Wednesday, December 6, 2023

Train Wreck at JSU Foundation?

 This article first appeared in Mississippi Today and is published under a Creative Commons license.  Reporter Molly Minta authored this story.

Concerns about poor record-keeping, inadequate accountability and the possible “unintended” use of restricted dollars led a member of the Jackson State University Development Foundation board to quietly resign earlier this year.

In his June 23 resignation letter, Brian Johnson, a 2009 Jackson State graduate who had served on the board for six years, wrote that he was stepping down after the board failed to pass his motion for a forensic audit. 

Johnson was alarmed by internal presentations that he wrote showed the cash-strapped foundation using donor-restricted dollars to pay for its general obligations. But the foundation’s recent annual audits, Johnson wrote, had no discussion of the potentially improper spending. 

“As a business professional in the financial services industry, I can’t seem to comprehend how the JSUDF Board of Directors received two financial reports over the last two years from two different JSU Division of Institutional Advancement comptrollers indicating the unintended use of restricted/designated funds, but the Foundation’s CPA audited financial statements have no note or mention of this information,” he wrote. 

When contacted by Mississippi Today, Johnson would not comment for this story. 

Johnson’s resignation letter is part of a cache of internal foundation documents that was obtained by Mississippi Today as Jackson State is poised to receive a new president. Last week, the Institutions of Higher Learning governing board for Mississippi’s public universities held a special-called meeting to discuss the imminent hire for just 16 minutes

Taken together, the documents raise questions at the core of the foundation’s fiscal health. One document showed the foundation lacking about $7.6 million in “cash on hand to cover fund balances” and its operating budget, on average, bleeding at least $100,000 every year since 2012. Another, an internal audit that Jackson State completed in late September, determined the foundation was commingling in one account its operating and donor-restricted dollars for alumni, athletics and annual scholarships. 

Brian Mittendorf, an Ohio State University accounting professor who reviewed the documents for Mississippi Today, said it wasn’t clear how the foundation has enough liquidity, or cash-on-hand, to meet its obligations, including scholarships and financial support for university athletics. 

“There’s this consistent nagging issue which is that a substantial amount of their assets are restricted, though the exact amount is somewhat unclear,” he said. 

But Mittendorf said he was only able to reach that conclusion — one of the concerns that led Johnson to resign — after reading “between the lines” of the foundation’s audit. He didn’t understand why the foundation’s audits are not drawing attention to the existential financial situation it appears to be facing. 

“Somewhat surprisingly, they aren’t shouting about that from the rooftops in the financial statement,” Mittendorf said. 

In an email, an IHL spokesperson wrote that “IHL does not govern the JSU Development Foundation, so questions about the foundation’s assets should be addressed to the foundation.” But IHL’s bylaws do permit the board to exercise a certain amount of oversight over the university-affiliated foundations, such as giving prior approval if a president wishes to sever ties with the foundation.  

The foundation chair, Guyna “Gee” Johnson, a managing director of global fund ratings at S&P who has led the foundation since 2021, asked Mississippi Today to email her questions for this article but did not respond to repeated requests for comment by press time.

In a sit-down interview with JSUTV earlier this year, Gee said that “one of the things the board would like to do is to bring more attention to what we’re doing so people feel safe and they trust that we are being good stewards over their money so that they can continue to help our students grow.” 

$7 million cash on-hand deficit?

The development foundation was founded in the 1960s to financially support Jackson State. It has been in hot water in recent years after an independent audit that IHL called for found tens of thousands of dollars in questionable credit card spending in 2014, leading the foundation to cancel its credit cards. 

Johnson got on the board in 2017, a year after that independent audit was made public by the Clarion Ledger. But internally, the foundation was facing even more challenges than Johnson knew, he wrote in his resignation letter. 

“It was then I learned the Foundation was behind on 990’s, facing legal issues due to past Foundation ventures/contracts and not having completed audited financial statements for the two prior years,” he wrote. 

