Auditor targets
special UH fundThe UH Foundation cites
privacy concerns in the state's
request for financial records
The University of Hawaii Foundation is negotiating to turn over financial documents under threat of a subpoena from state Auditor Marion Higa.
In a Nov. 4 letter obtained by the Star-Bulletin, Higa told Elizabeth Sloane, president of the UH Foundation, that the auditor would issue a subpoena commanding the foundation to turn over the documents unless it cooperated.
Lawmakers have asked Higa to find out how the private foundation that raises money to help UH spends about $2.3 million a year from a special fund. The money from the Tuition and Fees Special Fund is given to the foundation to generate private donations through fund-raising services.
The university had been spending $1 million a year since 1997 on a contract with the foundation, but the auditor said a new $2.3 million contract was signed in October 2002.
Higa said the new audit is a follow-up to a legislative audit last year that criticized the management of six special funds at the university, including the tuition fund.
She said she is also looking into other payments from the university to the foundation for development officers and a $350,000 annual contract to provide alumni relations services.
Higa said her office is examining "whether the university got what it contracted for."
Bill King, chief financial officer for the foundation, said the foundation has had two meetings with Higa since the Nov. 4 letter and is "making good progress" on turning over the documents. However, he said some details still need to be worked out.
King said the foundation wants to protect the names of donors who want to remain anonymous.
"We're trying to figure out how to do that," he said. "That's where we got bogged down before."
King said the foundation also had concerns about the state auditing a private foundation.
"We don't consider ourselves a state agency, but we're trying to work with her because we get funding from the university," he said.
State Sen. Norman Sakamoto, chairman of the Senate Education Committee, said it is unusual for the auditor to take the step of preparing a subpoena.
"Normally, people agree and work things out," he said. "I'm hoping they still can."
In the letter, Higa outlined the steps that had been taken to conduct the audit and what documents were being sought:
>> On June 3 she informed the foundation, university administration and the Board of Regents by letter that she was continuing with an audit of the UH contract with the foundation for "fund-raising, stewardship and alumni relation services."The auditor was also seeking budget information, revenues and expenditures related to alumni relations and a list of development officers supported by university funds.>> In subsequent meetings, letters and phone calls through October, the foundation provided some documents but did not provide others. Concerns were also discussed on the scope of the audit and how the auditor would protect the confidentiality of some donors.
>> In an Oct. 1 request, the auditor sought, among other items, a list of gifts and endowments received, payouts and expenditures, and information relating to the calculation of the gift assessment fees and endowment administration fees charged to the university since 2001.
Higa said depending on when she gets the documents, the audit should be released during the next legislative session.
The 2002 Legislature called for an audit of university funds after a controversy involving UH President Evan Dobelle's use of foundation money to take two dozen donors and staff members to a Janet Jackson concert at Aloha Stadium.