But See How The System Is Full Of Weaknesses.
Weaknesses seen in U of L grant monitoring system
Officials admit rigor of the system varies
By Chris Kenning
Last year, the University of Louisville received $77 million in federal grants -- just a small chunk of taxpayer awards that flow to universities each year for research in fields ranging from medicine to education.
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At most universities, including U of L, a mix of federal regulations, financial accounting and administrative monitoring provides oversight for those grants and is typically sufficient to deter misuse, experts and grant administrators say.
But a federal criminal investigation into the potential misappropriation of a $694,000 federal education grant has raised questions about whether gaps exist at U of L -- at a time when grant funding at the university has risen sharply.
"There has been some increase in oversight … but is the infrastructure adequate to support the growth?" asked David Barker, the university's director of audit services. "That's a legitimate issue we need to look at."
Those who work with grants say monitoring has always been strict, with researchers typically required to file detailed proposals, budgets, invoices, reports and requests for spending. The university and grantors also conduct random audits.
But there are weaknesses in the system that could be exploited, a Courier-Journal review found.
Oversight is spread among many university offices and departments, with lead researchers largely responsible for monitoring their own grants. Some monitoring isn't done until after the money is already spent. And officials acknowledge that the rigor of oversight within schools and colleges varies.
For instance, the university failed to notice that Robert Felner, the former education dean who is the focus of the federal grant investigation, had never filed financial disclosure forms that could have revealed his relationships with subcontractors he hired with grant money.
And because Felner was the dean and lead researcher, his grant spending wasn't subject to oversight from anyone else within his college.
President James Ramsey has hired external auditors to see if there are shortcomings that need correcting, a process that is expected to take some time. Grant officials say they're prepared to correct weaknesses that are found.
And they note that it was the university that notified federal officials of concerns that grant funds might have been mishandled.
"Do I think we've shown due diligence (in monitoring grants)? Absolutely," said Judy Bristow, head of U of L's grants management office. "Could our process be improved? I think so."
Funding increases
Such questions have grown increasingly important as direct federal grant funding at U of L has nearly doubled from 2002 through 2007. Last year, U of L received 273 awards, with its total grants and contracts reaching $150 million.
The university is seeking to become a more prominent research university to raise its profile.
Controls to safeguard such funds are largely standard among most universities -- and they usually work, said Anthony DeCrappeo of the Council on Government Relations, a Washington, D.C.-based association of research universities.
Auditors at U of L agree, saying that overt misuse or outright fraud is rare.
"I've been here eight years. I can't think of a federal grant where there's been an overt, significant, large and intentional mischarge," said Cheri Jones, associate director for audit services at U of L.
But DeCrappeo said cases of abuse sometimes slip through.
And Beth Boehm, former chairwoman of U of L's Faculty Senate, said of the Felner situation: "There must have been holes somewhere. Otherwise, this wouldn't have happened."
Subcontracting issues
An internal university audit in March 2006 -- after Felner had secured his grant -- did find that inadequate monitoring of subcontracts on grants "could result in a misuse of funds."
Subcontracts are issued when researchers hire other universities or nonprofit centers to help with their projects.
The audit, which was released to The Courier-Journal under an open-records request, said university policy didn't clearly spell out who was responsible for oversight of grant subcontracts; that researchers sometimes failed to monitor subcontractors; and the university controller's office didn't consistently keep up with required documentation.
University officials say they corrected those audit findings in 2006-07, adopting clearer policies, doing more to educate researchers about compliance rules and making sure proper audits were requested.
Even so, the audit illustrates how weaknesses can exist despite the complex and overlapping regulations.
For example, in Felner's case, the university's controller requested documentation about his subcontractors in late April 2008 -- a full year after the first of three checks to one of the subcontractors was deposited in a Louisville bank.
Susan Wilhelm, director of grants and sponsored programs in the controller's office, said the timetable met federal reporting deadlines, allowing for other reporting to be completed first.
But Barker said the timing of some monitoring "could be improved."
Riaan Van Zyl, associate dean of research at the Kent School of Social Work at U of L, agreed, saying that the "the time lag between a particular activity and the oversight" may not reveal problems soon enough.
Even oversight that takes place early can fail to catch problems. For example, it's not clear why the university didn't notice that Felner had not reported financial disclosures required of researchers.
"We need a stronger control environment to make sure the paperwork was filed," Barker said. "But that being said, would he have disclosed that relationship? Your guess is as good as mine."
Big responsibility
Much of the daily oversight of grant money rests with the lead researchers, or "principal investigators," as they are known, who are "ultimately responsible for the effective and compliant management of all scientific, fiscal and programmatic aspects of the sponsored research project," according to the U of L research handbook.
