Auditor says perks from UNM athletics went to 23 non-donors

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In this Oct. 23, 2017 photo, Garnett Stokes, the provost and executive vice chancellor for academic affairs at the University of Missouri, speaks at the University of New Mexico in Albuquerque, N.M. The University of New Mexico Board of Regents made history Thursday, Nov. 2 as it named Stokes the first woman president to lead the state's flagship school. (Roberto E. Rosales/The Albuquerque Journal via AP)

SANTA FE, N.M. (AP) A special audit of the University of New Mexico athletics department and affiliated fundraising groups found a stark lack of financial controls over public money that resulted in unpaid access to luxury basketball arena suites, overpayments to coaches and donor perks of golf and alcohol that failed to elicit donations, the Office of the State Auditor announced Friday.

State Auditor Tim Keller said the university's comingling of public funds and donations could involve violations of the state's anti-donations clause and has created the appearance of impropriety. He described a tangled web of transactions that has made it difficult even for financial staff at the university to trace public funds.

The office of New Mexico Attorney General Hector Balderas is conducting a separate inquiry in response to questions about the use of public money on a 2015 golf junket to Scotland that included prospective donors. Prosecutors are reviewing audit findings, agency spokesman James Hallinan said.

The university agreed with all 10 major findings under the audit and outlined corrective efforts.

The special audit studied athletics department finances from July 1, 2014, though June 30 of this year. It found that there were 23 recipients of so-called donor perks that failed to elicit actual donations during the past decade to the university or its related entities including the UNM Foundation, the Lobo Club that raises funds for athletics, an alumni association and booster clubs. The recipients were not named.

The perks included charter flights, inclusive golf trips, hotel stays, and meal, drinks and season passes to Lobo football games.

Those and other improprieties indicate a lack of financial controls at the university and fundraising affiliates, auditors said. "Funds flowing back and forth between organizations make individual accountability for financial decisions nearly impossible," the auditor's office said in a statement.

As of Sept. 1, the university was unable to collect $239,000 in unpaid charges for suites at the university's basketball arena. Auditors found that in many cases suite contracts were never signed, leaving the university with little recourse. Deficient financial controls also were linked to under-collections of $256,000 linked to multimedia and sponsorship rights.

Earlier revelations about athletics department finances led to a management shake-up, with Paul Krebs stepping down as athletics director in June. The new director, Eddie Nunez, has promised to protect the integrity of the UNM brand.

The athletics department is confronting a projected budget deficit for the current fiscal year of more than $1 million.

At the same time, pressure is rising to raise tuition at New Mexico's public colleges and universities. New Mexico state government has slashed spending on state universities and colleges in response to faltering state tax revenues and a general decline in student enrollment.

At the Albuquerque-based University of New Mexico, broad management changes are underway with the appointment this month of a President Garnett Stokes, previously provost at the University of Missouri's Columbia campus.

"We are hoping that this is a clarion call for the new president and regents to restructure the university in a way that at least can provide accountability," said Keller, a Democratic candidate in a runoff election for mayor of Albuquerque to be held Tuesday. "If the structure is not fixed we can almost ensure that this will continue to happen because there simply is not a way to monitor what's going in dozens of different entities."

In response to the audit, the university said it was in the process of revising an agreement between the Board of Regents, the UNM Foundation and the Lobo Club to ensure that benefits intended for donors or prospective donors are paid with appropriate funds.

The university indicated it has revised suite agreements and payment tracking so that tickets are not issued to suite holders with outstanding balances.

The audit confirmed errors that led to the overpayment of three coaches by $185,000. The overpayments were returned.

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