College ran up serial deficits

“If it turns out to be $16 million, I would say this is unprecedented,” said Claire Arnold, director of the education audit division of the State Department of Audits and Accounts.

The school’s reserves fell from $9.2 million in 2008 to $288,000 when this fiscal year began last July.

Neither University System Chancellor Hank Huckaby nor Tricoli would answer questions about the financial crisis. Tricoli, who has been singled out for praise by Huckaby in the past, referred the AJC to his lawyer.

Tricoli, once considered a rising star in the system, was moved into a central office job, and the school’s top financial officer had already been scheduled to retire. But the impact of the fiscal crisis on students and faculty at the nearly 27,000-student two-year college could be far-reaching.

“We’re all frightened because we don’t know if our classes or professors will be around,” said John Posso, who is working toward a degree in computer science. “We just don’t know what will happen, but I think we know it won’t be good.”

University System officials have been vague so far about the impact on students and faculty. They are still looking at the school’s books.

But Huckaby said in a letter to the college community that the shortfall will follow the school into next year, and the consequences could include layoffs.

The college has already suspended contracts, cut travel, delayed hiring and implemented other steps to start closing the gap, Huckaby said in his letter, sent Monday.

“We do not know at this time precisely the impact in every budget area, but it will be significant and will likely impact personnel,” he wrote. “These actions are necessary to address a shortfall of this magnitude.”

Tricoli attracted both admirers and critics shortly after he arrived from California in 2006. Georgia Perimeter’s enrollment grew by nearly 7,000 students under his tenure and many students speak highly of him.

But some faculty and staff have complained that he had outsized ambitions for himself and the college.

Tricoli had the school work with Georgia Southwestern State University to offer a bachelor’s degree that students would complete in three years instead of the standard four. Tricoli announced the new degree to the media before system leaders could do so.

When Huckaby was developing candidates for college mergers, Tricoli wrote a letter urging the state to merge the smaller Atlanta Metropolitan College into his school. The pairing was not among those recommended by Huckaby or approved by the State Board of Regents.

Among the questions left unanswered by the fiscal crisis is why the University System didn’t act more quickly when state audits had raised questions about the school’s deficit spending and record-keeping the past two years.

GPC responded in the most recent state audit, released just before Christmas last year, by saying, “Georgia Perimeter College continues to improve accounting procedures and internal controls.”

However, the audit showed that the school had overspent what it took in by almost $5 million, that some fund categories were running deficits and that some basic accounting in its financial statement was incorrect.

For example, the cash on hand at the beginning of the fiscal year, July 1, didn’t match what it was at the end of the previous fiscal year, June 30, according to the audit. The difference: $1.675 million.

“Through our examination, it was determined that the college failed to properly monitor budgetary financial activity during the year,” the audit said.

University System officials’ initial take was that the crisis was brought on by poor tracking of spending rather than criminal activity.

Information provided by the system shows that what has been spent and what the school planned to spend this year would outpace available revenue by $16.34 million if the University System didn’t make any changes. The original budget for this fiscal year was $185.1 million.

The school was on schedule to spend $10 million above its $101 million payroll budget, including $6.7 million extra on fringe benefits. Equipment purchases were expected to be twice what was budgeted. And revenue — tuition, fees, state appropriations — was running $3 million below what had been budgeted.

Perimeter has been on the system’s radar before for its business practices.

A separate University System audit in 2010 found Georgia Perimeter violated state policy for nearly seven years by allowing hundreds of students to remain enrolled in classes even though they never paid tuition. The findings included 395 past-due accounts more than a year old with a balance of $590,786.

At the time, Tricoli said the college was unaware it was violating the rules and immediately stopped the practice. The violations began in 2003, before Tricoli became president.

Members of the University System Board of Regents and system officials have long said that presidents must be held responsible for what happens on their campuses. Regents Chairman Ben Tarbutton agreed that the “buck stops” with Tricoli but said the situation isn’t clear cut.

“The main thing is he is no longer president,” Tarbutton said. “We have to be fair and we have to get all the facts ... We have got to find out who knew what and how this happened.”

System staff has been aware of the situation for less than two weeks and need more time, Tarbutton said. There’s “more to come,” he said.

The crisis comes at a particularly bad time for the school because its accreditation is up for renewal, and the Southern Association of Colleges and Schools Commission on College is scheduled to announce a decision in June 2013. The state Department of Audits was already planning a full audit of the school’s finances to provide to the accrediting group.

“Right now it’s too early to speculate” what impact the shortfall may have, said Pamela Cravey, spokeswoman for the association.

Georgia Perimeter isn’t the only University System school that has faced — or is currently facing — a shortfall and questions about how they handle the taxpayers’ and students’ money.

Fort Valley State University officials announced in March faculty and staff would have to take at least three furlough days to help cover a $900,000 deficit, the Macon Telegraph reported.

In December, SACS, the accrediting group, issued a warning to the school on several issues, including its handing of money.

Auditors have raised questions about Fort Valley’s management for years, and current President Larry Rivers had to deal with a $5 million deficit brought on by years of overspending when he took the job in 2006.

In 1995, then-Chancellor Stephen Portch reported that an internal audit and an external review at Albany State University found poor record-keeping and questionable loans to employees, cash disbursements and account transfers.

Besides sending its staff to examine Georgia Perimeter’s books, Huckaby and the Regents have appointed Rob Watts, the university system’s former chief operating officer, to serve as Georgia Perimeter’s interim president. Watts held this position before Tricoli was hired.

Watts already appointed a new vice president for fiscal affairs and plans to speak with faculty and staff May 18.

“We have a challenging year to face together,” Watts wrote in a letter to faculty and staff. “We must bring the budget back into balance, while simultaneously meeting the educational needs of our students ... It will be a very delicate balance indeed.”