Louisiana Voice

            Seventy-one years ago, LSU President James Monroe Smith revealed to then-Gov. Richard Leche that he had illegally invested—and lost—more than half a million dollars of university funds in the stock market. For that transgression, and others, Smith was carted off to federal prison.

            Thirty-three years ago Josh Bursh who, at the time was the odds-on favorite to succeed Ralph Jones as president of Grambling State University, was convicted of misappropriating $26,000 in GSU Foundation funds and spent two years in prison.

            More recently, a state audit revealed that GSU officials lost $1 million investing in the stock market. By investing $2.6 million of funds that legally could only be used for university facilities—physical plant—GSU violated two state laws, the audit report says.

            For the third consecutive year the university failed to compile an accurate annual fiscal report and overstated or understated cash flows by as much as $89 million. The audit also cited continuing problems with athletic department contracts and for movable property accountability.

            But the real revelation was when Tom Cole, director of financial audits for the Legislative Auditor’s Office, said, “None of this was serious enough for use to send for prosecution.” Perhaps not, but Daarel Burnette left his position as Vice President of Finance and Administration on July 21. There was no immediate word if he resigned voluntarily or under pressure, or was simply fired. Leon Sanders, who served as Burnette’s assistant, has been named as his interim replacement.

            GSU President Frank G. Pogue concurred with virtually all the audit’s findings, which, among other things, said the university failed to correct poor accounting practices, including being unable to account for movable property and for not signing game contracts with all athletic opponents, shortcomings also noted in prior year audits.

            Even as area media were saying that Pogue was unavailable for comment, the GSU president was releasing an “open letter to the campus community” that addressed news reports on the latest poor audit. While acknowledging that GSU “ is undergoing major financial challenges, however, not to the extent that we are negligent in being good stewards of the public’s trust.”

            Pogue said that while the audit was for the fiscal year ended June 30, 2009, “the stocks were purchased by the university between 2000 and 2004.” Pogue became GSU’s eighth president only last month. He had been serving as interim president since last December. Horace Judson, who left last October, was GSU president during the time period covered by the audit.

            “It is my belief that the corrective actions submitted in response to the legislative auditor’s findings are appropriate and that they ensure the fiscal operations at Grambling State University are consistent with the law,” Pogue said in his June 30 letter.

            “Our priority is to move Grambling State University forward and that includes ensuring that this university makes fiscally sound decisions in spending and investing public resources. We have established an inclusive strategic planning process to assist us with these efforts. We are committed to holding ourselves and this institution to a higher standard of moral and ethical accountability while ensuring that we are good stewards of the public’s trust.

            “It is the goal of this administration to maintain a spirit of transparency and open communication with the campus community, especially when faced with potentially damaging news,” he said.

            Cole said the improper stock investment, made with $2.6 million in plant funds that can legally be used only on university facilities, “was through an oversight and not properly monitoring their investments.” Pogue, in his letter, did not address the question why funds clearly earmarked for campus physical plant were used for stock market investment.

            “They are making efforts to improve the control structure at Grambling,” he said.

            Grambling has been “making efforts” to correct glaring audit deficiencies for more than 40 years, mostly to no avail. The legislative auditor’s office, on the heels of the Josh Bursh debacle, was so desperate to clean up the fiscal mess at the university that it installed one of its own auditors on the campus to oversee financial operations. That effort, however, failed as GSU continued to pile up negative audit reports year after year.

            Stay tuned for annual updates.