Auditor finds issues with higher ed finances

Problems include overpaid faculty, financial reporting errors

From faculty members overpaid more than $500,000 to errors in annual financial reports, the Louisiana Legislative Auditor’s Office found problems with higher education’s accounting skills.

The state auditor focused on Baton Rouge Community College, Southern University Law Center and the University of New Orleans in reports released to the public Monday. The community college had problems calculating paychecks for faculty who only worked nine months of the year. The law center struggled with accuracy.

Baton Rouge Community College is in the process of recouping the more than $500,000 it overpaid to nearly 100 faculty members. So far, $203,498 has been recovered.

The community college encountered problems during the 2011-2012 school year and the 2012 summer semester. Spreading out nine-month faculty’s pay over 12 months and entering dates into the payroll system proved to be tricky.

In the 2011-2012 school year, 93 faculty members received between $1,098 and $7,114 too much in pay.

The summer semester problems, which resulted in employees being overpaid by between $500 and $2,700, stemmed from the wrong contract dates being entered into the payroll system.

All total, the college mistakenly paid $506,233 to faculty members.

Not everyone’s check was a welcome surprise, however. A handful of employees did not receive enough pay.

The Auditor’s Office found the college experienced problems when manual calculations were made on how much money needed to be deferred in order to spread out salaries over 12 months. The academic year is roughly nine months, not including the summer semester. Further errors were made with contract end dates.

The community college also failed to deduct $16,765 in Federal Insurance Contributions Act taxes, Medicare taxes, health insurance premiums and disability benefits from 34 employees’ paychecks. The college neglected to submit $29,578 in employer contributions to providers.

“Management should continue its efforts to identify all inaccurate payments, track and recoup all overpayments, and correct all underpayments,” the Auditor’s Office recommended.

In a written response, the college’s chancellor acknowledged the problems.

“The management at BRCC recognizes its responsibility to accurately pay employees and exercise proper custodianship over state funds,” Andrea Lewis Miller wrote before detailing steps that have been taken. The steps include processing payments for underpaid workers, beginning collection efforts against overpaid employees who have not made repayment and providing additional training to the college’s human resources and payroll staff.

Steven Mitchell, special assistant for media relations at BRCC, said by email Monday that three underpaid employees will get a bigger check in the new year. He said 14 other employees still need to start a repayment process.

At Southern University Law Center, the A uditor’s Office said the school had errors in its annual financial report for the second year in a row. The law center understated accounts by $846,432.

According to the auditor, the law center relied on manual accounting entries in 2013 because it lacked a comptroller. Other Southern campuses use the Banner accounting system.

The auditor said the best approach would be for the law center to record entries in Banner and then thoroughly review its annual financial report.

“The resulting errors increased the time and effort necessary for the auditors to complete their work. The inadequate review also increases the risk that additional errors may remain undetected,” the auditor’s office complained of the law center’s accounting approach.

In a written response, the law center’s chancellor, Freddie Pitcher Jr., concurred with the finding on errors in the annual report. Pitcher said the law center is hampered by limited staff and time frame.

“The Law center and the system is actively seeking personnel to perform its accounting and financial processes,” he wrote.

The University of New Orleans is seeing its federal and state funding drop, even as a smaller student body is paying higher tuition and fees to make up the gap, according to an audit.

UNO has seen its revenue fall by about $28.6 million over the past four years, leaving it bringing in about $176 million a year, according to the Legislative Auditor’s Office.

The end of those stimulus programs led to a roughly $19.7 million decrease in federal funding for UNO over the past four years, said Bradley Cryer, assistant director of financial audits for the Legislative Auditor’s Office.

State funding has dropped by about 20 percent since 2010, with the university now receiving about $38.3 million in annual appropriations, according to the audit.

At the same time, tuition and fees have risen by about $8.4 million a year as the student body has slowly declined, according to the audit.

Jeff Adelson of The New Orleans Advocate contributed to this report.