Md. college foundations could face new curbs Salisbury, Bowie State abuses spur lawmakers

September 24, 1998|By Tom Pelton | Tom Pelton,SUN STAFF

Responding to reports of misspending and mismanagement, an influential General Assembly committee wants more oversight the fund-raising organizations run by Maryland's public universities, its chairman said yesterday.

The Joint Audit Committee is drafting legislation that would allow its auditor to examine the records of university foundations, which raise and spend tens of millions of dollars each year to support the schools.

The extra scrutiny, legislators said, would help to prevent the questionable contracts, misuse of school credit cards and other problems found at Bowie and Salisbury State universities.

University officials argued vehemently against the increased oversight during a committee meeting yesterday, saying that scrutiny might scare away donors concerned about privacy.

But the committee chairman, Sen. Ulysses Currie, and the state legislative auditor, Bruce A. Myers, said increased oversight would be healthy, would not reveal the names of donors and would give potential donors more confidence.

"If I were a donor, I'd like to know how my donations are spent," said state Sen. Barbara A. Hoffman, a panel member who also heads the Senate Budget and Taxation Committee.

Questionable activities

The Sun reported last month that the Bowie State University Foundation had spent $182,000 restricted for scholarships and campus activities on questionable items such as a cruise, personal credit-card purchases and a consulting contract for the son of the foundation's treasurer.

The newspaper also reported that Salisbury State University gave its top fund-raiser a $36,000 a-year consulting contract, even after he was forced to resign. An audit showed that he had used university employees on state time to help run his private consulting business, and had channeled $18,000 in no-bid work to companies that employed his son.

John K. Martin, the president of the University of Maryland Foundation, told the audit committee yesterday that the mismanagement at Bowie State was an isolated incident and that the problems at Salisbury State had been exaggerated.

"The problem at Bowie State is the exception and not the rule," Martin said. "The foundations affiliated with the University System of Maryland are the most regulated of public charities operating in the state."

But Myers, the state legislative auditor, released a report during yesterday's meeting that suggested the problems were more widespread.

Wrong deposits

A June 1 audit by the legislative auditor of the University of Maryland, College Park, revealed that a pair of foundations serving the school had improperly deposited $1.1 million meant for the university itself.

The report said that the University of Maryland Foundation and the College of Business and Management Foundation, both private nonprofit corporations, intercepted state education and research grants that should have gone into the university's treasury.

Myers told the committee that the mix-up illustrated a long-standing problem: There is little separation between state universities and the fund-raising corporations run by university employees.

As a result, money moves back and forth between the public and private bodies -- with state lawmakers barred from scrutinizing the funds that university officials put into foundation bank accounts.

"There is a fine line where the foundation stops and the university begins," Myers said. "We don't have access to the foundation records. And to see the complete picture, we need to see all the records."

The committee's bill, being drafted for the 1999 legislative session, would allow Myers' office to examine the records of university foundations just as it examines the records of the universities themselves. The records would still be unavailable to the public.

Currie, a Prince George's Democrat, noted that the committee is still discussing how to best provide more scrutiny of the foundations.

University officials argue that their foundations already have enough oversight, paying their own accounting firms to audit their books every year.

'10 years to get it right'

Currie suggested this is not enough. "We think there should be some legislative oversight over the university foundations, primarily to give confidence to contributors that their money is going where they think it's going."

State lawmakers proposed bills five times from 1990 to 1994 that would have allowed the legislative auditor to examine the books of public university fund-raising organizations. But the proposals were killed when university presidents lobbied against them.

The 1990 legislation was inspired by a scandal at the Frostburg ** State University Foundation. University president Herb F. Reinhard Jr. resigned that year after newspapers reported that he had spent thousands of dollars of foundation money on improper campaign contributions.

"You have had 10 years to get it right," Hoffman, a Democrat from Baltimore city and county, scolded university officials at yesterday's meeting. "But we've had too many years of these things happening."

Pub Date: 9/24/98

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