Auditors: UConn improperly used maintenance funds for expansion projects

The University of Connecticut

The University of Connecticut’s Storrs campus

The University of Connecticut improperly redirected nearly $50 million in state funds earmarked for deferred maintenance to instead expand and upgrade various facilities, the state auditors reported Tuesday.

And the House chair of the legislature’s Higher Education Committee – who wrote UConn oversight legislation a decade ago in response to a construction scandal at the Storrs campus – said it appeared the university was “sliding back into old habits.”

Auditors John C. Geragosian and Robert M. Ward reported Tuesday that state funds “allocated for deferred maintenance were used for purposes not authorized by statute” under the UConn 2000 program during the 2014 and 2015 fiscal years.

“UConn 2000” is the title for the state’s financing program for capital projects at its flagship university. The program, which dates back to 1996, has pumped $2.36 billion into the main and satellite campuses in two decades.

The auditors surveyed 20 of the “larger, recent, deferred-maintenance projects” and noted that the “primary objective” of 10 projects “was to expand the capacity of, or otherwise upgrade, assets.”

Geragosian and Ward added that “legislative authorization should be sought for projects that do not constitute deferred maintenance.”

Examples included:

  • $23 million in state bonding used to expand the maximum capacity of the Putnam Refectory dining hall from 400 to 700 people.
  • $4.7 million to construct a functional magnetic resonance imaging center in the Philips Communications Sciences Building.
  • And $2.3 million to increase water delivery capacity by installing new water mains and burying electrical lines.

Geragosian and Ward noted that UConn’s bond counsel advised the university six years ago that funds allocated for deferred maintenance cannot be used for “activities aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, those originally intended.”

But the issue of UConn’s redirecting state funds for new purposes goes back further than 2010.

Gov. M. Jodi Rell formed a study panel in 2005 after the Hartford Courant disclosed a host of problems with UConn 2000 funds.

Initial reports of fire and safety code issues in dormitories led to disclosures that certain inspection work hadn’t been done. Further probes revealed that the university was shifting funds from one project to another.

Close to $3 million in renovations to sports offices were assigned to a School of Business project, for example.

That investigation also showed that funds earmarked for deferred maintenance were used for expansions and new construction.

The 2006 legislature enacted a reform measure tightening audit requirements and establishing a management construction committee to improve oversight.

Willis, who helped to draft that legislation, said Tuesday that “nobody wants to micro-manage the university, and it shouldn’t be our job. But I think they have a responsibility to inform us” so legislators can make adjustments to UConn 2000 program parameters.

But UConn countered in its written response to the auditors that it “does not have access to sufficient funding to make all the necessary and appropriate repairs to its facilities and infrastructure.”

University officials wrote that, “The principal basis of any project utilizing this funding is for the repair or renovation of an under-maintained facility or infrastructure to bring it to current standards.”

UConn also said it believes that after deferred maintenance funding has been allocated to a project, that project may change in scope. But “the university has consistently reported this utilization of such funding to the legislature and other state agencies without objection.”

UConn spokeswoman Stephanie Reitz said that while the university disagrees with the auditors’ interpretation of the law, it has asked legislators to clarify the matter in statute.

The university says that a statute enacted this year, which authorizes UConn “to operate and maintain the components” of UConn “in a prudent and economical manner,” clearly covers the redirecton of deferred maintenance funding. The auditors disagreed.

In another section of the audit released Tuesday, Geragosian and Ward revisited an issue they previously had addressed.

The auditors again recommended that UConn work with the legislature to attempt to refinance an ambulatory care center built at the UConn Health Center campus in Farmington.

Originally directed by Gov. Dannel P. Malloy and the legislature to team up with a private partner to build the center, UConn looked elsewhere when that option didn’t develop.

UConn, working with a quasi-public entity the legislature created in 1987 to help the health center purchase equipment and finance other capital projects, secured a $203 million loan at an annual rate of 4.81 percent. The auditors estimated this cost the state $77 million in “unnecessary” interest.