Archive for Sunday, April 19, 2015

Audit finds UMKC business school ran up deficit to boost ranking

April 19, 2015

— The University of Missouri-Kansas City's business school racked up a nearly $11 million operating deficit in its effort to gain national and global esteem, which ultimately tarnished the university's reputation.

An internal audit raised concerns about the Henry W. Bloch School of Management's deficit and called for better internal controls over travel and expense budgets, The Kansas City Star reported.

The report follows an earlier audit requested by Missouri Gov. Jay Nixon after an investigation by The Star found faculty members submitted false data as a means to get the Bloch School's entrepreneurship program in the Princeton Review's top rankings. Both audits cover roughly the same time frame, fiscal years 2009-2014.

The report by Pricewaterhouse Coopers auditing firm shows the Bloch School's operating deficit increased more than 600 percent in the past five years, from $1.5 million in 2009 to $10.6 million in the fiscal year that ended June 30, 2014.

UMKC spokeswoman Stacy Downs said the Bloch School has been able to balance its budget each year with help from the university's reserve fund, and the $10.6 million deficit eventually will be repaid from the school's revenue. Total revenue for the school in fiscal 2014 was $19.4 million.

"It's not out of the ordinary for an academic unit to run a deficit on occasion, based on a variety of factors from enrollment shifts to state funding decreases to program investments," Downs told the newspaper by email.

Auditors said the core of the Bloch School's problem was that projected revenue increases didn't keep pace with added expenses, such as new, higher-paid faculty members, aimed at boosting the number of tuition-paying students. Former dean Teng-Kee Tan set a goal of doubling enrollment at the Bloch School during his five years there, but enrollment rose only 21 percent between 2009 and 2014, the audit said. Tan retired last year and wasn't available for comment to the newspaper.

Officials at other area universities, including Kansas State and the University of Kansas School of Business, told the newspaper it isn't their practice to operate on a deficit.

The audit Nixon requested mirrored The Star's findings that Bloch School faculty took shortcuts and submitted false or misleading information to achieve higher rankings. Two faculty members resigned and the school's entrepreneurship program was stripped of four years' worth of rankings.

UMKC Chancellor Leo Morton has apologized for the lapses committed during his watch and vowed that the Bloch School is reforming its practices.

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