NTF Issue Paper: edmon II-6. 11-09.
NEBRASKA
TAXPAYERS FOR FREEDOM ISSUE PAPER:
SPENDTHRIFT
ELITE ARISTOCRACY AT NEBRASKA UNIVERSITIES.
BACKGROUND. State Auditor Mike Foley has found systemic and pervasive waste and mismanagement in use of public dollars in University of NE finances, calling his 233-page auditing report of its $40 million annual credit card system shocking. His audit lasted 18 months. The cards look like VISA cards, the NU name imprinted on them with the cardholder name and account number. Over 2,600 NU employees use these cards. Public funds through the U accounting system monthly pay the invoices.
CREDIT
CARD MAYHEM. UNMC paid over
$15,000 for 1 1st class round-trip plane ticket from Omaha to
Beijing, in violation of its own card policy.
Others on the same trip paid less than $1,500. The chancellor of the
medical center used his credit card to buy 3 1st class tickets, the
China trip costing $11,886, a Germany visit costing $4,751, and a Hawaii trip
$2,111. The UNO chancellor used his NU
credit card to buy plane tickets to a meeting in Minneapolis for his wife and
son, costing $302 each, purchases not legitimately approved. NU erroneously
bought 1st class plane tickets worth over $283,000. State policy regulations and university
guidelines both forbid purchasing 1st class plane tickets. A gaping problem with plane ticket purchases
stems from the ability of employees to register with the NU travel agency
website and pick flights regardless of class or cost. The auditor discovered great deficiencies in NU
control over its credit cards. This $40
million annual program gives select employees Visa cards, drawing on U. funds,
to make work purchases from approved vendors. Employees used credit cards to
buy thousands in gift cards supposedly to recognize co-worker merit
performance, though 3 NU campuses forbid using credit cards to buy merchandise
gift cards. The medical center, UN-O,
and UN-K bought gift cards, and employees at the latter 2 institutions used
cards to buy cash advances, all violations. University
guidelines prohibit the use of cards for cash advances, yet auditors discovered
many instances of employees using the cards to obtain cash. In some
instances, there existed little or no documentation regarding what the cash
bought. All NE campuses made
multiple smaller transactions to avoid the card dollar limits. These pyramiding
transactions cost over $330,000. Two
employees must approve all credit card purchases, but on many occasions, the
only one approving the purchase was the one who made the buy. Flimsy U.
accounting controls permitted a card primary user to enter the computer system
and change his user name to avoid approval by a second employee. One UN-L employee asked cardholders to buy
things for her, totaling over $3,500, including unauthorized office furniture
and decorations. Other transactions
included cell phone bills that included personal calls on nights and
weekends. Employees routinely bought
things on weekends and holidays, in some instances with little or no
documentation showing what they bought. One
UNO worker used a card for a $50 golf spree during a conference. Other
purchases included caramel flavoring at an ice cream shop and magazine subscriptions. Auditors also exposed NU workers using cards to buy things
that qualified for promotional rewards from some vendors. Purchases at
Best Buy, Nebraska Furniture Mart, and Famous Footwear qualified the employees
for personal customer rewards, such as
merchandise credits or gift cards for use at those stores. One way NU
controls card transactions is to place restrictions on the kind of merchants
with whom the cards can serve. However, many cards checked had no
restrictions, or the restrictions appeared lifted with little or no reason
documented. Numerous weaknesses auditors
found in U. accounting controls established to regulate card use. In some
instances, they found active cards assigned to former employees who no longer
work at the U. On the UN-O campus, auditors found a case in which an
ex-employee card, never cancelled, saw current employees accrue over $20,000 in
expenses over a period of 4 months after the original cardholder had terminated
employment. Auditors noted that 1 ex-employee who left U employment 5 years previously
still had access to the secure web site that controls restrictions on card
transactions. The worst problems
were lack of understandable guidelines and employees ignoring clear policies.
PARTIAL LIST. Below is a partial list of exposed
transactions made by University employees:
Business purpose questioned = 30.
Purchase included sales tax paid but now owed = 20.
Wrongful purchase of food =
7.
Wrongful purchase of clothes = 7.
Wrongful purchase of gifts = 4.
Wrongful purchase of decorations = 3.
Wrongful purchase of 1st or business class plane tickets = 3.
Pyramiding purchases =
21.
Use of terminated employee card = 1.
Purchase not approved by or reconciled by assigned or approving official = 168.
Transaction not approved =
79.
Transaction with inadequate or no documentation =
43.
Card purchase exceeded its spending limit = 29.
Cardholder was not user who purchased = 17.
Purchase not made through a University-preferred vendor =
47.[1]
GREAT DEALS & WHEELS. Top U. administrators, other officials,
and sports coaches receive luxury vehicles as perks. The UNMC chancellor drives a 2009 Porsche,
the NU vp for business and finance a 2008 Lexus GS 350, and the NU vp and
general counsel a 2009 Acura RL. 20
UN-O coaches and athletic directors among themselves drive a 2009 Chrysler
3000, 2009 Chevy Tahoe, and 2009 Volkswagen Jetta. 59 UN-L coaches and athletic directors have
swank vehicles, including a 2010 Ford F-150 and 2009 Chevy Suburban. The wife
of the head football coach drives a 2008 Nissan Quest. The NU president, the UN-L, UN-K, and UNMC
chancellors, a UNMC vice-chancellor, and UNMC dean all have country club
memberships. 8 UN-O coaches and athletic
directors and 1 UN-K coach also enjoy these memberships. 36 UN-L coaches and other sports
administrators have country club, other club, or fitness center memberships.
NU RESPONSE. David Lechner, the NU VP for Business
& Finance, retorted that NU leaders have “high confidence” in the credit
card program, that NU “people are doing their best out there.”[2] Don Leuenberger, chancellor for business and
finance at UNMC, declared that he viewed very little in the audit that seemed
to him an inappropriate transaction.
District 8: Randy Ferlic, M.D 2254 South 86 Avenue Omaha, NE. 68124
Research and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska
Taxpayers for Freedom with express prior permission granted for its use by
Cherry County Taxpayers, Dawes County Taxpayers, Citizens for Local Control,
and other groups in the Tax Freedom
Network. 11-09. C