They also are relied upon to oversee subcontractors to make sure the research they're getting is legitimate.
"Our PI would be the only one to know whether (subcontractors) are truly doing the work," Bristow said, since administrators lack the expertise to gauge whether the science or research being done is legitimate.
In the case of the $694,000 education grant, Felner was the principal investigator -- and the college dean.
Bristow said that is an unusual circumstance, though allowable. Barker said, "That's something we certainly want to take a look at here, and reassess."
Another issue is that the university's monitoring system is decentralized -- spread among colleges, grantors and a handful of departments, including grants management, the controller, purchasing, sponsored programs development and research integrity.
That's "a trade-off," Barker said: It provides multiple checks by people close to the grant but lacks the consistency of centralized oversight.
The Felner case
University officials won't say exactly how the Felner case came to light, except that it was reported to the provost and campus police, and that the university alerted federal authorities.
The grant came through an earmark secured by former U.S. Rep. Anne Northup, R-3rd District, in the 2005 federal budget.
Felner was to use the grant, from the U.S. Department of Education's Office of Innovation and Improvement, to create a center to help schools meet goals under the federal No Child Left Behind Act.
Documents show that most of that money went to two research subcontractors -- centers that Felner was connected to in Illinois and Rhode Island.
But some of that money wound up in a Louisville bank, and it remains unclear what work was done.
System defended
Despite the Felner controversy, some researchers and administrators at U of L argue that grant controls shouldn't be viewed as a broad failure.
"I don't see a systemic problem," Van Zyl said.
Bristow said that since word of the Felner investigation broke, her office has been deluged with calls and e-mails from researchers who want to make sure their grant applications and spending follow proper procedure.
An anonymous "compliance hot line" was added in August 2007 so people could report alleged abuses. Only two of the 81 calls it has received involved grants, and both were "minor accounting correction kind of things," Barker said.
"We're trying to encourage folks that, if there's some concern in charging inappropriately on grants, we want them to report that," he said.
And while Bristow and others say they're willing to make needed changes, no system is likely to catch everyone bent on wrongdoing.
"There's no perfect system," Wilhelm said. "There's always someone who will find a way to circumvent it."
Officials admit rigor of the system varies
By Chris Kenning
Last year, the University of Louisville received $77 million in federal grants -- just a small chunk of taxpayer awards that flow to universities each year for research in fields ranging from medicine to education.
Advertisement
At most universities, including U of L, a mix of federal regulations, financial accounting and administrative monitoring provides oversight for those grants and is typically sufficient to deter misuse, experts and grant administrators say.
But a federal criminal investigation into the potential misappropriation of a $694,000 federal education grant has raised questions about whether gaps exist at U of L -- at a time when grant funding at the university has risen sharply.
"There has been some increase in oversight … but is the infrastructure adequate to support the growth?" asked David Barker, the university's director of audit services. "That's a legitimate issue we need to look at."
Those who work with grants say monitoring has always been strict, with researchers typically required to file detailed proposals, budgets, invoices, reports and requests for spending. The university and grantors also conduct random audits.
But there are weaknesses in the system that could be exploited, a Courier-Journal review found.
Oversight is spread among many university offices and departments, with lead researchers largely responsible for monitoring their own grants. Some monitoring isn't done until after the money is already spent. And officials acknowledge that the rigor of oversight within schools and colleges varies.
For instance, the university failed to notice that Robert Felner, the former education dean who is the focus of the federal grant investigation, had never filed financial disclosure forms that could have revealed his relationships with subcontractors he hired with grant money.
And because Felner was the dean and lead researcher, his grant spending wasn't subject to oversight from anyone else within his college.
President James Ramsey has hired external auditors to see if there are shortcomings that need correcting, a process that is expected to take some time. Grant officials say they're prepared to correct weaknesses that are found.
And they note that it was the university that notified federal officials of concerns that grant funds might have been mishandled.
"Do I think we've shown due diligence (in monitoring grants)? Absolutely," said Judy Bristow, head of U of L's grants management office. "Could our process be improved? I think so."
Funding increases
Such questions have grown increasingly important as direct federal grant funding at U of L has nearly doubled from 2002 through 2007. Last year, U of L received 273 awards, with its total grants and contracts reaching $150 million.
The university is seeking to become a more prominent research university to raise its profile.
Controls to safeguard such funds are largely standard among most universities -- and they usually work, said Anthony DeCrappeo of the Council on Government Relations, a Washington, D.C.-based association of research universities.