The board proceeded to work together to resolve the issues, Johnson wrote. In 2019, a resolution was introduced to acknowledge that the board had borrowed funds from temporarily restricted accounts, as well as its permanently restricted endowment, due to “having insufficient unrestricted operating dollars.” 

The foundation, according to the resolution, intended to repay the “interfund debt,” which at the time totaled about $1.8 million. It’s unclear from the document Mississippi Today received if the foundation adopted the resolution.

And last year, the foundation finally executed the sale of One University Place, a mixed-use apartment complex across the street from Jackson State’s campus that was draining the foundation’s bank accounts, to the university for $6.9 million. 

But it appears the sale wasn’t enough to get the foundation in the clear, according to the foundation’s 2021 audit and two internal PowerPoints presented earlier this year by Keilani Vanish and Sophia Williams, comptrollers for the foundation. 

As of May 18, the date of the most recent presentation, the foundation’s restricted fund balances, which cover its designated accounts, totaled $11.6 million. But the foundation had just under $4 million in its operating accounts, leaving a roughly $7 million deficit in “cash on hand to cover fund balances.” A presentation in February showed a similar situation.

That’s when Johnson, who served on the finance committee, began to wonder why that information wasn’t included in the foundation’s audited financial statements, according to his letter. 

The foundation should be communicating the difference between those documents to board members, Mittendorf said. 

“The concerning part is if someone on a board is unaware of why those things deviate,” he said. 

Mittendorf reviewed the internal presentations and the foundation’s 2021 audit, the most recent publicly available. Both documents, he said, were confusing for him to follow. 

David Ewing, the accountant who oversaw the audit, said he couldn’t answer any questions about the foundation, because the university is “pretty strict” about the information it gives out and he didn’t want to lose a client. 

Though Mittendorf didn’t go so far as to question whether the 2021 audit was accurate, he noted that it appeared to contradict itself. On page 3, the audit shows the foundation has about $33 million net assets “with donor restrictions, but on page 22, in a section titled “liquidity and availability,” the audit claims that the foundation has “no donor restricted net assets.” 

That same section, Mittendorf pointed out, claims the foundation has access to about $35 million in “financial assets available to meet cash needs for general expenditures within one year.” But that doesn’t add up, he said, considering the audit also states the foundation has just under $42 million in total financial assets at year-end, with over $37 million of that in the restricted endowment.

Meanwhile, the foundation is holding a substantial amount of debt. In 2021, the foundation extended its credit line with Merrill Lynch from $2 million to $6.9 million, “secured with certain investments accounts held by Merrill Lynch in the name of the Foundation.” The balance was $5.9 million, according to the May comptroller presentation. 

At BankPlus, the foundation has a $3 million credit line but the most recent balance is unclear. 

A one-page internal audit

Johnson wasn’t the only one with questions. On June 1, an ex-officio board member emailed Gee and the board because there were rumors in the community about the presentation that allegedly showed the foundation spending restricted dollars. 

When Gee replied-all on June 9, she wrote that if the community had access to that presentation, which was prepared for “various internal management or other analytical purposes” and was not an official financial position, then an “extremely serious breach of confidentiality” had occurred. 

“The matters you mention in your email have been things that JSUDF boards, University Presidents and University CFOs have been aware of for at least 15+ years, and we have been addressing directly through corrective measures,” Gee wrote. “As we have University turnover, the board chair’s transition policy is to immediately request a meeting to properly provide an official financial update, provide and (sic) overview of the Foundation and align our goals with the new administration’s strategic plan.” 

A week later, a similar concern about the “potential misuse of donated funds” led Jackson State to start conducting an internal audit of the foundation that was finalized in September, according to a copy.

It was only one page.  

 Though the university’s internal auditor, Christopher Thomas, wrote in an email that IHL Commissioner Alfred Rankins requested the internal audit, an IHL spokesperson wrote in an email that Elayne Hayes-Anthony called for it. 

