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Posted: September 20, 2012 9:57 p.m.

Audit: Top execs at fault in GPC $ mess

State auditors don't believe fraud was a cause in the massive overspending at Georgia Perimeter College that led to millions in budget cuts and cost 282 employees their jobs, but rather lay the blame on a budgeting process mangled by top executives.

GPC (Georgia Perimeter College) began spending more money than it earned in fiscal year 2009, racking up $21.8 million in overspending over four years, yet each member of GPC's former financial team claimed to be unaware of the overspending, according to the audit, essentially passing blame down the line. However, the audit found that officials not only should have known but could have prevented the issues.

The audit, conducted by University System of Georgia officials, was long-awaited as school officials and the public sought explanation for how the school ended up having to make more than $25 million in cuts to balance this school year's budget.

Former president Anthony Tricoli, who resigned as president after the cuts were announced and took a job at the university level, did allege fraud by his fellow former employees, but auditors did not find any instances of fraud.

Rather, the ultimate blame for the financial mess was laid at Tricoli's feet.

"We concluded that senior GPC administrators failed to perform certain key fiduciary duties," the audit stated. "Chief among these fiduciary duties was responsibility to understand and manage the institution's fiscal affairs. Responsibility for the institution's management rests with the president."

The audit's conclusion is what many suspected - namely that Tricoli and other's "emphasis on enrollment growth and program expansion took precedence over sound fiscal practice as management and leadership priorities."

However, that financial responsibility, and blame, also rested on the chief business officer, assistant vice president for financial and administrative affairs and the budget director.

Based on numerous interviews conducted by auditors, each official ultimately held another official accountable for the fact budget deficits were going unnoticed.

"The former president asserted that he was unaware of GPC's fiscal condition and that it was the CBO's duty to inform him of fiscal issues. The CBO indicated that he relied on the budget director and the AVP to keep him informed of fiscal deficits. The AVP indicated that she was excluded from key decision-making with respect to the budget, the audit stated. "The budget director indicated that he brought some budget concerns to the attention of the CBO and AVP; however, the internal reports produced by the budget director did not suggest that any significant budget issues existed."

The financial team was replaced shortly after the budget deficit was found and, along with interim President Rob Watts, instituted a series of reforms, many of which were suggested by the audit.

"Georgia Perimeter College appreciates the special review conducted by the Board of Regents Office of Internal Audit. As the report indicates, the new financial team at GPC has already implemented most of the recommendations in the area of budgetary and accounting controls. These actions ensure that the current budget shortfall will never happen again," Watts said in an email.

"GPC is almost 50 years old. It has always been and continues to be an academically strong teaching institution.

This semester, 24,000 students will pursue their dream of a college education with the outstanding faculty at GPC."

In the same email, college spokeswoman Beverly James said Watts would not be making any more statements regarding the audit.

The college is now trying to rebound after its reserve accounts were wiped out by overspending. The college had $20.7 million in reserves at the end of fiscal year 2009, which then dropped to 12.4 million and 4.9 million heading into this year. The deficits happened despite significant revenue growth of $42.4 million during the past four years. The unaudited fiscal year 2012 revenues were $183.3 million, while expenses were $187.6 million.

"In summary, GPC's fiscal challenges were preventable. The shortfall in any given year leading up to fiscal year 2012 was not insurmountable. Management attention to GPC's actual spending would have allowed the institution to curtail the growth in spending," the audit stated. "Unfortunately, key leaders at every level charged with actual responsibility for GPC's fiscal management did not exercise all of their assigned duties."

Although the cuts have been detailed previously, the audit gave a clear breakdown on the steps taken to fill the college's deficit, including:

• state appropriations in the form of institutional loans were increased $9.5 million (paid back in fiscal year 2013)
• $1.4 million of purchase orders were closed
• $4.7 million in summer 2012 revenue was moved from fiscal year 2013 to fiscal year 2012
• $400,000 savings from implementation of other short term strategies
• 282 staff members (215 full time and 67 part time) were laid off, which GPC projects will result in financial savings of $7.5 million in fiscal year 2013 and $9.4 million in 2014

The Newton campus lost 24 of its 266 employees, totaling around $500,000 in salary reductions, according to data obtained previously through an open records request.

Watts admitted the cuts hurt, but he emphasized the college's efforts to reduce any effect on students, including not releasing any tenured or tenure-track faculty. And despite decreased enrollment, caused by tougher admission standards implemented at all colleges by the state, Watts told The News previously he is confident Newton's campus still has a bright future.

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