A state audit found that the university mishandled two federal grants and overspent by more than $1 million as a result. But university officials strongly disagree with the findings and argue that they followed sound policy.

The report found that the university overspent a NASA grant, using more than $700,000 of its own money to cover research expenses. Costs from drug trafficking research were not reimbursed on time, causing a loss of more than $200,000 in interest, said Del. Steven DeBoy (D-Baltimore and Howard), a co-chair of the Joint Audit Committee.

The university blamed both losses on the federal government. Vice President for Administrative Affairs Ann Wylie said the university followed standard practice with both grants but NASA failed to deliver promised funding in one case and errors with a filing system by the Office of National Drug Control Policy caused the loss of interest in the other.

In the case of the NASA grant, Wylie said, the agency committed to funding a four-year research grant in 2004. Instead of providing the money up front, NASA refunded the university each year. Despite promises, NASA failed to reimburse the university for the fourth year of the project, Wylie said.

“We had every expectation that those funds would be forthcoming, so we made a judgment call to go ahead for the fourth year,” Wylie said. “It’s either that or fire everybody and stop the project. It’s a risk of doing business.”

Because research grants include overhead costs, NASA would have refunded the university $1 million for the fourth year of work, said John Farley, the university’s assistant vice president for administrative affairs. But because the money from NASA never arrived, the university used money from its $375 million research budget to make up the gap, he said.

Because they so rarely make bad calls, administrators have no plans to change any policies, Wylie said.

“If they told us that we had to cease every time we didn’t have funding even though we had a commitment to funding, we wouldn’t accept it; we couldn’t accept it,” she said.

DeBoy said the main concern he had was with the mismanagement of receipts to the Office of National Drug Control Policy for high-intensity drug trafficking research, conducted by researchers in the university’s College of Behavioral and Social Sciences.

Wylie said administrators made their best efforts but that the agency’s filing system was an “unfamiliar process” and not “user-friendly”.

“There were training issues on our part in terms of how to navigate this system, and they also admitted that they have bugs in their system,” she said.

Wylie said they have fixed the problem and are up to date on their reimbursement requests. DeBoy acknowledged that some money had been recovered but said his main concern is that the university would have accrued $200,000 in interest if the receipts had been handled properly.

The university is routinely audited; the University System of Maryland monitors funds weekly, while the state legislature evaluates them every two or three years. Wylie said the audit process is helpful and allows the university to correct mistakes and that it shores up trust that the university is making wise use of public money. Farley said the report also pointed out minor procedural errors with the payroll and student financial aid departments that were quickly corrected.

DeBoy said the audit will be used by the General Assembly to determine university funding next year. Budget committees often quiz university administrators on their use of state funds based on reports like these.

“Hopefully they will come before legislators with a response, and they usually do,” he said. “If they don’t, we can always make a recommendation to pull funding.”

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