Hayes-Anthony has been the university’s temporary acting president since Thomas Hudson resigned earlier this year for reasons that remain unclear. She holds one of seven ex-officio spots on the board, the one reserved for the university president.

“Commissioner Rankins did not call for an internal audit of the foundation,” Kim Gallaspy, IHL’s interim communications director, wrote in an email to Mississippi Today. “Dr. Elayne Hayes-Anthony initiated the process by expressing concerns to the Board of Trustees about the use of JSU Development Foundation funds. Dr. Anthony was advised to exercise her authority to have her concerns investigated by utilizing the university’s internal audit staff to review any Foundation books, records or accounts needed to monitor and verify proper use of donated funds.” 

Thomas wrote that he did not find any “current evidence” of misused donor funds, but that the foundation’s bank accounts only had $4.4 million as of Aug. 31 while the “designated accounts” totaled $11.8 million, a finding that correlates with the internal presentations. 

“While the Development Foundation liquid funds are not adequate to cover the Designed Accounts, this does not represent the financial position of the Development Foundation,” he wrote. “The Foundation holds a multitude of assets that can be utilized to meet its financial obligation to the University.” 

Though Thomas did not specify what those assets are, he did identify six areas where the foundation could improve its internal controls. Specifically, he recommended the foundation should monitor its budgets “based on actual revenue throughout the fiscal year to reduce overspending.” 

He also recommended the foundation establish “separate bank accounts” for the operating budget — called “the Excellence Fund” — and the donor gifts, which were commingled. 

Mittendorf said foundations should keep records in a way that prevents concerns about funds getting mixed up. 

“When you have donor designed and donor restricted gifts, you want impeccable record keeping that segregates the funds,” he said. 

It’s unclear if the foundation has done that. 

Kingfish note: I'm not surprised this day came.  Mr. Speed proudly served on the Board with his friend (who worked at Merrill Lynch, his name escapes me.).  He told me a few years ago how they were run off the Board and said the leadership was not interested in fiscal responsibility.   

I submitted a public records request IHL for the audits mentioned in the story.  IHL refused to provide the audits, hiding behind a public records exemption it could have waived. An IHL official provided the single-page letter and this explanation: 

The internal audit report is exempt from production under Miss. Code Ann. §25-65-17(1).

 Per Miss. Code Ann. 25-65-17(1), “Audit reports shall be confidential but shall be provided on a quarterly basis to the governing board or commission of the university, the community/junior college or the state agency. State agencies without a governing board or commission shall have the quarterly report provided to the Governor and the State Auditor.”

Nothing like our legislature to write laws that cover up university corruption.  

 


 

 

29 comments:

Anonymous said...



The $$ is gone-

Anonymous said...

Sticky fingers are everywhere in Mississippi.

Anonymous said...

It is extremely difficult to make JSU supporters and alumni accept the fact that the IHL, the legislature, and the governor are not interested in providing state funding for expansion or enhancement of Jackson State or it's program offerings. It's just not going to happen. If they will use the funds actually available they could operate a reasonably efficient school with 4,000 or so students. JSU does not have the clout to use slush funds and other outside sources available to the "big three" so they might as well accept their fate. If the latest presidential "search" didn't send a message they are hopeless.

Anonymous said...

So typical. Somebody got rich

Anonymous said...

How the literal hell can anybody be surprised?

When segregation of duties is ignored, single signature expenditure and withdrawal privilege exists and the combination to the vault is unguarded, thieves gonna do what thieves gonna do.

And don't be fooled into thinking this is simply good-purpose spending of restricted funds...or writing a check on the wrong account for a legit business purpose. It's not.

Anonymous said...

Were they stealing the money or misusing it? There is a difference. If it was stolen how come nobody went to jail or was even charged? If it was diverted to other university expenditures, why? We know Jackson State is no favorite of the college board, are they operating in the red?

