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Heitkamp: UND fund transfers were legal
legislators say legal opinion will make it tough for them to keep track of university spending.

Internal transfers of funds at UND were legal even though they exceeded a $50,000 limit set by the state Legislature on spending or transferring funds, according to North Dakota Attorney General Heidi Heitkamp. Heitkamp issued the opinion this week, leaving some legislators believing it will be difficult for them to keep track of university spending. Heitkamp's opinion was issued at the request of the Legislative Audit and Fiscal Review Committee, which reviews and must approve all audits of state agencies.

The transfers, totaling $1.13 million, were questioned earlier this year in an audit of UND by the North Dakota State Auditor's Office. The audit cited a 1995 law that says colleges and universities may not spend or transfer more than $50,000 in any one transaction without first getting approval from a legislative committee.

Heitkamp's opinion worries Rep. John Dorso of Fargo, the House Republican Leader and a member of the audit committee. Dorso said Heitkamp's opinion may undo several years worth of legislative work aimed at getting a handle on how funds are shifted around internally at colleges and universities, especially UND.

At Dorso's urging, the legislative committee voted to ask Heitkamp to suggest wording for a new law that would make it possible to keep track of those funds. Heitkamp said she would comply with the request.

The UND audit identified five internal fund transfers that exceeded the $50,000 limit. The transfers were for such things as copying, telephones and aviation maintenance.

UND officials have explained in the past that the internal service funds are used to move money around from one area to another, as services are performed and paid for. For example, the university provides telephone service to individual university departments, then regulates and keeps track of telephone use by charging fees for telephone use. The internal service funds also help the university keep track when such things as phones and copying machines used for other purposes, such as doing work for a federal grant.

Dorso has long complained the funds cover up the true uses of money at the university. For example, the same UND audit also uncovered 11 funds that were in the red. By far the largest group of deficit funds were located in the Center for Aerospace Sciences, where eight separate funds showed a total of $2.4 million debt. There also were deficits in funds for two of the UND School of Medicine's family practice centers, and a $343,000 deficit in the athletic department that Dorso says was, in effect, a taxpayer subsidy of the UND Boosters Club.

The problem is partly due to the university system's outdated accounting system, according to Laura Glatt, university system vice chancellor for finance. A new computerized system would enable colleges and universities to better track and report on use of funds, she said.

Meanwhile, UND is no longer making large internal fund transfers-Instead they are making a series of smaller transfers. UNDís President said large transfers showed up in the audit because the university used to wait for months or even a year before making certain transfers. Now, UND makes transfers each month, so the total never exceeds the $50,000 limit.

Dorso said he's not so concerned about the $50,000 limit as he is about the possibility that Heitkamp's opinion may allow universities to hide the true use of money on state campuses. The opinion says that transfers among internal service funds should be considered "routine operating expenses." That definition, Dorso said, might encourage universities to begin disguising their fund transfers.

Source: Grand Forks Herald, October 8, 1997