Auditor Faults University Of Missouri System For Handling Of Leader's Exit, Bonus Pay

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Bonuses paid to executives and administrators in the University of Missouri System "may violate the Missouri Constitution," the state auditor says in a new report that details hidden bonuses, "excessive" luxury vehicle allowances — and $100,000 in retention payments to a chancellor who resigned amid a furor, only to be rehired in a new post months later.

"Administrators appear to have forgotten that the system is a public institution, and that they are accountable to taxpayers, students and families," Missouri State Auditor Nicole Galloway said in presenting her report on the University of Missouri System and its Board of Curators.

That former chancellor, R. Bowen Loftin, resigned his post at the flagship Columbia campus in 2015, on the same day University of Missouri System President Tim Wolfe stepped down. While Wolfe was undone by his handling of racial incidents at the campus, Loftin resigned after nine deans from nine different departments called for his dismissal in a letter they sent to the school's Board of Curators.

Despite the deans' repudiation of Loftin's leadership — they said he had created a "toxic environment through threat, fear and intimidation" — Loftin, who resigned in November of 2015, "continued to receive his full chancellor salary of $459,000 per year through April 30, 2016," the auditor's report states. The agreement that was approved when Loftin resigned had called for him to receive a salary at 75 percent of his chancellor pay.

Detailing what the auditor calls "financial mismanagement" of the former leader's transition, Galloway says a new job was created for Loftin last May, paying him $344,250 per year as the Director of National Security Research. When he returned, Loftin also received a $35,000 annual stipend and a vehicle allowance of $15,560 — nearly $1,300 per month.

Noting that his base pay is 31 percent more than any other research administrator on campus, Galloway's report says Loftin was granted "developmental leave" almost immediately upon taking the job, giving him the rest of the year "to travel the UM System and the country to 'learn what we do'" — citing the offer letter for the job.

The auditor also found fault with the system's payment of bonuses and vehicle allowances.

From the report:

"In 2015, 2016 and 2017, the Board of Curators or System President approved approximately $1.2 million in incentive payments to top executives and administrators for their performance during the preceding years. Incentive payments were made without a formalized and clearly defined process of how the additional compensation was to be earned, giving the appearance of year-end bonuses, which are a violation of the Missouri Constitution."

For the 2015 and 2016 fiscal years, the auditor says, the system paid some $407,000 in vehicle allowance payments to "an average of 15 top executive and administrative positions" — a system that, in the most recent fiscal year, meant those individuals were paid an average of around $1,240 a month.

Speaking of the wider ramifications of the university system's financial stewardship, Galloway said, "Missouri families often take on significant debt, even after spending years saving their hard-earned dollars, to send their sons and daughters to college. System leaders must work to accept responsibility for their actions and to regain the public's confidence."

Tuition at the University of Missouri did not rise for most students last year, as part of a deal made with state leaders over an increase in funding. But with a new governor looking to cut the state's higher education budget, some now say tuition hikes will result.

The official audit includes the university system's response, which says in part: "Nothing in the System's plan violates the state constitution or gives any reasonable appearance of doing so." The system also refers to some of the laws cited by the state auditor as being written with either the general assembly or a municipality — not the university system — in mind.

The system defended its handling of bonus pay, stating that the criteria it uses to judge job performance are "quantifiable" or "otherwise objective." To that, the auditor replied in a comment of her own, "Our review of the documentation determined the measurement criteria in place are almost entirely subjective."

On the subject of vehicle allowances, the UM System said it provides the payments to executives "as one component of a compensation package," adding that the allowances "are not excessive but instead are market driven" by pay rates at peer institutions.