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YELLOW SHEET Office of the State Auditor of Missouri |
April 19, 2000
Report No. 2000-24
While most separation and retention contracts for
departing college or university officials contained reasonable provisions, some
contracts placed the universities at risk for nonperformance or contained other
provisions that appeared excessive or unwarranted compared to similar contracts
in Missouri.�
The State Auditor�s Office audited separation and retention contracts for college and university officials who occupied the position of president, chancellor, vice president, or head coach of major sports.� The purpose of the audit was to determine if colleges and universities were consistent in the types of contracts they entered into with these high-ranking officials.� Additionally, our objective was to determine if college and university governing boards and regents properly considered their responsibilities to the institutions, students, and taxpayers when signing agreements with these departing officials.
We included all 13 Missouri (4-year degree) public institutions of higher education.� We reviewed 14 contracts for departing officials at 7 of the universities during the period January 1995 through October 1999.
We concluded that most of the colleges and universities were consistent in the types of contracts they signed.� Most were buyout contracts for uncompleted terms of existing contracts and these buyout contracts contained reasonable and similar provisions.
At Central Missouri State University (CMSU), a continuing employment contract subsequent to the president�s resignation (worth over $600,000) contains provisions that represent improper compensation and perquisites.� These included:
q������������������ Contract language that favors the president in all disputes.
q������������������ An extended leave of absence without a stated purpose or required duties.
q������������������ Transfer of university property to the president and his wife.
q������������������ Unrestricted use of a university automobile and the right to purchase the vehicle at the end of the term for a substantial discount.
q������������������ Benefits for the president�s wife who is not an employee of the university.
q������������������ Unrestricted use of the travel and expense budget.
Board officials at CMSU stated that the state of Missouri cannot attract and recruit top-level talent if it fails to recognize that the price for such talent is adequate compensation and proper reward.� They stated that the ordinary prudent man might find the salary and benefits accorded the president generous, but the ordinary prudent man does not have the skills and capacities to successfully run and expand a multimillion-dollar enterprise.� Instead, if fully informed, the prudent man would understand the Board�s position that the benefits of retaining the president far outweigh the dollar costs.� This perspective on compensation is pervasive throughout the contract provisions and is the justification for providing questionable benefits and compensation at taxpayers� expense.
At the University of Missouri-Columbia, (MU) a consulting contract worth $500,000 with the former men�s basketball coach does not contain adequate provisions to protect the university against nonperformance.� There were no termination and penalty clauses.� This contract also provides advance payments of up to 2 years for services not yet provided which put the university at risk if the coach does not perform his duties.
At Southeast Missouri State University (SEMO), an employment contract with the former president contains provisions for reimbursing reasonable and necessary expenses for the chancellor�s spouse (who is not an employee) for travel when she participates in the event, unlimited reasonable and necessary travel expenses for the former president, and establishing residence in Ohio.
Since Boards of Governors and Regents have sole authority over compensation of university officials, these contracts demonstrate the need to exercise restraint in agreeing to terms that do not clearly state the duties to perform or may provide excessive or improper compensation or perquisites.
