Sep 292008
 
Authors: Aaron Hedge, J. David McSwane

As CSU President Larry Penley launched an overhaul of administration — drastically boosting high-level administrative budgets and salaries — four top-level financial overseers departed the university because of disputes with the president’s financial philosophy, sources said.

On the same day — April 30, 2007 — two auditors and an Athletics business manager left the school, accepted large monetary incentives totaling almost a quarter of a million dollars and signed confidentiality agreements requiring them to keep quiet about any arguments they may have had with CSU.

Another auditor left earlier that spring and did not sign a confidentiality agreement.

Several sources say the men were “forced out” of their positions over disagreements with the Penley administration, which included:

An audit report that showed university departments incorrectly approved liquor purchases that “appeared to be excessive” as official university functions.

A sharp increase of administrative budgets, while the academic colleges and library saw a much slower growth.

A substantial influx of highly paid top-level administrators.

Penley’s focus on bringing in research dollars, namely for the branded “Superclusters” concepts, which reports show swallow money that could be used for the financially starving academic colleges.

Brad Bohlander, CSU’s chief spokesperson, said the men never voiced any grievances and that the men left the university on good terms.

Rich Tusa, the former chief auditor for the CSU System; Keith Ickes, the former vice president for Administrative Services; and Phil Goldstein, the former business manager for the Athletic Department all signed agreements.

Tusa’s compensation for signing the agreement was nearly $115,000, Goldstein received more than $70,000 and Ickes was paid $50,000, according to copies of the separation contracts obtained by the Collegian.

The confidentiality agreements are not a result of any previous employment contracts, which are only drafted for high profile positions like the president, the athletic directors and coaches.

The contracts required the departing employees to not “disparage CSU” or “disclose the nature of any disagreements with CSU.”

The fourth man, Edwin Ruotsinoja, the former controller of the CSU system, was the only man who did not sign an agreement.

Bohlander said such agreements are standard university procedure for personnel who hold sensitive information about the university, adding that any change in executive leadership leads to substantial changes in personnel.

But Ruotsinoja, the former controller of the CSU system, said he and the other men were “forced out” under pressure from the administration, which, he said, was unhappy with the financial oversight they provided.

Half a dozen sources, most of whom worked closely with the auditors, corroborated Ruotsinoja’s story but spoke on the condition of anonymity to avoid potential backlash from the university.

Bohlander, however, said it was “purely coincidental” that all three men left on the same day and that their departures were all for different reasons.

None of the men were under pressure to leave the university, he said, adding that he couldn’t discuss the nature of the departures because state law that forbids university officials from discussing personnel matters.

The departures occurred as CSU began fighting to enter the national spotlight by bringing in loads of research grants and marketing for Penley’s “green university” campaign.

During this same time, the budgets of the president and vice presidents have increased by 62 percent since 2003, and the academic colleges and the library have seen much less financial support, a 32 percent increase since 2003, according to annual university budget reports.

‘Inappropriate’

spending

Tusa, the former chief auditor for the CSU system, in June 2005 performed an audit that reported purchases for liquor by university departments that “in many instances the use appeared to be excessive.”

The audit also reported a number of financial transactions by departments that “were not adequately documented . were not considered prudent or reasonable.”

Of the test sample, which included 207 transactions out of more than 15,000, Tusa determined 178 of them prudent, but only after extensive interviews with official function representatives, who are charged with approving or denying the expenditures, according to the audit report.

The 29 that were declared inappropriate included $864 on furniture for a faculty lounge, which didn’t qualify as an official function, and $745 on alcohol — which was determined as an excessive amount — for a sponsored banquet that served 30 people.

The audit made several recommendations to the president’s office to better track official functions spending and curb the “excessive” spending on liquor. The university, in the audit, agreed with the recommendations.

Tusa, who signed a confidentiality agreement, said he left on good terms with administration.

But Ruotsinoja said Tusa departed under arguments with the president about the spending shifts to fund Penley’s research initiatives and expenditures of university funds on parties for alumni and donors, which the university classifies as “official functions.”

Ruotsinoja said that during Penley’s tenure at CSU, the administration regularly isolated upper-level management employees from their duties. He left CSU in favor of a position as the controller of the University of Wisconsin.

“(Penley) was dissatisfied with all the financial people,” Ruotsinoja said. “We were being left in the dark. . It wasn’t really the type of institution I wanted to work for.”

A contentious

departure

When the Collegian contacted Ickes and Goldstein for comment, they declined. And Ickes said, “I have separated myself from the university, and I don’t want to talk about it.”

Ruotsinoja said Ickes was fired “out of the blue” without explanation. In mid to late August 2006, Ruotsinoja said he received a call from Ickes, who told him that CSU Provost Tony Frank had walked into his office that day and ordered him to pack his things and leave the office.

“Tony Frank walked into his office and said, ‘We want you out of here by the end of the day,'” Ruotsinoja said. “I was just in my office, and Keith called and said he wasn’t going to be working there anymore.”

Frank, effectively the second-highest official under Penley, deferred comment to Bohlander, who vehemently denied the claim that Ickes was fired.

Bohlander said Ruotsinoja’s allegations are “completely inaccurate,” and that the men left on good terms with the president’s office.

“Sometimes things just don’t work out,” he said.

As the vice president for Administrative Services, Ickes was charged with oversight of financial and administrative operations.

Before he was promoted to a vice presidential position in 2005, he had served as a financial administrator for CSU for nearly 19 years.

And Ruotsinoja, who had reported to Ickes as the CSU System controller for eight years, said Ickes was apprehensive about the university’s focus on bringing research funding because a number of university reports show that heavy reliance on research grants can strain academia.

Ruotsinoja said Ickes was especially skeptical of CSU’s “Superclusters” project, which is a technology transfer program that injects university research into the marketplace in hopes of bringing patent royalties to CSU.

A previous Collegian investigation found that technology transfers like Superclusters, over the last decade have kicked back to the university a total of $9.4 million — a figure dwarfed by hundreds of millions of tuition and state dollars that are invested in research and marketing for the concepts. The increased focus on research was included as a part of a five-year comprehensive plan by the president, called stretch goals, in 2007.

“Keith was kind of flummoxed by the question of ‘how are we going to use those as an asset?'” Ruotsinoja said. “Penley got (approval) from the (CSU System Board of Governors) to go ahead and aggressively move toward these stretch goals. . Keith and I were of the same mind that these goals would hurt CSU.”

Accounts from former employees who worked closely with Ickes and Tusa say the four men who left showed perfect competence in each of their jobs.

“I was very surprised when I heard that they were terminated,” said Gerry Bomotti, the former vice president for Administrative Services. “(They are) four people who are top notch in the area of competence.”

Bomotti had been at CSU for 11 years, 10 of them under Penley’s predecessor Al Yates, but left a year after Penley took the president’s office. He had worked closely with Ickes, Tusa and Ruotsinoja. Ickes replaced Bomotti when he left to take a position at the University of Nevada in 2005.

Don Hamstra, a former chair of the CSU Board of Governors, echoed Bomotti’s statements, saying that he held each of the men “in the highest regard.”

Most of the records referenced in this story are public record and can be found at

News Managing Editor Aaron Hedge and Enterprise Editor J. David McSwane can be reached at news@collegian.com.

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