min­is­tra­tive af­fairs and the bud­get di­rec­tor.

Based on nu­mer­ous in­ter­views con­ducted by au­di­tors, each of­fi­cial ul­ti­mately held an­other of­fi­cial ac­count­able for the fact bud­get deficits were go­ing un­no­ticed.

“The for­mer pres­i­dent as­serted that he was un­aware of GPC’s fis­cal con­di­tion and that it was the CBO’s duty to in­form him of fis­cal is­sues. The CBO in­di­cated that he re­lied on the bud­get di­rec­tor and the AVP to keep him in­formed of fis­cal deficits. The AVP in­di­cated that she was ex­cluded from key de­ci­sion-mak­ing with re­spect to the bud­get, the au­dit stated. “The bud­get di­rec­tor in­di­cated that he brought some bud­get con­cerns to the at­ten­tion of the CBO and AVP; how­ever, the in­ter­nal re­ports pro­duced by the bud­get di­rec­tor did not sug­gest that any sig­nif­i­cant bud­get is­sues ex­isted.”

The fi­nan­cial team was re­placed shortly af­ter the bud­get deficit was found and, along with in­terim Pres­i­dent Rob Watts, in­sti­tuted a se­ries of re­forms, many of which were sug­gested by the au­dit.

“Ge­or­gia Perime­ter Col­lege ap­pre­ci­ates the spe­cial re­view con­ducted by the Board of Re­gents Of­fice of In­ter­nal Au­dit. As the re­port in­di­cates, the new fi­nan­cial team at GPC has al­ready im­ple­mented most of the rec­om­men­da­tions in the area of bud­getary and ac­count­ing con­trols. These ac­tions en­sure that the cur­rent bud­get short­fall will never hap­pen again,” Watts said in an email.

“GPC is al­most 50 years old. It has al­ways been and con­tin­ues to be an aca­dem­i­cally strong teach­ing in­sti­tu­tion. This se­mes­ter, 24,000 students will pur­sue their dream of a col­lege ed­u­ca­tion with the out­stand­ing fac­ulty at GPC.”

In the same email, col­lege spokes­woman Bev­erly James said Watts would not be mak­ing any more state­ments re­gard­ing the au­dit.

The col­lege is now try­ing to re­bound af­ter its re­serve ac­counts were wiped out by over­spend­ing. The col­lege had $20.7 mil­lion in re­serves at the end of fis­cal year 2009, which then dropped to 12.4 mil­lion and 4.9 mil­lion head­ing into this year. The deficits hap­pened de­spite sig­nif­i­cant rev­enue growth of $42.4 mil­lion dur­ing the past four years. The unau­dited fis­cal year 2012 rev­enues were $183.3 mil­lion, while ex­penses were $187.6 mil­lion.

“In sum­mary, GPC’s fis­cal chal­lenges were pre­ventable. The short­fall in any given year lead­ing up to fis­cal year 2012 was not in­sur­mount­able. Man­age­ment at­ten­tion to GPC’s ac­tual spend­ing would have al­lowed the in­sti­tu­tion to cur­tail the growth in spend­ing,” the au­dit stated. “Un­for­tu­nately, key lead­ers at ev­ery level charged with ac­tual re­spon­si­bil­ity for GPC’s fis­cal man­age­ment did not ex­er­cise all of their as­signed du­ties.”

Al­though the cuts have been de­tailed pre­vi­ously, the au­dit gave a clear break­down on the steps taken to fill the col­lege’s deficit, in­clud­ing: the form of in­sti­tu­tional loans were in­creased $9.5 mil­lion (paid back in fis­cal year 2013)

or­ders were closed 2012 rev­enue was moved from fis­cal year 2013 to fis­cal year 2012 im­ple­men­ta­tion of other short term strate­gies full time and 67 part time) were laid off, which GPC projects will re­sult in fi­nan­cial sav­ings of $7.5 mil­lion in fis­cal year 2013 and $9.4 mil­lion in 2014

The New­ton cam­pus lost 24 of its 266 em­ploy­ees, to­tal­ing around $500,000 in salary re­duc­tions, ac­cord­ing to data ob­tained pre­vi­ously through an open records re­quest.

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