UM audit clears Frostburg chief in use of funds

December 15, 1990|By Patricia Meisol

University of Maryland auditors found no "willful or flagrant violations of any laws" by the president of Frostburg State TTC University involving university budget and fund-raising accounts, a special audit released yesterday shows.

However, auditors recommended significant changes in the way the campus foundation, a non-profit fund-raising arm, is operated. Because of "scant" documentation of expenses, auditors said, the oversight of foundation directors who signed checks was "nearly meaningless."

Frostburg President Herb F. Reinhard Jr. had asked for the audit because of controversy over how some of the money was spent.

In their report, the auditors said the University of Maryland System should investigate whether the directors of campus foundations -- those who authorize foundation spending -- should also be employed as university vice presidents for development, positions in which they answer to the president.

The practice, used at Frostburg and on many campuses throughout the state, has been criticized as a conflict by legislative auditors.

The audit report released yesterday also said the Frostburg University marching band should not have entertained Gov. William Donald Schaefer during a campaign stop at the Frostburg railroad station in October.

"The university should have remained neutral" in the campaign, the report said.

Mr. Reinhard announced last week that he was resigning over criticism he had received in connection with foundation spending. In a statement released by the university yesterday, he said he was "pleased" by the audit findings.

According to the audit, Frostburg spent more than $4,500 from foundation accounts and others controlled by the president to make political contributions and for events to lobby politicians.

While finding no evidence that the money was spent directly in exchange for votes, the auditors recommended that the campus foundation seek a ruling from the Internal Revenue Service on whether part of the money to lobby politicians was used properly.

According to the audit, the president spent $2,208 from various accounts on an annual event staged by PACE -- or Positive Attitudes Change Everything -- a Western Maryland group, to lobby lawmakers to bring industry to the region. About $405 of that came from the tax-exempt foundation account.

Previously, Frostburg officials said they would seek the return of about $1,240 in contributions that Mr. Reinhard made to politicians, including the governor, from the fund. Most of the contributions were in the form of tickets to political events. Yesterday's report put the final tally for political contributions at $1,919. The foundation is barred by federal law from making political contributions.

The auditors said that except for spending on behalf of public officials, the president's office budget and contingency accounts were spent properly. But they questioned whether a campus the size of Frostburg needs a $75,000 contingency fund.

The auditors also found that the transfer of a $10,000 estate gift to the president's fund was legal and ethical, but recommended that university regents consider establishing a scholarship fund on behalf of the donor, Grace S. Kopp.

Mrs. Kopp willed the campus stock for scholarships, but sold the stock before she died. The cash settlement was a compromise with her estate.

UM auditors plan to return to Frostburg to review additional allegations said Alfred S. Chavez, director of internal audits for the system.

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