Anonymous said...

What about the tens of millions missing when Carolyn Myers was there?

Anonymous said...

JSU is a train wreck

Anonymous said...

WHY is this a surprise?

Anonymous said...

So what is the status of the joint JSU/IHL audit staff audit?

Anonymous said...

This is a private foundation, not a governmental entity. The funds are donated funds from individuals, foundations etc. It could lose its tax exempt status if federal and state reporting requirements, like the 990, have not been met. The fines for not filing the annual 990’s with the IRS can be very high.

So who is is that” auditor “?

Anonymous said...

2:03 Nothing was missing. Carolyn Myers was extravagant but did she steal millions and simply walk away? How do you do that under the noses of people who have doctorates in accounting and business? The IHL board runs the show remember that.

Anonymous said...

JSU wants to be big-time with pee-wee money. Most all it's money comes from the state and that ain't never gonna be enough to play with the big boys. Robbin' Peter to pay Paul won't get it. Sorry.

Anonymous said...

Stealing 101.

That's all this is about, with the thieves being so arrogant as to think they are above anyone watching them.

To those of you participating in this theft. You're not fooling anybody. We all know how you operate and are simply laughing at you because without stealing, you'd be living under a bridge or, in prison. Which is where you should be.

Anonymous said...

3:57 are you *really* that stupid, or ignorant. The IHL does NOT run the private foundation. Leland Speed chaired it AND RESIGNED when he saw the tea leaves. This was never audited as it is PRIVATE money.

Anonymous said...

Let’s just cut the crap right now. Jackson State has two endowments. One sits with under the authority of the university and IHL ($60 million) and one is a separate through the JSU foundation and its over $40 million. There is no misappropriation of funds. Those foundation funds are managed by Bank of America. You can’t spend without them knowing what the funds are being used for.

Now, let’s call out what really happened.

Dr. Elaine Hayes Anthony was appointed interim president but wanted to be president. When it was discovered that the board president Guyna Johnson was the top candidate for the JSU presidency, elaine made some calls in her republican circles and asked how could they derail the top candidate. This led to IHL asking well we need a reason to derail. So, dr Anthony got with ex board member Brian Johnson, who by the way doesn’t like the board president. They got with Molly, fed her some bogus story about misappropriated funds and boom the article drops.

So this is a big nothing burger. Elaine wanted to be president and she got her cronies and local alumni to tank the process. IHL is implicated, but their crimes here is community service. But the former interim prez, Thomas Hudson, Brian Johnson, sollie Norwood, John Horne, patresse edwards, hillman Frazier, Dawn Mclin, and a few others should be charged with treason in the Court of Jackson State. They are utterly pathetic, incompetent, and clueless.

Sometimes it’s not the white folks that destroy us. Disgusting!!!

Anonymous said...

Jackson State and Ole Miss have the same Board of Directors. If that ain't a hint...

Anonymous said...

December 7 is National Pearl Harbor Remembrance Day.



The Jackson State University Development Foundation Inc IRS 990 filings can be viewed online.*

Full disclosure: I am not an accountant but can read and cipher some.

All the following observations reference the JSUDF 2021 IRS 990 (2021 Calendar year, or tax year beginning 07-01-2021 ending 06-30-2022; filing date shows as 05-11-2023).

Taking a quick look at Part IX Statement of Functional Expenses the first thing I noticed was

Total functional expenses reported as $10,030,589 HOWEVER

The largest single item reported is ”TELEPHONE”, approximately 49% of total functional expenses, in the amount of exactly $4,903,416.

An additional observation concerning the "TELEPHONE" expense is that it does not appear to be charged (to either Program service expenses, Management and general expenses or Fundraising expense) with the exception of $1,000 charged to Program service expense.

The second thing I noticed concerns the Management and general expenses. The Total management and general expenses are reported on line 25 as $7,243,919. Yet if a person were to add up lines 1 through 24e they might get a much smaller number. Possibly the sum total of lines 1 through 24e is $2,812,345, or possibly someone else might cipher something different.

