FOIA Request Sheds Light On ETSU Activity Fund Accounting

By Daniel Gilbert
Reporter / Bristol Herald Courier
Published: June 1, 2008

JOHNSON CITY, Tenn. – On paper, calculating the balance for a special events fund at East Tennessee State University looks like linear, checkbook-variety math.
But when entered into the university’s electronic accounting system, where revenues and expenses cycle continuously in and out, errors can happen to the tune of a few hundred of thousand of dollars.
University records obtained through a Freedom of Information Act request highlight a shoddy accounting system that allowed administrators to overdraw a special events fund by nearly $230,000 – an oversight that places severe monetary limits on events for the coming year.
Officials have not said whether anyone has been disciplined for the mistake, and have blamed the oversight on a chain of errors involving multiple departments, beginning with an employee who “misread a [computer] screen.”
Administrators say they have implemented more regulatory measures, but it remains unclear how they miscalculated the available funds. There is no written correspondence between administrators regarding the authorizing of spending from the events superfund, according to a statement from the university responding to a Herald Courier inquiry.
The complexity of the accounting method officials describe contrasts with revenue figures that are based on relatively constant quantities, leaving questions unanswered about how they could err by such a large margin.
The superfund, created to bankroll major events several times a year, receives its funding from 75 percent of $20 activities fees students pay each semester.
At the beginning of the 2007-2008 school year, the fund had $56,629 and could count on an additional $400,000 in activities fees – assuming all enrolled students paid for both semesters. The university’s bills – including Homecoming and concerts by Carrie Underwood and the Goo Goo Dolls – came to approximately $862,000, records show.
That amount represents more than all the revenues from projected activities fees for the entire year – $535,560 – including the money shunted into a smaller fund for student organizations. It is nearly 2½ times greater than what the university spent on events the previous academic year.
Assuming enrollment stays relatively constant, the superfund will have less than $200,000 at its disposal next year once it pays off the outstanding charges – which have been temporarily covered by internal cash reserves, officials said.
Though the university can calculate to a fair degree of certainty how much revenues to expect, a random snapshot of the fund may not reflect income and expenditures that are pending.
“Not everyone pays on one day,” David Collins, vice president for finance and administration, said of how the activities fees accrue.
The accounting software, installed two years ago, has a feature that automatically rejects an expense when revenues are not sufficient, but it was not enabled.
That will change, Collins said.
“Effective July 1, we will turn on that flag, which will kick anything out in the future,” Collins said.
He also gave assurances that his office will more closely review contracts for future concert events.
As for the miscalculation, Collins said he believed it “was a function of learning a new system. I don’t understand it either, how that happened.”
Officials have downplayed how the overspending will affect events for next year, saying the depleted fund does not necessarily rule out concerts. They are offering few details until they meet later this summer to discuss their options, said Sally Lee, associate vice president of student affairs.
When first contacted about overdrawing the superfund, university officials immediately realized the potential for negative press, e-mails obtained through the FOIA request show.
“This is worrisome,” wrote Collins on April 29, after the first media inquiry. “I see potential for some real negative publicity coming. You might want to give the President a ‘heads-up.’ ”
“I will David,” responded Jane Jones, executive assistant to the president, who is also the facilitator for the university’s four-member Crisis Communication Team. “This is not good.”
But as administrators went into damage-control mode, convening the CCT to come up with “talking points,” the newly-elected president of student government, was still touting the success of the Carrie Underwood concert in late March – the year’s biggest expense, at $535,000.
For the most part, senior T.J. Mitchell said, “We got very positive feedback for Carrie Underwood. It was our highest attended concert.”
Richard Singleton, another ETSU senior, was not in attendance.
“I think it’s atrocious,” said Singleton, 52, a Vietnam veteran who is working on a philosophy degree. “That money could have been better spent elsewhere. For that kind of money, they could have gotten Paul McCartney.”

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