YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

March 18, 2004

Report No. 2004-24

The following problems were discovered as a result of an audit conducted by our office of the Missouri Western State College.

Missouri Western State College (MWSC) needs to improve the oversight and management of its construction projects.  The college completed 15 construction projects costing approximately $14.6 million during the two years ended June 30, 2002.  The cost of several of the construction contracts was significantly increased through change orders, including $446,000 as a result of eight change orders for additions and renovation of the student union building, $246,000 as a result of 57 change orders for the renovation of 106 classrooms in 5 buildings, and $15,000 as a result of four change orders for sidewalk repair and construction.  Many of the construction change orders were for work that was not included in the scope of the original project.  If the scope of the project changes substantially, considerations should be given to re-bidding those parts of the project.

Our office reviewed nine construction expenditures made from August 2000 to February 2002, totaling approximately $596,000, for various construction projects and noted that none of the expenditures were properly reviewed and approved.  The college's private architect certified the work for five of these expenditures, totaling approximately $334,000, and the Director of the Physical Plant accepted the work for the other four expenditures, totaling approximately $262,000.  However, there was no indication that the Vice President of Administration reviewed or approved these payments.  Additionally, the college's private architect sometimes bids and/or partners with other firms on projects when he has prepared the request for proposals (RFP) for the project.  At a minimum, this situation gives the appearance of a conflict of interest.

College officials could not locate contracts and/or RFPs signed by both the college and contractor for 12 construction projects, with original bids totaling approximately $12.9 million.  Also, 60 change orders, totaling approximately $260,000, on 6 projects were not in the project files.  For these change orders, neither the college nor the construction companies could provide documentation of approval for 49 change orders, totaling over $185,000.

The college awarded "merit pay" in the form of lump sum payments totaling $146,575, $163,740, and $164,358 in fiscal years 2003, 2002, and 2001, respectively.  The merit pay program appears to represent additional compensation in the form of a bonus, and, as such, is in violation of the Missouri Constitution.

College records indicate expenditures, excluding personal service costs, totaled nearly $16 million in fiscal year 2002.  The college did not always follow purchasing guidelines for obtaining bids and advertising for services and supporting documentation for the college's business-related expenses is not always adequate.  Additionally, college officials usually approve their own expenses.

 MWSC participates in the A+ Schools Program (A+ Program).  State law provides for the "reimbursement of the costs of tuition, books, and fees to any public community college or vocational or technical school" for eligible students.  Since MWSC is not a community college, the college entered into an agreement with the local vocational technical school (Hillyard) whereby students would be enrolled at Hillyard and could attend classes at MWSC; however, it appears the A+ students are students at MWSC.  The legislature should evaluate participation in the A+ program statewide to be certain its implementation is following the intent of the legislation.

Hillyard requests the A+ reimbursements because the Department of Elementary and Secondary Education (DESE) has identified Hillyard as an  eligible institution for the A+ Program.  Since fall 2000 through spring 2003, DESE has paid Hillyard approximately $1,567,000.  In turn, Hillyard has paid MWSC approximately $1,425,000 for the A+ student's tuition, books, and fees assessed by the college and has retained approximately $142,000 as their fee. 

The college owns 40 vehicles and additionally paid approximately $58,500, $54,500 and $84,700 to car rental companies for vehicle rentals for the years ended June 30, 2003, 2002, and 2001, respectively, which include annual leases for security vehicles, police vehicles and vehicles for the admission office.  Also, the college paid mileage reimbursements, totaling over $212,000, to employees for the use of their personal vehicles for the three fiscal years ended June 30, 2003.  The college needs to perform a cost-benefit analysis of travel costs to evaluate the most cost-effective method of furnishing vehicles for college related business.

MWSC subsidizes some operating expenses of the Missouri Western State College Foundation (Foundation) and the Western Alumni Association (Association).  The college paid the salary and fringe benefits, totaling over $140,000 annually, for two of the Foundation executive positions.  In addition, the college's practice is to pay approximately $9,700 of operating expenses each year for the Association, and in June 2001, the college donated $10,000 to the Association for homecoming expenses.  This practice does not appear to be appropriate and may violate provisions of the Missouri Constitution.  

The audit also includes some matters related to cellular phones, controls over receipts, sunshine law compliance, capital assets, and computer controls upon which the college should take appropriate corrective action. 

Complete Audit Report