If Legislature Can't Order University Foundation Audits, Make Them The Price Of Admission

The Legislative Audit and Fiscal Review Committee (LAFRC) has voted for audits for the state’s university foundations, and it wasn’t even close. During its January 29 meeting, LAFRC voted 11-4 for the audits.

The folks at the universities aren’t happy about it, including NDSU President Dean Bresciani who claims that the state doesn’t have the authority to audit a supposedly independent foundation.

“I can’t even imagine how you would justify making the independent agency pay for the state’s audit,” Bresciani said, according to the Fargo Forum. “I’ve never heard of a state auditor’s office being able to audit a legally established, independent agency.”

Now the Attorney General’s office has agreed with Bresciani, finding that the Legislature doesn’t have the authority to order audits of these foundations.

The assistant state attorney general has found that North Dakota has no authority to order performance audits of three university foundations, deflating a law recently approved by the state Legislature and criticized by North Dakota State University officials.

The finding was good news for the NDSU Development Foundation and its interim leader, Keith Bjerke, who said Thursday that the state had no business auditing his organization.

“We are audited every year very successfully, and we’ll continue doing that,” Bjerke said. “But the state auditor, you know, is for state agencies, and not for outside entities. And we are an outside entity.”

The problem is that these foundations only seem to be outside entities when it comes to avoiding transparency and accountability to the public.

For one thing, the foundations benefit in no small way from state resources. Bresciani himself has admitted to spending more time raising money for the NDSU Foundation than he does attending to the business of his school. The state has also created the Challenge Grant Fund, which matches public dollars to private donations to these foundations.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#000000″ txt_color=”#ffffff”]If these foundations want to be a part of the state’s university system, doing the public’s work with public servants basically working for them, submission to full audit authority and transparency should be the price of admission.[/mks_pullquote]

For another, every time these foundations run into financial problems it seems the taxpayers are on the hook to bail them out.

When the UND Research Foundation couldn’t make ends meet on the REAC Building they dumped it on the taxpayers last year.

When the Dickinson State University Foundation, currently in receivership thanks to a series of bad investments, couldn’t make good on student scholarships it was up to the taxpayers to bail them out. Now the State Board of Higher Education is asking the Legislature to approve another for the DSU Foundation in the form of Dickinson State purchasing up some facilities the foundation owns.

These foundations want to operate like the “too big to fail” banks. They want to be private, except for when they’re in need of a bailout. They’re private, except for when North Dakota state employees are spending their time on the taxpayer’s clock raising money for them.

But if the Attorney General, despite previously finding that these foundations must adhere to state open records and meetings laws, says the Legislature can’t order audits of the foundations then fine. Instead the Legislature should take up an idea I wrote about last year: Make submission to full state oversight and transparency a requirement for these foundations to work with public institutions in any way.

If these foundations want to be a part of the state’s university system, doing the public’s work with public servants basically working for them, submission to full audit authority and transparency should be the price of admission.

Again, the state may not be able to order audits, but they can tell the foundations that it is a prerequisite to doing business with the state.