Auditors at U of L agree, saying that overt misuse or outright fraud is rare.
"I've been here eight years. I can't think of a federal grant where there's been an overt, significant, large and intentional mischarge," said Cheri Jones, associate director for audit services at U of L.
But DeCrappeo said cases of abuse sometimes slip through.
And Beth Boehm, former chairwoman of U of L's Faculty Senate, said of the Felner situation: "There must have been holes somewhere. Otherwise, this wouldn't have happened."
Subcontracting issues
An internal university audit in March 2006 -- after Felner had secured his grant -- did find that inadequate monitoring of subcontracts on grants "could result in a misuse of funds."
Subcontracts are issued when researchers hire other universities or nonprofit centers to help with their projects.
The audit, which was released to The Courier-Journal under an open-records request, said university policy didn't clearly spell out who was responsible for oversight of grant subcontracts; that researchers sometimes failed to monitor subcontractors; and the university controller's office didn't consistently keep up with required documentation.
University officials say they corrected those audit findings in 2006-07, adopting clearer policies, doing more to educate researchers about compliance rules and making sure proper audits were requested.
Even so, the audit illustrates how weaknesses can exist despite the complex and overlapping regulations.
For example, in Felner's case, the university's controller requested documentation about his subcontractors in late April 2008 -- a full year after the first of three checks to one of the subcontractors was deposited in a Louisville bank.
Susan Wilhelm, director of grants and sponsored programs in the controller's office, said the timetable met federal reporting deadlines, allowing for other reporting to be completed first.
But Barker said the timing of some monitoring "could be improved."
Riaan Van Zyl, associate dean of research at the Kent School of Social Work at U of L, agreed, saying that the "the time lag between a particular activity and the oversight" may not reveal problems soon enough.
Even oversight that takes place early can fail to catch problems. For example, it's not clear why the university didn't notice that Felner had not reported financial disclosures required of researchers.
"We need a stronger control environment to make sure the paperwork was filed," Barker said. "But that being said, would he have disclosed that relationship? Your guess is as good as mine."
Big responsibility
Much of the daily oversight of grant money rests with the lead researchers, or "principal investigators," as they are known, who are "ultimately responsible for the effective and compliant management of all scientific, fiscal and programmatic aspects of the sponsored research project," according to the U of L research handbook.
They also are relied upon to oversee subcontractors to make sure the research they're getting is legitimate.
"Our PI would be the only one to know whether (subcontractors) are truly doing the work," Bristow said, since administrators lack the expertise to gauge whether the science or research being done is legitimate.
In the case of the $694,000 education grant, Felner was the principal investigator -- and the college dean.
Bristow said that is an unusual circumstance, though allowable. Barker said, "That's something we certainly want to take a look at here, and reassess."
Another issue is that the university's monitoring system is decentralized -- spread among colleges, grantors and a handful of departments, including grants management, the controller, purchasing, sponsored programs development and research integrity.
That's "a trade-off," Barker said: It provides multiple checks by people close to the grant but lacks the consistency of centralized oversight.
The Felner case
University officials won't say exactly how the Felner case came to light, except that it was reported to the provost and campus police, and that the university alerted federal authorities.
The grant came through an earmark secured by former U.S. Rep. Anne Northup, R-3rd District, in the 2005 federal budget.
Felner was to use the grant, from the U.S. Department of Education's Office of Innovation and Improvement, to create a center to help schools meet goals under the federal No Child Left Behind Act.
Documents show that most of that money went to two research subcontractors -- centers that Felner was connected to in Illinois and Rhode Island.
But some of that money wound up in a Louisville bank, and it remains unclear what work was done.
System defended
Despite the Felner controversy, some researchers and administrators at U of L argue that grant controls shouldn't be viewed as a broad failure.
"I don't see a systemic problem," Van Zyl said.
Bristow said that since word of the Felner investigation broke, her office has been deluged with calls and e-mails from researchers who want to make sure their grant applications and spending follow proper procedure.
An anonymous "compliance hot line" was added in August 2007 so people could report alleged abuses. Only two of the 81 calls it has received involved grants, and both were "minor accounting correction kind of things," Barker said.
"We're trying to encourage folks that, if there's some concern in charging inappropriately on grants, we want them to report that," he said.
And while Bristow and others say they're willing to make needed changes, no system is likely to catch everyone bent on wrongdoing.
"There's no perfect system," Wilhelm said. "There's always someone who will find a way to circumvent it."
Labels: Crime, Education, Punishment
posted by KYJurisDoctor at 11:04 AM
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