The Board of Governors asked UCF officials to respond to written questions that scrutinized the misuse of state funds for on-campus construction and those involved in the decision-making process.
UCF answered to the board in a series of written responses, according to a Wednesday email from Assistant Vice President of UCF Communications Chad Binette.
The misuse of $38 million for the construction of the new Trevor Colbourn Hall on UCF's main campus was brought to the attention of the university in August by the Florida Auditor General in a preliminary audit report of operational activity, a report generated each fiscal year. UCF President Dale Whittaker acknowledged the misuse of Education and General funds, which are intended for operational costs, for the construction of the new building in a Sept. 13 Board of Governors meeting.
An additional $10 million was revealed to have been inappropriately used during an emergency UCF Board of Trustees meeting on Sept. 20 to partially fund the construction of new buildings on UCF's main campus. The buildings include a band building, a facilities surplus showroom and a postal hub. The money was also used for furniture, fixtures and a faculty lab in the Research I Building on campus, according to a document that summarizes the inappropriately funded projects.
The Board of Governors is a group of 17 members that oversees the operation and management of the Florida public university system’s 12 institutions, according to the Board of Governors' website.
In a document titled “UCF Questions: Colbourn Hall,” UCF officials responded to 13 questions asked by the Board of Governors regarding the events leading up to the misused funds and the decisions made along the way.
In the first question, the Board of Governors asked UCF to explain the fund source that was originally identified for the estimated $20 million in renovation costs for the old Colbourn Hall, which was initially going to be renovated instead of rebuilt entirely.
In response, UCF officials said the fund source was intended to be from Public Education Capital Outlay funds. PECO funds are the primary source of funding for the State University System’s new facilities and maintenance to existing ones, according to the Board of Governors.
“However, when it became clear that PECO funds would not be forthcoming, E&G funds were identified as a substitute, with the intention of reimbursing those funds from PECO at a later date,” UCF officials wrote in the document.
The Board of Governors asked UCF when the recommendation or decision was made to construct a new facility instead of renovating the existing building. The board also asked who was involved in the decision-making process.
The recommendation to construct the new Trevor Colbourn Hall was made by Vice President for Administration and Finance Bill Merck in 2016, according to the document.
The decision to construct the new building was made by the Board of Trustees after Merck presented documentation supporting new construction to the Facilities and Finance Committee and the Board of Trustees. UCF officials noted the use of E&G funds was not discussed during the meetings.
Whittaker said at a Sept. 14 Board of Governors meeting that Merck accepted responsibility for the decision to misuse the funds and that he accepted Merck's retirement.
The board proceeded to ask UCF to explain the fund source originally identified for the construction project and any changes in the fund source over time.
UCF officials reiterated in the document that the fund source was intended to be PECO funds, but E&G funds were used as a substitute as the PECO funds were not available. UCF officials said in the document the intention was to reimburse the E&G funds from PECO funds at a later date.
UCF was asked to provide the breakout of planning, construction and furnishing costs of the new building, in which UCF officials answered through a series of short-term project explanations and five-year fixed capital improvement plans.
In the July 2014 project explanation, Colbourn Hall was documented as needing major renovations and that a “delay of this project could prevent growth of programs currently housed in the building and could adversely affect health and safety issues in the use of existing building.”
The projected cost of renovations to Colbourn Hall, and the requirement to displace its building occupants during the renovations was “proven to be expensive and disruptive.” Construction of a new building was proposed, intending to match the overall space categories and square footage of the existing building and be the more cost-effective option, according to the 2014 explanation.
When asked if the Board of Trustees approved the construction and fund source recommendation, UCF officials stated that the construction was approved by the Board of Trustees, but the use of E&G funds was not discussed.
The Board of Trustees meeting minutes from May 22, 2014, were also included with UCF’s response. During the meeting, documents prepared by Merck were used as supporting documentation for the proposed board action of proceeding with the new construction to replace Colbourn Hall. The action passed unanimously.
UCF officials stated that the university did not rely on legal authority to authorize the funding for the new facility, and UCF's General Counsel’s Office was not made aware of the use of E&G funds for the project. UCF also stated that a legal opinion to appropriate the use of the funds was not sought out, according to the document.
When asked if legislative approval was sought out for the funding of the new facility, UCF stated that PECO fund requests were made in 2014, 2015, 2016, 2017 and 2018. But no PECO funds were obtained through these requests.
The Board of Governors asked UCF to provide any documentation that relates the recommendation or decision to the use of E&G funds for the construction of the new facility, but UCF officials stated there is none.
UCF provided the Board of Governors with a “Journal Entries for Transfers from E&G Funds to Construction,” when asked to supply documents reflecting all internal accounting entries related to the misused funds.
UCF also identified the sources and total amount from each entity used to replenish the misused money, according to the documents.
The Sept. 5 document, titled “Funding Sources for Colbourn Hall,” lists the major funding sources used to replenish the misused E&G funds such as proceeds, rental income, interest income and commission, totaling approximately $38.5 million.
The next Board of Trustees meeting will be on Thursday from 8:30 a.m. to 4 pm., in the Fairwinds Alumni Center on UCF’s main campus.
Whittaker is expected to comment on the status of the situation, and Trustee and Chair of Audit and Compliance Beverly Seay is expected to provide updated information regarding the status of the Board of Trustees' investigation with the Bryan Cave Law Firm.