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Audit: NDSU misspent public funds

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Audit: NDSU misspent public funds
Park Rapids Minnesota PO Box 111 56470

North Dakota State University officials agree with state auditor findings that spending $24,000 for unused hotel rooms and $15,000 for Tony Robbins seminars was not a good use of taxpayer money.

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An audit released Thursday cited several examples of expenses state auditors viewed as unnecessary or unreasonable uses of public funds.

Other examples included upgrades to first-class airfare, alcohol and bartending fees and an arrangement that auditors viewed as subsidizing the North Dakota Horse Park.

President Dean Bresciani said NDSU has already made several changes that would prevent these expenditures from happening again, including new guidelines for credit card use and expanding the role of the internal auditor.

"I think these were innocent mistakes, but also helpful illustrations as we move forward," Bresciani said. "We're not doing business like that anymore. We're setting a higher expectation."

The operational audit, which is routinely done by the Office of the State Auditor, covered fiscal years 2008 and 2009, before Bresciani was president.

These are some of the highlights from the audit and documents used to compile the audit:

- NDSU's Upper Great Plains Transportation Institute sponsored a conference in Washington, D.C., in December 2008 that resulted in spending $24,385 for unused hotel rooms.

Tom Jirik, communications coordinator for the institute, said the organization hosted a similar conference related to trucking in 2007 that was successful.

But because of the economy in 2008, attendance dropped and NDSU had a contractual obligation to pay for the hotel rooms, Jirik said. Forty-six of the 100 rooms reserved were vacant, he said.

"Unfortunate circumstances intervened, and we came up with a shortfall," he said.

Chris Brucks, the auditor in charge of the report, said NDSU could have worked out a clause in the contract to protect the university.

"It seems to be an issue of poor planning," Brucks said.

- Two employees attended a Tony Robbins "Unleash the Power Within" motivational seminar in Los Angeles at a "diamond premiere" price of $2,595 per person rather than the general admission rate of $995 per person.

The employees were Steve Winfrey, director of the Memorial Union, and Chris Suriano, the union's associate director of operations.

Brucks said he questioned how the more expensive registration benefited the university. The upgraded registration included expedited registration, early entry into the auditorium and seating closer to the front.

Janna Stoskopf, NDSU's dean of student life, said she approved the training events but was not aware of the premiere registration until recently. Winfrey is reimbursing NDSU for the difference, she said.

Winfrey also attended the Tony Robbins Leadership Masters University event with a registration cost of $9,995.

Stoskopf said the training was over three separate time periods and was approached from a "train the trainer" perspective. About 1,200 students have benefited directly from Winfrey's participation in the programs, she said.

"I recognize that it was a costly venture," Stoskopf said. "But I wouldn't have moved forward with something that we didn't feel had the equivalent benefit back to the institution."

The Memorial Union budget is partially funded through student activity fees.

Brucks said he thought the amounts, which did not include airfare, hotels or all meals, seemed excessive.

"It would seem to me there were probably other ways using less funds that could have gotten the same results," Brucks said.

- The audit raises concerns that NDSU was subsidizing the North Dakota Horse Park.

Since 2003, NDSU subleased the Equine Center to Horse Race North Dakota each summer during the horse racing season. In fiscal year 2008, NDSU charged a rental price of $4,000 per month while the cost to NDSU was $30,137 a month.

In fiscal year 2009, NDSU charged $5,400 a month, while the cost to NDSU was $32,962 per month.

Brucks said NDSU did not consider operational costs when setting the lease rate. Brucks said he was told by Bruce Frantz, NDSU's former director of facilities, that the lease rate was "pulled out of the air."

Racing was not held at the horse park this past summer. If horse racing resumes in the future, NDSU would renegotiate the lease and consider the university's expenses, said Bruce Bollinger, vice president for finance and administration.

- The audit questions employees who flew first class or business class three separate times, costing the university $19,845.

Two flights were for Ken Grafton, dean of the College of Agriculture, Food Systems and Natural Resources. The upgrade was approved by vice presidents D.C. Coston and Craig Schnell.

The third was for Elias Elias, a plant science professor, and approved by Coston.

Brucks said the reason given to him for the upgrades was so the employees could be "well rested" for meetings.

- Virginia Clark Johnson, dean of the College of Human Development and Education, used a university credit card to pay for $746 in alcohol and bartender fees for a "Women in Deanship" conference in Denver.

NDSU policy states that state money should not pay for alcohol.

Brucks said NDSU officials have said the university was reimbursed for that expense, but he asked for documentation, and they have not provided it.

Clark Johnson did not return a call seeking comment.

- The audit also found instances where employees did not follow policies for university credit card use. NDSU changed its policies in January 2009 to provide greater controls, which Brucks called a "drastic improvement."

NDSU officials have looked into each instance outlined in the audit and found that employees had good intentions but that some decisions were not well thought out, Bresciani said.

"If we want to have the public's trust, we need to not only do the right thing but have it look like we've done the right thing," he said.

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