State auditors have flagged what they describe as questionable office-lease payments from Eastern Connecticut State University to its private foundation.
In their report on ECSU’s finances for fiscal years 2012 and 2013, state auditors noted what they deemed “an unusual and insufficiently supported payment” to the Eastern Connecticut State University Foundation Inc.
In April 2012, the report said, the university issued a $289,328 payment to the foundation to cover apparently past-due rent on space unused for more than four years.
The report criticized the lack of a formal lease between the two parties. The university rented space for its Institute for Sustainable Energy (ISE) in the foundation building. According to the report, the university’s then vice president for finance and administration directed in an Jan. 9, 2012 memo that the payment be made for 52 months of back rent.
According to university management, there was no written lease established for this agreement. Instead, the university and the foundation came to an informal agreement that appeared to be based on the ISE business plan, which specified a monthly rental payment of $7,302 for 6,520 square feet of space (the ISE used 4,968 square feet).
The audit disclosed that the university’s rental agreement with the foundation did not comply with the board’s stipulations, as follows:
- Although documentation indicated that the former state Department of Public Works — since absorbed into the Department of Administrative Services — sought proposals for the university’s lease of office space, the month-to-month rental arrangement with the foundation was initiated by the university. It was not a proposal that was submitted to DPW. Between 2001 and 2003, DPW attempted to establish, but could not agree on, a lease-purchase agreement to obtain the Foster Building for the university.
- The rental agreement was negotiated directly between the university and the foundation.DPW was not involved in lease negotiation.
- Lease finalization should have been contingent upon available funding. It is clear, the auditors said, that available funding was not in place for this rental agreement. The university needed to defer the payment of rent to the foundation until April 2012, more than four years after vacating the foundation’s office space.
