Past Ewu Spending ‘Improper’ Administrators Tapped School’S Capital Budget

Former Eastern Washington University administrators improperly tapped the school’s capital fund to pay for rebuilt generators, renting storage units and fixing up campus, officials said Thursday.

Alex Cameron, interim vice president of business and finance, said he discovered $250,000 to $600,000 in day-to-day expenses that were mistakenly charged each year to Eastern’s capital budget as a way to keep the historic campus in shape.

Cameron believes the practice was used to circumvent deep cuts to the campus maintenance budget. He said he has installed new controls that prevent employees from mingling capital construction dollars with operating expenses.

“We agree with his (Cameron’s) position,” said Ed Penhale, spokesman for Gov. Gary Locke’s finance office. “It was clearly improper.”

Cameron said he unearthed the practice last summer after he was appointed to fill a vacancy left by the retirement of Michael Stewart, the longtime business vice president. Stewart left after Eastern president Marshall Drummond resigned under pressure in February 1998.

Cameron said it may take years before past practices work out of Eastern’s system as employees slowly find that the capital funds they once used for maintenance are no longer available.

Keeping the accounts separate is important to maintaining public trust. The Legislature approves Eastern’s budget based on a promise to spend specific capital dollars for building and renovation, and other money on daily operations required to educate its 7,400 students in Cheney and Spokane.

Budgets for the next two years currently are being drawn up in Olympia for Eastern and other state agencies.

“Nobody was doing anything illegal, but the definition of capital was quite loose,” said Cameron, who believes former administrators slashed too much from the maintenance budget and, in desperation, raided the capital fund. “People were hunting around for other sources to get the work done.”

Eastern president Stephen Jordan, who took over last July, said Wednesday that Cameron’s findings may inflate a projected $1.5 million to $3.5 million budget deficit for the coming year. Jordan’s staff is in the early stages of identifying solutions to balance the budget in time for fiscal 2000, which begins July 1.

A boost in student enrollment increased tuition revenue this year, but Cameron said those dollars won’t cover the deficit. Rather, they were promised to the academic departments as an incentive to recruiting students.

Cameron, a professor of accounting, said the Drummond administration’s broad interpretation of capital spending made him nervous.

He found that when a generator had burned out, former officials took capital funds to rebuild it. When science equipment was moved during a construction project, they used capital dollars to rent a storage unit for years after the project was completed.

“We shut down most of this kind of spending three to six months ago, but I anticipate that I’ll see more come through in the months ahead,” Cameron said. “I’m not too worried about cleaning up the (improperly charged) expenditures, but I’m worried about making sure that campus maintenance gets done.”

Much of the capital spent on operations came from the Minor Works Preservation account, Cameron said.

That was the same account that Stewart and others used in 1997 to help pay for a $200,000 weight room renovation before the Seattle Seahawks training camp. State regulators said no statutes were broken, but demanded that Eastern tighten its accounting controls.

FUNDING Capital funding is separated from operations because it is financed with bonds. The more capital dollars that are spent, the greater the amount of interest payments to investors. Those costs are absorbed by taxpayers.