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Posted: December 13, 2012 8:30 p.m.

GPC sanctioned for financial issues

This year has been tough on Georgia Perimeter College, and the latest bad news came this week when the college was sanctioned by the Southern Association of Colleges and Schools after an audit found the school was operating with a $25 million budget shortfall caused by chronic overspending and lack of financial oversight.

The Atlanta Journal-Constitution Tuesday reported the college is still accredited, but has been warned because of the financial shortfall and lack of fiscal oversight.

A rough year

GPC is the state's fourth-largest public college with an enrollment of around 27,000 students at campuses in Alpharetta, Clarkston, Decatur, Dunwoody and Newton County and online. The college is a popular option for many students who attend in order to get their core classes out of the way prior to transferring to another institution.

In May, former president Anthony Tricoli resigned as president following the disclosure that the school had a roughly $9 million shortfall at the end of the 2011-2012 school year and a projected $16 million shortfall for the current school year. Months later, the college was forced to reduce its staff of 3,000 by 282 employees, including 26 from the Newton campus.

Adding onto the situation was a required 3 percent cut from all state agencies, which trimmed another $1.6 million from spending.

In addition to a cut in state funding, the school could see less in tuition fees as well. The Board of Regents instituted a new requirement for learning support students, creating a cutoff score for reading and math. Those students who fall below a score of 78 in reading, a 60 in English and/or a 40 in math, must take learning support classes at a technical college before attending a university-system college.

What happened?

The college has been spending beyond its means for several years. Reserve accounts have been wiped out by overspending over the last several years. At the end of fiscal year 2009, GPC had $20.7 million in reserves. That dropped to $12.4 million with just $4.9 million heading into the 2012 fiscal year, in spite of $42.4 million in revenue growth over the last four years.

Despite the obvious overspending, each member of GPC's former financial team claimed to be unaware of the overspending, according to an audit done in September, 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, according to a previous story in The News.

"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."

"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."

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

However, state Representative Karla Drenner recently defended Tricoli's responsibility in the fiscal fiasco.

"Several statements made in the final audit report suggest the problem was not solely at the presidential level. Other departments suggested to be involved were the human resource and budget offices," Drenner said in a statement. "GPC understated the fringe benefits that corresponded with each employee on the payroll. This understatement has been estimated at $6.7 million."

Drenner said that since both the human resources department and the budget office both reported to the same vice president, the problems with budget is centralized "in this one area under this one vice president."

"Presidents in all organizations are ultimately responsible for the organizations in which they have been charged to run but, presidents must rely upon their staff to provide them with accurate information, so the best decisions can be made in a timely fashion," she said.

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

What happens now?

Since the University System of Georgia's September audit found that the school's senior fiscal leaders either ignored or didn't notice the school's dire financial straights, the school has been given one year to resolve their issues. A warning was issued to the school earlier this week.

"A warning is not unanticipated in this situation," said Barbara T. Obrentz, chief public information officer for GPC, in a press release. "It is expected that the college will be able to demonstrate to SACS that these issues have been completely resolved within 12 months.
"Georgia Perimeter College has already made notable strides to correct budgeting issues and return the institution to solid financial footing," Obrentz said in the release. "We will continue to implement and strengthen the controls put in place during the summer of this year so that we may resolve any remaining deficiencies and bring the budget back into balance... We value the standards that SACS sets for its members. These standards allow us to achieve our mission as Georgia's largest access institution."

Although the college has retained its accreditation status, making sure they comply with the issues raised will determine if they receive just one warning, or two. A second sanction could mean that the school is placed on probation, according to the SACS website.
Obrentz added in a message Thursday that the school's budget office is addressing each individual issue SACS has and looks forward to regaining full accreditation at the end of that time.

 

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