University President Mary Sue Coleman has consistently defended the University’s use of the state funding it receives, but Coleman has a lot to explain now that allegations of rampant violation have surfaced in its credit card-issuing program for employees. An internal audit last month uncovered frequent abuse of the program, and the administration faces many questions about whether it is using state funds responsibly. The University must better disclose how it uses its state funds and crack down on violations in its programs, or risk losing support for its continued crusade for more state funding.
The 2006 audit found that $112 million was spent by employees who hold University-issued cards known as P-Cards. While this may be a miniscule part of the University’s budget, two-thirds of that amount was spent by only 20 percent of employees who hold these cards. Additionally, one employee was found to have spent $86,704 on a personal vacation to Florida, a bug zapper and a trip to a weight loss clinic, among other things.
Part of the problem with the P-Cards is a general lack of oversight. Purchases on the cards are supposed to be monitored by an “approver,” but each approver is in charge of monitoring between 50 and 100 employees, which can be an overwhelming task. Employees have also figured out how to avoid raising red flags that go up when they make purchases of more than $5,000; they simply split large purchases into smaller ones.
In order to correct the problem, the University should start with some of the recommendations offered by the auditors. Obviously, oversight must improve. The responsibility to approve large purchases should be shifted from low-level supervisors to an appointed University official. Delegating authority to an office with more authority would provide a checkpoint to catch any frivolous spending.
At the lower level, approvers should be better trained to catch inappropriate purchases and face discipline if illegal activity slips past them. Hiring more approvers to cut down on the number of cases per person may be difficult because it would require cutting more checks, but it may be necessary.
But oversight isn’t always enough: The P-Card program itself should be reevaluated, too. The current system allows employees to have credit lines up to $250,000 in some cases. When most employees need no more than $15,000 a year, installing a cap on credit lines could go a long way in alleviating waste. Since each credit card has the employee’s own name on it, the University needs to be doing credit checks on those applying for these cards to prevent individuals with poor spending habits from obtaining cards.
Ultimately, this credit card scandal is an embarrassment to the University. Coleman is in the middle of trying to lobby the state for more funding, and lawmakers have a reason to be hesitant if the University is seen to be wasting what it’s being given already. The current addition of monitoring software is an improvement, but the recommendations of the audit team should be implemented as well.
Students are supposed to be the ones dealing with credit card debt, not the University.