USU legislative audit identifies financial noncompliance and leadership concerns

“We’re ready to move out of the shadows from some of this controversy,” Utah State University President Brad Mortensen said following a review of the legislative performance audit of the Utah State’s governance and finances.

Mortensen’s comments followed a presentation of audit findings that identified financial noncompliance and leadership concerns at USU. The Utah Legislative Audit Subcommittee ordered the audit after a preliminary review raised concerns about presidential spending under former USU President Elizabeth Cantwell.

“We found cracks in the governance at Utah State,” said legislative auditor Nick Varney, citing specific examples of financial mismanagement.

Varney said USU began working with a vendor in 2013 without going through procurement, the process schools must use to make purchases and ensure public money is spent fairly. The newest contract with this vendor lasts five years, according to the audit report. It is unclear when this contract began. According to the report, USU ignored the advice of purchasing and legal, leading to a total cost overrun of $12 million. 

In another case, the university began services with a vendor before going through the procurement process. University leadership did not provide adequate documentation for the procurement process, leading to a rapid jump in costs from $30,000 to $100,000 in four months.

Varney also stated inflexible academic budgets are harming students and individual departments. Currently, the engineering technology program risks losing a third of its students because of insufficient funding.

“As the program has grown and brought students into the university and those tuition dollars into the university, those tuition dollars have not followed the students to their program of choice which means the department has a hard time servicing the students and having the faculty to teach those students,” Varney said.

Other departments are facing similar issues. The aviation program has grown by 435 enrollments since 2015, but despite a growing demand, the department hesitates to grow the program until a new budget model guarantees they will have sufficient resources for students.

The chemistry department struggles to offer enough entry-level courses to meet student demand. The auditors noted last semester, some introductory labs had a waitlist of 204 students. These classes are a prerequisite for many STEM majors, and being unable to take them could delay academic progress and graduation.

“We recommend that the university commit to a timeline to implement a new budget model,” Varney said. “It’s been a problem for a long time and leadership has failed in a timely manner to implement a budget model that’s responsive to student needs.”

Varney recognized the Center for Anticipatory Intelligence in the College of Arts and Sciences and the Jon M. Huntsman School of Business Analytic Solutions Center as bright spots in the university because of high job placement post-graduation and the skills students develop.

Audit manager Jesse Martinson cited leadership problems as the root cause of other issues within the university. The Utah Board of Higher Education has implemented a presidential coaching program Martinson hopes will help provide additional training for university presidents but said further steps should be taken.

Martinson stated current presidential evaluations conducted by the board are insufficient and untimely. Currently, presidential evaluations conducted by the board happen every four years.

“We would ask the [Utah] Board of Higher Education to create more stable and more consistent evaluations for the presidents,” Martinson said.

The auditing team found several historic instances in which university leadership did not support the internal audit and limited the auditors’ access to information.

“There was a point where the president did want them to essentially answer to the president, which is a violation of internal audit rules,” Martinson said.

He clarified university leadership is currently compliant with the internal audit.

Mortensen said he welcomes the work of the audit and that the university is prepared to follow the recommendations provided by the auditors.

“Utah State University understands that when appropriate policies aren’t followed, when financial and budget models aren’t aligned with the appropriate outcomes, when there’s a lack of leadership accountability, when decision making isn’t transparent or properly coordinated and when all of those governance lapses penetrate the culture of the institution, we’re not being good stewards of public resources,” Mortensen said. “We lose public confidence. We get distracted from fulfilling our statewide land-grant research university mission, and the students and communities that we serve are the ones that don’t get the Utah State University that they’re entitled to.”