Shumaker may have violated state laws

By Abby Morris
Star Staff
amorris@starhq.com
NASHVILLE - Former University of Tennessee President John Shumaker may have violated state laws by "misrepresenting" official documents to those investigating his spending practices and by impeding the investigation by declining to speak with auditors.
A review of Shumaker's expenses began in June of this year when local media in Knoxville questioned his use of the university's airplane. University officials performed an internal audit, which was followed a federal audit conducted through the Comptroller of the Treasury's office.
The Comptroller of the Treasury of the State of Tennessee, John G. Morgan, issued a letter to Governor Phil Bredesen, the Board of Trustees of UT, the General Assembly, and Dr. Joseph Johnson, current president of UT stating the findings of the state audit.
"As summarized in the transmittal letter to the internal audit report, the internal auditors identified questionable expenditures totaling $31,885.75 related to personal travel and other expenses incurred by Dr. Shumaker or on his behalf, the majority of which were not reimbursed to the university in a timely manner," Morgan states in his letter. "The internal auditors also stated that certain expenses associated with the president's residence and reception were substantial and may not have been prudent."
Listed among expenses for the president's residence, which were "stretched by Dr. Shumaker", are renovations, furniture and other items for a cost totaling $439,137, according to Morgan's letter. "Items such as a $4,822 gas grill and a $7,000 Persian rug were purchased because no UT official wanted to make waves for the new president," Morgan states.
The audit review also cited Shumaker's credit card expenses and practices. According to the letter from Morgan, auditors were told by UT personnel that Shumaker often failed to turn in credit card receipts or to clarify business and personal expenses.
One item questioned was a credit card receipt from a hotel in San Antonio, Texas, charged on Shumaker's UT issued credit card. The name on the receipt was Dr. Carol Garrison, president of the University of Alabama at Birmingham.
"When questioned by the internal auditors as to why Dr. Carol Garrison's name appeared on his hotel bill from San Antonio, Texas, Dr. Shumaker initially stated that he had given his room to Dr. Garrison for her convenience at a conference they were both attending, and he stayed with friends," the audit report states. "Dr. Shumaker later admitted that he and Dr. Garrison actually shared the hotel room and arranged with the hotel to split the bill, and that he initially misrepresented the situation in an effort to protect Dr. Garrison."
The auditor's report also cited concerns with UT contracts that had been awarded to "associates" of Shumaker that "may not have been wise business decisions, were not always awarded in accordance with policy, and had given the appearance of favored treatment."
While the auditor's report did note that problems in the control system may have allowed the actions of Shumaker to go unnoticed for a while, that does not excuse his actions, according to Morgan's letter.
"Rather than recognizing that there were control weaknesses in certain key areas in his operations and taking steps to improve them, Dr. Shumaker took advantage of these situations. His reaction to practically every question regarding his misuse of state resources was that he didn't know it was a problem, no one at the university had raised a red flag, and it was merely a procedural matter," Morgan states in his letter.
"Based on his approach, he apparently had a very different concept of what was reasonable, particularly when it came to expending money for things that benefited him, not withstanding the context of the financial hardships facing the state, the university, its students, and those individuals supporting the students. Unless there was a clear line that he couldn't cross, he apparently felt that it was his prerogative to do as he pleased. No amount of internal controls can effectively compensate for such an attitude."
Shumaker's salary was $365,000 a year with a $20,000 expense allowance, an increase of more than $14,000 over the previous UT president, Dr. Wade J. Gilley. In addition to his salary and expense account, Shumaker also received a benefits package and expense account from the UT Foundation with an estimated total worth of $275,000.
"Thus the estimated potential value of the combined compensation packages was $758,550," Morgan states in his letter, citing a report by the Chronicle of Higher Education which listed Shumaker's compensation package as the second highest among public university leaders in the United States for the year 2002-2003.
Under heavy pressure, Shumaker resigned as UT President in the early part of August of this year. At the time of his resignation, Bredesen agreed to advocate for a severance package of more than $420,000 in return for Shumaker's unconditional resignation.
Thursday afternoon, Bredesen held a press conference to address the auditor's report as well as Shumaker's severance package. The governor stated that as facts around the case came to light, he asked the university to delay any payout to Shumaker until the comptroller's auditors report was complete and had been assessed.
Bredesen stated that with the new facts in light, he no longer felt an obligation to Shumaker in regards to the severance package. "I now no longer feel that obligation and certainly free the (UT) Board (of Trustees) to take any additional actions it feels appropriate and in the best interest of the university including rescinding or modifying the severance package they approved on my recommendation," he said.
The UT Board of Trustees is slated to meet at the university in Knoxville today.