Recent changes in the University of Tennessee’s fiscal policy will aid in strengthening administrative control over the university’s economic system, according to Interim Executive Vice President and Chief Financial Officer Eli Fly.
According to an Oct. 15 memorandum sent to university personnel from Fly, revisions were made in university’s fiscal policy regarding the corporate travel card program and entertainment, two issues which stemmed from abuses by former UT President John W. Shumaker
Previously, the corporate travel card issued to university administrators acted as a liability card, Vice President and Treasurer Charles Peccolo said.
The American Express corporate travel card was used by administrators during travel leave on university business to pay for charges incurred. According to Peccolo, this gave employees the benefit of using university funds to pay for the expenses of travel on official business.
Expenses incurred during travel periods were reimbursed by the university after the fact, and these funds were used in turn to pay off the balance on the travel cards.
This policy changed when administrators decided to guarantee a before-the-fact documentation of travel expenses prior to the university reimbursing its employees for their expenses.
“Changes in the new fiscal policy restrict the corporate program to a personal liability,” Peccolo said.
This change resulted largely from the audit conducted on Shumaker’s expenses during his administration, Peccolo said. Shumaker incurred large expenses during extensive travel periods, receiving the reimbursement funds to pay off the travel card, and then documenting his travel records after the fact, according to two separate audits conducted by the university and by the State Comptroller’s office.
Additional changes were also made to regulate entertainment expenses at the university.
Administrators will no longer be permitted to use university funds to pay for entertainment or meals during routine meetings where only university employees are present.
The policy stipulates that university funds will be reserved only for formal entertainment purposes, such as banquets, retreats or receptions.
“This is more a clarification than a change,” Peccolo said. “Outside of formal events, the university should not be paying for employee expenses.”
Mark Paganelli, executive director of audit and consulting services, said that these changes directly reflect the evidence of over-spending apparent in the audits into Shumaker’s activities.
“His (Shumaker’s) entertainment involved only university employees in what seemed like routine meetings,” Paganelli said. “We felt the need for restrictions.”
Fly said he believes these changes in fiscal policy will restore, if not strengthen, confidence in the university and the system.
“We allowed our former president to operate outside the system,” Fly said. “If you have rules and regulations, and allow someone to operate outside them, then they have no value.”
“These changes were made to strengthen our control,” he added.
Fly also commented he believed these new developments will not pose a great threat to potential presidential candidates presently involved in the search process, or have a detrimental impact on the presidential search process itself.
