Former Darton State College President Peter Sireno was forced to resign late last year after the findings of a Georgia Board of Regents audit became known. (File Photo)
ALBANY — Darton State College officials and the Darton College Foundation issued statements Thursday in regard to the findings of a University System of Georgia Board of Regents’ audit report critical of the college’s handling of its finances.
As first reported Wednesday on www.albanyherald.com, the audit was conducted June-September, 2013. The report cites six areas of “material” concern dealing with issues ranging from not properly keeping track of the academic progress of students receiving federal financial aid to improper use of grant money.
“The Darton State College administration has been working to resolve the issues addressed in the audit report,” Darton Interim President Paul Jones said in a statement released late Wednesday night.”We are already in the process of putting the appropriate internal controls in place to ensure that these types of issues do not resurface at Darton State College.”
Jones was out of town Thursday, but was scheduled to conduct a news conference at 9:30 a.m. today to take questions from the media.
All issues in the report occurred under the watch of former Darton President Peter Sireno, who resigned in October, shortly after the audit was completed.
Darton State College Foundation Chairman Glenn Tennyson quickly attempted to distance the Foundation from the college in regard to the report’s findings.
“The issues outlined in the Board of Regents Audit report pertain to the operations within Darton State College — not the Foundation,” Tennyson said. “The Darton State College Foundation is a separate corporate entity operated by a board comprised of dedicated and community minded individuals who have volunteered their time and resources to promote the mission of the foundation and the school it supports. The few recommendations made to The Darton Foundation by the audit team, which comprise less than one page of a 39-page report, were immediately adopted by the Foundation at the first board meeting following their receipt.
“The swift adoption of the suggested policies is further reflective of the environment of unfettered transparency that the Darton Foundation has, and continues to, foster and embrace.”
The excerpts below detail the BOR’s six areas of concern:
— Issue 1: Reviews of Satisfactory Academic Progress (SAP) were not properly performed to determine eligibility for federal student aid
“Students receiving federal financial aid are required to demonstrate Satisfactory Academic Progress (SAP) in order to continue receiving this funding. These reviews are performed by the DSC Office of Student Financial Aid, and involve a qualitative review (maintaining a minimum Grade Point Average, or GPA) and a quantitative review (completing enough classes in order to demonstrate progress toward successfully obtaining a degree).
“We reviewed students receiving federal financial aid for the Fall 2011, Spring 2012, Summer 2012, and Fall 2012 terms. Our review indicated DSC has not properly assessed SAP.”
“As of December 3, 2013, the staff of the Financial Aid Office has determined that a total of 189 students received federal financial aid awards, which may have produced potential over-awards of $893,919. In January 2014, the college will be notifying the federal Department of Education of these potential over-awards …” School officials also said a new SAP policy was adopted Dec. 3 and that technology was being updated to improve financial aid data and reporting.
— Issue 2: Restricted funds were not spent in accordance with grant requirements
“Funds received from two local hospitals totaling over $592,000 during the mid- to late-2000s for nursing stipends were not spent. Instead, the institution used state appropriations to fund the stipend payments with the intent of using the local hospital funds for potentially related but undetermined future uses. As the original grant funds were to be used for a restricted purpose as stated in the agreements, those funds can only be used for those stated purposes.”
“The college’s FY13 Annual Financial Report (AFR) and the State Auditor’s completed audit of our 2013 APR reflect that the college has recorded these restricted funds as surplus funds, and, as surplus funds, sent these funds to the Georgia Office of the State Treasurer.”
— Issue 3: Time and effort reports were not completed in accordance with federal requirements
“Time and effort reporting is a process utilized to monitor monthly payroll expenses attributed to contract and grant awards. It serves as a tool to ensure the actual activity incurred as related to a grant award is reflected proportionally in the amount of staff salaries charged to the grant.
“During fiscal year 2013, there were two active federal grants at DSC. The largest grant was awarded by the U.S. Army Medical Research and Command for approximately $1.4M ($1.4 million), to be expensed over multiple years. The purpose of this grant included providing nursing programs for military personnel and their families and civilians at the Fort Benning U.S. Army Post facility. At the time of the audit engagement, time and effort reports had not been completed in relation to this grant.”
“The staff in the Grants Office has developed and began a ‘time and effort’ reporting process to ensure full compliance of federal requirements. We will further enhance this process by establishing an internal control structure that provides for a system, which reasonably reflects the actual effort employees devote to sponsored projects in accordance with the actions in the recommendation.”
— Issue 4: Completion of tax forms; payments to vendors without contracts
“An IRS tax form (1099-MISC) was not completed by Business and Financial Services staff for a vendor who provided services to DSC from 2005 through 2012; payments were made to vendors by the institution without the use of contracts or adherence to required procurement processes.”
“In November 2013, the college provided the vendor and the IRS with the required 1099-MISC forms, as well as supporting letters of explanation, to ensure the vendor’s compliance with IRS regulations for filing his federal income taxes. The college is also developing and implementing improvements in internal controls to further assure that all contracts adhere to required procurement processes.”
Issue 5: Salary paid to the Director of Grants was in excess of job duties and responsibilities.
“The former Academic Computing Director (Kathy Bishop) retired March 31, 2005, and was rehired by the institution in a part-time capacity as the Director of Grants on May 1, 2005. Her salary at time of retirement was $86,330, and her current salary is $70,000 for part-time (49 percent) work. The president approved this salary in October 2009 through memorandum issued to the Payroll Supervisor.
“The full-time equivalent for the Director of Grants’ current salary would be $142,000 annually. This would qualify as the third highest paid position at DSC significantly exceeding the salary of comparable positions within the University System of Georgia.”
“Effective December 1, 2013, the college’s administration reduced the salary paid to the part-time Director of Grants from an annual salary of $70,000 to an annual salary of $43,201. The Teachers Retirement System of Georgia was notified of this change in November 2013. In addition, the Director of Grants position is not being continued beyond December 31, 2013 at the part-time level.”
Issue 6: Costs for DSC Athletics were allocated inappropriately, distorting the depiction of the department’s actual financial condition.
“The costs of certain DSC Athletics staff are shared between the athletics department and the grounds keeping function within the Plant Operations department. While these staff do perform some grounds keeping duties, the current allocation of their salary likely exceeds the time spent performing those duties outside the realm of the athletics program particularly given that most of the grounds keeping duties they perform are for athletic fields/grounds.
“A review of FY 2013 salary expenses indicated six of 19 individuals associated with the DSC Athletics department had some portion of their salary charged to the Grounds Maintenance department. More specifically, some $165,635.04 in salaries were allocated to the Grounds Maintenance department, representing approximately 25 percent of the total salary expenditures paid to the individuals assigned to the DSC Athletics department ($640,571.77) – these amounts represent only the salaries paid to these employees, and do not include benefits or other fringe costs.”
“The college is currently revising the FY14 Intercollegiate Athletics Budget to properly allocate all Intercollegiate Athletics expenses to the appropriate cost centers within the revised FY14 Intercollegiate Athletics Budget.”
The Board of Regents’ entire audit report will available for download at www.albanyherald.com this morning.