Feb 12, 2008 - 17:00:14 CST
North Dakota's Board of Higher Education paid former chancellor Robert Potts about $200,000 for doing nothing, said an auditor who questioned the board's handling of the resignation of the state university system's top administrator.The criticism is included in an audit of the North Dakota University System's internal controls, which the board's budget, audit and finance committee reviewed Monday. Its members are Jon Backes, Richie Smith and John Q. Paulsen, who is president of the full board.
Potts left his job in August 2006 after clashes with Joseph Chapman, the president of North Dakota State University, and disagreements with some board members over the scope of Potts' authority.
In exchange for Potts' resignation, board members agreed to pay him his salary, benefits and housing and car allowances until July 2007, when his three-year contract was scheduled to end. The package was worth about $200,000.
Potts agreed to be a consultant to North Dakota's university system while he was being paid, and the terms of his settlement allowed him to seek another job. He started work in November 2006 as the top administrator on the Jonesboro campus of Arkansas State University.
"He had about nine duties that were outlined in his ... extended contract, and he performed none of those," John Grettum, a state audit manager, said Monday. "So, essentially, the chancellor was paid $200-and-some thousand dollars and did nothing."
The audit concluded: "Since the agreement was not fulfilled, the consulting payments should not have continued."
In a written response to the audit's conclusions, the board argued the settlement with Potts was preferable to keeping him on when he "did not have the full support" of the Board of Higher Education, Gov. John Hoeven and some of the university system's college presidents.
The board decided the settlement "was in the best short-term and long-term interest" of the university system, the response says.
The audit is also critical of payments the University of North Dakota and North Dakota State University are making for buildings owned by the two universities' affiliated foundations.
NDSU is paying the mortgage, insurance, utilities and repairs for its downtown campus and buildings in its research and technology park, while UND is paying for ground-support equipment and a hangar for its aerospace school, the audit says.
The schools report $33 million in liabilities on their balance sheets "for facilities they will not own," the audit says.
"We feel that should not happen. The institutions are not in the business of giving away buildings," Grettum said during Monday's meeting. "What also has to be taken into consideration is that the state has lost control. Just by definition, those foundations are independent of the state, so that they control those assets."
Board members said they were unconcerned about the situation, because the foundations at both schools are operated for the universities' benefit.
"These foundations, especially for UND and NDSU, have been a huge, huge part of the success of both of those schools," Smith said. "Without those foundations, there are many things that those schools couldn't have done."
Smith said he understood Grettum had "a concern from a strict audit standpoint, but realistically, this is not a big concern to me."
Should the UND Aerospace Foundation dissolve, ownership of its assets will be transferred to the university for the aerospace school's benefit, the university system's response to the audit says.
The NDSU foundation is "to be operated exclusively for the benefit of North Dakota State University," its articles of incorporation say.
"Whether the facilities are owned by NDSU or by an affiliated nonprofit corporation, NDSU and the state of North Dakota will derive substantial benefits for many years," the board's formal audit response says.
The full Board of Higher Education, which has eight voting members, will review the audit later. It will also be presented to the Legislature's Audit and Fiscal Review Committee, an oversight panel chaired by Rep. Bob Skarphol, R-Tioga.
Why the lowball reporting?? wrote on Feb 12, 2008 11:42 AM:
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Ripped Off wrote on Feb 12, 2008 11:01 AM:
diggs wrote on Feb 12, 2008 9:40 AM:
la wrote on Feb 12, 2008 8:45 AM:
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