Nonetheless the numbers don’t appear add up.

BONUS: Just for giggles I tested to see if shifting the $4,903,416 telephone expense made the numbers add up to $7,243,919; it’s close but no cigar.

I’m wondering how such a mess got filed, it seems rather elementary to wonder how 49% of $10 million in expenses gets spent on “TELEPHONE”, and if it didn’t get spent on the telephone, then well... Sometimes a person wonders how do errors of this magnitude get missed by a board of 25? You’d think someone might read the filing and ask a question. Apparently not this time.

It certainly doesn't seem like it would inspire a sense of confidence in this situation.

As far as what else might turn up in this or other JSUDF filings, "hold my beer and watch this" might apply.


Can I get a

Surprise

Surprise

Surprise?


* htps://projects.propublica.org/nonprofits/organizations/237061115/202321379349301022/full

Anonymous said...

This is merely a rare instance of uncovering in the community college/university systems what is deliberately ignored, and has been for decades. The IHL and MCCB both provide cover for their "institutions" to keep the flow of billions of federal financial aid dollars flowing like an ocean....they comingle monies all the time to keep their fiefdoms on life-support, especially when their enrollment numbers keep falling like they have, in addition to if/when they start infrastructure "projects" (new buildings that aren't at all needed) to make it appear they are growing and on the move upwards.

It's kind of like churches and their "building fund" that's really used as a slush fund. The campuses across the state are merely mass distribution centers for billions of state/federal dollars "comingled" all the time. Biggest scam in the state. And those who work within the "systems" are kept quiet by chasing the golden handcuffs of PERS.

Anonymous said...

Don’t whitewash this. This is simply THEFT. Remember, this is the school where the president got arrested with a hooker in a Clinton motel room.

Anonymous said...

Now you see why Deion left. He hinted at this in one of his interviews when he first left JSU.

Anonymous said...

Dec 6 @8:13 If the IHL has nothing to do with "private money" then why was Myers fired by the IHL? Why was she not charged with a crime or sued for conversion of those funds by anybody? The foundations at all the universities are slush funds and they know it. That was not why they fired Myers. She had JSU going upwards of 10,000 students and was dipping into the "slush money" when JSU couldn't get by otherwise. That was her "crime". The President IS THE IHL they run RUN all eight institutions and if a President moves foundation money, as they allege Myers did, THE IHL STILL RUNS THE SHOW. In Mississippi the institutions do NOT have their own Separate Boards of Regents. THE IHL RUNS THE SHOW. Nothing illustrates that point better than the selection of the last three JSU presidents. DUH

Anonymous said...

7:00 Leave Mississippi College out of this!

Anonymous said...

@10:02 Nope. When Myers opened that Madison campus she was dead meat.

Anonymous said...

@8:13 Deion and his children will make more than the entire JSU athletic budget this year. A lot more. That's why he left.

Anonymous said...

@ 1213 The president of the NCAA has made a proposal to allow direct payment of athletes by schools in a new big bucks division. Pretty sure Deion wants to be there, and that Jackson State athletics won't be there. The two are somewhat connected.

Anonymous said...

Before Dr. LaForge was fired (as president) at Delta State last year, he had been advised by 'the state' that the school is responsible for finding out what happened to a million grant bucks to be (but never) administered by the school. And the College Board or IHL gave a certain number of days for the school to report.

He's a white dude though.

Anonymous said...

This conversation needs to end. The only scrutiny of "slush funds" and foundation expenditures has to be confined to the scapegoat JSU. Heaven forbid the day we look at the real slush fund money good ole boys at Ole Miss and MSU handle.

P.S. We know where USM got theirs.

Anonymous said...

Brian Johnson is an Alconite!!! Take note! No Bulldog or Rebel would burn down their own house with pure lies!


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