Archive for Wednesday, October 2, 2002

Baker disputes audit findings

October 2, 2002

Although Federal auditors say Baker University violated financial aid and student recruitment rules in the late 1990s, Baker officials believe the matter will be resolved without potentially steep penalties being paid.

"We are highly confident, as our attorneys are, that there will be no recovery necessary," said Baker President Daniel Lambert. "What we know within the Department of Education that is going on now is that Baker's policies are good."

Auditors cited two problems at Baker's School of Professional and Graduate Studies, which has classes in Overland Park, Topeka and Wichita. The first involves a government requirement to track attendance for students receiving federal financial aid. The second involved a contract Baker has with the Institute of Professional Development (IPD) that the government says violates its rule against paying recruiters based on the number of students it attracts.

Baker began keeping attendance records after being informed of the rule, but Baker officials also doubt any university kept such records for the time period in question. Baker officials also disagree with the alleged recruiting violation because IPD does more than just recruiting.

Also, the Department of Education (DOE) is expected to approve changes to its policies this year which put Baker in compliance as it stands now.

Although Baker could technically have to repay about $13 million in financial aid if the DOE accepted the auditors findings and another $1.8 million on the attendance question, Lambert doesn't believe that will happen.

"If they look at the other schools that have been subjected to audits, none of them have had to pay a dime," he said. "It's possible that the DOE secretary could seek relief, but it would be a small fraction of that amount.

"Even under the worst-case scenario, we don't think the government would try to recover anywhere near that amount," said Lambert. "We think in all likelihood that there won't be any recovery at all."

Still, the cloud of the repayment possibility is there after the story broke last week. Lambert has scheduled a meeting with Baker's faculty, staff and student representatives Thursday to clear up any misconceptions brought on by the report.

"It's been an outrageous event in terms of public relations," he said. "I think they (faculty, staff, etc.) have the right to know what's really going on."

The final audit report wasn't given to Baker until Friday, but officials have seen previous drafts and were given the opportunity to respond. Lambert said Baker couldn't make the audit findings public before the final report was presented.

"Anytime these things happen people say you've been sitting on this, but we've been bound by the inspector general," he said.

The timing of the report was questionable and Lambert said he was surprised it was released at all.

"The period under review ended about four years ago," he said. "I find it perplexing that the inspector general has chosen to release its findings now, when the DOE is on the verge of adopting policy that mirrors our position."

He's also surprised that this audit found problems that previous audits hadn't.

"We've had the same contract since 1988 and it's been audited and reviewed numerous times," said Lambert. "There has been no interpretation that there was anything wrong before. That's what would be the outrageous part."

But, he also believes the biggest factor in untangling the situation is the DOE's proposed changes which would allow contracts such as those with IPD and loosen restrictions on keeping attendance for nontraditional programs. Lambert believes those changes will be adopted by the end of the year and Baker will be in federal compliance.

"As far as we can see, it's addressed all of our issues," he said.

He also said he believes that regulations need to be in place to ensure the careful stewardship of public funds.

"We have always supported policies which are clearly stated, fair to the students we serve and applied evenly throughout higher education," Lambert said. "I'm pleased that the leadership in the department of education is moving in a fair and progressive direction."

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