University of Maryland University College may have overpaid $3.3 million to a marketing contractor, state auditors found in a review that came just before the school's president was placed on indefinite leave and then abruptly resigned.
The misstep was included as an addendum in a routine review of the university's operational and financial systems published Thursday by the state's Office of Legislative Audits.
Auditors noted that after the conclusion of their fieldwork — which primarily occurred March 2011 through August 2011 — "we became aware of certain significant events that necessitated additional focused audit work."
They cited the resignation of UMUC's president, Susan C. Aldridge, and several referrals to the agency's fraud, waste and abuse hot line "alleging certain improprieties" relating to payroll and personnel. Auditors also found other overpayments.
"This was certainly an unusual situation, given that the president was stepping down around the same time," said Thomas J. Barnickel III, the state's legislative auditor.
The auditors said that UMUC hired a contractor to advertise the institution online and paid the company based on the number of student leads it returned. In the end, auditors believed the university paid for 43,662 student leads that it never received.
"From our standpoint, it was a breakdown in their processes," Barnickel said. "They were paying the bills without verifying the information."
The additional review was initiated in January 2012 after the state's legislative office referred the allegations to the University System of Maryland's office of internal affairs.
In February 2012, Chancellor William E. "Brit" Kirwan announced in a short letter to UMUC students and staff that Aldridge had been placed on indefinite leave, without explanation.
In March, she abruptly resigned, saying in a statement, "Given all that we have accomplished over the past six years, I think this is a good time to step down."
Aldridge could not be reached for comment Thursday.
Kirwan also declined to comment Thursday, saying it was a personnel matter. But he confirmed that after the university system received a tip, it swiftly sent in a team to investigate. He said it found that "some inappropriate things had occurred."
The case has been referred to the office of the state attorney general's criminal division.
"I think it was unfortunate that it occurred but that we handled it satisfactorily," Kirwan said.
UMUC has more than 90,000 students and operates branches in Asia and Europe.
The audit also found that over several fiscal years, the university had $415,000 in questionable payments to employees.
Auditors found payments totaling $248,000 to two former employees in its European division for retirement reimbursements that were not substantiated; $128,000 in sabbatical leave paid to a faculty member in its Asian division who was not tenured and therefore not eligible; and $39,000 in administrative leave paid to several employees over months, though the university's leave policy limits those payments to 30 days.
In addition, auditors found a $547,000 outstanding debt from a Taiwan-based company that UMUC hired to administer its doctorate program.
"We take the whole process very seriously, accepted the findings and the recommendations, and have taken the appropriate actions where necessary," said UMUC spokesman Bob Ludwig.
In October, UMUC named Javier Miyares its permanent leader. Miyares had served on its management team for a decade and stepped in as acting president after Aldridge's resignation.
Kirwan said that the institution has been on solid ground since.
"I think the morale and the momentum at UMUC is very strong," he said. "So I think it is definitely back on track."
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