By Kat Riddler, Editor-In-Chief
Missouri State Auditor Nicole Galloway released Monday the findings on the audit that her office began in February of last year on the University of Missouri System. Her report found “inappropriate bonus payments to top executives, including incentive payments, luxury vehicle allowances, and other compensation not included in published salaries.” In addition, she found that former University of Missouri–Columbia Chancellor R. Bowen Loftin continued to receive his six-figure salary after resigning from his position in November 2015.
“Administrators appear to have forgotten that the system is a public institution, and that they are accountable to taxpayers, students, and families,” Galloway said.
According to the report, Galloway uncovered $2.3 million in hidden payments and incentives to top administrators, including $1.2 million in incentives awarded to 18 executives and administrators over the past three years.
While the UM System can use incentives according to Board of Curators’ (BOC) Collected Rules and Regulations 20.130 and the budget approved by the BOC, there was a lack of transparency in how the compensation was earned, making the incentives appear as year-end bonuses. The BOC or system president approved $819,000 in incentive payments for the fiscal years ending June 30, 2014 and 2015. This is with an additional $359,000 in incentives in fiscal year 2017, which ended June 30, 2016.
Excessive vehicle allowances and retention bonuses, relocation payments, and housing allowances were also criticized in the audit. According to the report, “Approximately $407,000 in vehicle allowance payments were made to 18 top executives and administrators in 2015 and 2016. Many administrators received more than $1,200 per month in vehicle allowance pay.” More than $800,000 was discovered in undisclosed retention bonuses, relocation payments, and housing allowances.
“These hidden sources of additional compensation amount to bonus pay because there were no clear guidelines or performance metrics,” Galloway said. “These payments must be included in compensation figures released to taxpayers so they know how their money is being spent.”
UM System President Mun Choi took office March 1, days before the audit release. The following Friday, Choi announced eliminating the executive performance incentive program. Choi said in his first available press conference, “As the state’s premier public university, we owe it to the state’s taxpayers and our stakeholders to be transparent with respect to what we are trying to accomplish as we move the university forward.” President Choi continued, “To that end, I will explore options for making our executive performance practices more effective, with any changes fully vetted with the Board of Curators.”
Choi also announced a comprehensive review of all elements of compensation for UM System executives. The review will be in conjunction with the UM System vice president for human resources and will begin immediately.
Chancellor Loftin resigned from his position in November 2015. The audit showed that he continued to receive his salary of $459,000 for six months after his resignation, when he was performing no duties of the position.
In June 2016, after he stopped receiving his salary as chancellor, Chancellor Hank Foley approved Loftin for the newly created position of the director of national security research development. This new position came with a salary of $344,000. This amount was higher than Loftin’s supervisors and was 31 percent more than the highest paid research administrator on campus.
The contract for the position also had a $100,000 retention bonus, a $15,600 per year luxury vehicle allowance, and a $35,000 annual stipend with no restrictions on use. Loftin was given “developmental leave” to continue traveling the remainder of the year with no clear objectives or deliverables for the position while using his salary and $50,000 travel budget.
“These decisions demonstrate poor judgment and a lack of accountability in almost every aspect of the former chancellor’s resignation and transition to a new position,” Galloway said. “System leaders must be called on to explain how it makes sense to pay almost half a million dollars over the course of a year to an employee who was responsible for completing no actual work on behalf of the university or its students.”
President Choi’s initial statement about the audit focused on transparency and the future. “The UM System strives to be more accountable and transparent in its stewardship of public resources,” President Choi said. “We will use the audit report to continue improving our business processes and our operations.”
Governor Eric Greitens’ Board of Curators nominees Darryl Chatman, Jamie Farmer, and Jeff Layman were questioned by the Senate Gubernatorial Appointments Committee about the audit findings. Chatman brought up the fact that the BOC might not know the competitive figures for the incentives and compensation programs to the extent that individual universities do. St. Louis Attorney Chatman said, “We do know something is broken, though, on a lot of levels.”
President Choi initially released in his official statement an explanation of some of the incentives. “Our executive compensation program is critical to our capacity to attract and retain top leaders in what is an extremely competitive national higher education market,” Choi said. “Consistent with the audit report’s recommendation, the UM System will continue to establish objective executive performance goals.”