A Compromised Press
The Topeka Capital-Journal sponsors the Topeka Business Hall of Fame. The Hall of Fame honors business leaders who "have made extraordinary contributions to Topeka and earned the respect of the community." Although a wonderful forum to pay tribute to these business leaders, the Topeka Capital-Journal, as a news reporting entity, must guard against compromise. When business leaders who are executive officers of a public institution are selected, the public can only wonder if that public institution will receive sufficient scrutiny by the press.
In 2004, Jerry Farley, president of Washburn University, was inducted into the Topeka Business Hall of Fame. These are some of the stories that the Capital-Journal may have missed due to their compromised position in reporting the news.
New Car.
In 2000, Washburn University purchased a new automobile for President Farley. With a concerted effort by Washburn University board members, university counsel, Washburn Endowment Association (WEA) board members, and the Purchasing Department, an automobile was purchased. At President Farley's direction, with board cooperation, and coaching by counsel the purchase was made in a manner that kept the transaction out of the public eye, in spite of the transaction amount exceeding $25,000. It is unlikely that the purchase was sent out for bid either, given the suggestion to "sole source" the purchase to a local dealership being courted by WEA.
Bank Reconciliation.
Even as School District 501 was justifiably receiving press for its problem with bank reconciliations, Washburn University had received its own recommendation from its auditors at the completion of their June 30, 2003 audit. The following Comment and Recommendation was given to the Board of Regents on January 13, 2004:
Bank Reconciliations
"The June 20, 2003 bank reconciliation listed items as outstanding that had already cleared the bank. We recommend that the University review the bank statements to determine those items that have cleared the bank at month-end and properly reflect them on the bank reconciliation. This would allow the financial statements and records to more closely represent the cash holdings of the University."
Change in Auditors
In January, 2005, the Washburn University Board of Regents approved awarding the contract for annual audit services to a Kansas City firm. Although the audit had been performed for as long as anyone could remember by a local Topeka firm, it was time for "fresh eyes and a different insight." These fresh eyes will cost the university an additional $75,000, since the Kansas City firm's bid was 27% higher than the local firm. Whether these are truly "fresh eyes" might be disputed.
Who is performing the audit is not as important as who the auditors report to. Independent audits work much better when directed by persons independent of the day to day financial affairs. There was considerable input from the staff when selecting the auditor, and unless members of the Board's audit committee really step forth to play an active role in the annual audit, the $75,000 spent for "fresh eyes" will not provide any additional benefit to the university while the $356,000 spent on the contract leaves this local community.
The firm awarded the contract, Baird, Kurtz & Dobson, LLP (BKD), first contracted with the university in May, 2001 to perform process mapping services at a cost not to exceed $50,000. Although the board agenda item gave some appearance that this was a competitively bid process, further investigation would unlikely support that impression, nor is it likely that a final product utilized by the university could be produced for the $62,740 that was spent on this contract. In June, 2004, BKD presented an Internal Control Review to the Board of Regents. As part of this presentation, it was recommended that their report be shared with the university's external auditors to ensure that the report's recommendations were being implemented. Now, these "fresh eyes" can review their own work product.
Financial Stories.
Some stories that should be covered, but never make the newspaper, involve financial matters. While the Capital-Journal has been generous in its praise for the changes that have occurred at Washburn University since Jerry Farley became president in 1997, some of the cost of those changes to this community have not been covered.
For example, since 1991, tuition revenues have increased by 160%, due to the combination of increased enrollment and double digit tuition rate increases. Also, debt service payments have increased $2,000,000 to pay for the new construction that has been so highly praised. Cost overruns on capital projects are somewhat routine, but the administration is generally not held accountable for this fact. Although money has been quite tight in other state and local public institutions, Washburn University has found discretionary funds for marketing costs of almost $70,000 a month and for building a water feature that cost $100,000.
It would be nice if the Capital-Journal would consider reporting on board meetings and perhaps take an unbiased approach in its reporting on what is really happening at Washburn University.
Presidential Compensation.
The press has spent considerable time, money and effort getting information regarding total compensation packages for area athletic directors. It would be interesting to learn the total compensation package for President Jerry Farley. While his salary is determined in a public forum, no information is provided to the public regarding other features of his compensation package, such as housing, transportation, and club memberships.