Cal U president's firing, release of audit report stun campus

Report raises questions about school's financial practices



A day after longtime California University of Pennsylvania president Angelo Armenti Jr. was fired, state education officials released an audit that was critical of some of the school's financial practices.

That 25-page report, spurred by a series of anonymous complaints received by the State System of Higher Education, raises questions about some university expenditures, many of which were recently detailed by the Pittsburgh Post-Gazette, including debt resulting from the new $59 million convocation center.

The report noted that "even though most transactions were done properly within university policy or procedure, external parties may perceive them as poor judgment or inappropriate financial oversight by California University management."

Mr. Armenti was fired Wednesday night by the State System's Board of Governors, which did not comment on the action.

The State System's audit did not explicitly link Mr. Armenti's dismissal Wednesday to the questionable financial activity. The document did state that some of the concerns raised about university spending were determined to be unfounded.

Mr. Armenti had been the university's president since 1992, giving him the longest tenure among the 14 State System presidents. He had two years remaining on his contract, and was receiving an annual salary of $227,160.

Some university trustees expressed support Thursday for the embattled president, as well as outrage over his firing and the reasons behind it.

The State System's Board of Governors, who authorized their executive committee earlier this month to meet with Mr. Armenti and "take whatever action was deemed necessary," offered few insights on their decision to remove the president from his post.

State System chancellor John Cavanaugh and Board of Governors chairman Guido Pichini both declined to comment, stating only that the situation with Mr. Armenti is "a personnel matter."

Gov. Tom Corbett, a member of the Board of Governors, "is aware of the situation" but was not involved in Mr. Armenti's removal, according to his spokeswoman. State Department of Education secretary Ron Tomalis, however, did participate in Wednesday's meeting with Mr. Armenti.

Following the release of the university audit, a State System spokesman issued a statement from Ronald Henry, chair of the audit committee, indicating that the board will review the report and determine its next steps.

Three items in particular raised a red flag for auditors: the university counted on anticipated donations to help pay for the convocation center; net profits from housing facilities were transferred to the Foundation for California University instead of remaining within the university; and the university and its fundraising foundation may not be as separate as the law requires.

On the convocation center funding, the audit was critical of the contrast between a 2009 bond document stating that the university had cash-on-hand and donations totalling $12.3 million, and later documents indicating that only a small portion of that figure was actually available.

University publications also gave conflicting figures on donation goals.

"No formal strategic plan for convocation center fundraising was created to achieve donation goals," according to the audit. "Moreover, there was no University Development focus or action directly aimed at the convocation center."

The report noted that a market analysis prior to construction recommended that the arena should be about half of its ultimate size, and that construction costs grew by $6.2 million due to design changes and errors.

It also detailed a complicated procedure for using on-campus housing profits to fund scholarships. The audit called for a review of whether housing costs have been inflated as a result.

As for the university's foundation, officials found that Cal U employees were fundraising on behalf of the foundation. State law requires separation between colleges and their related foundations, and the audit said the university needs to come into compliance.

Prior to the report's release, state Rep. Peter Daley, D-California, and a member of the university's Council of Trustees, said the Board of Governors and Mr. Cavanaugh had spent several months investigating "certain accounts at California University and the convocation center" and potential personnel issues regarding Mr. Armenti.

On Wednesday afternoon, Mr. Armenti was approached by State System officials and given the option to resign, according to Mr. Daley and others.

"He said he was not going to resign and they terminated him," Mr. Daley said.

Karen Ball, the State System's vice chancellor for external relations, said Thursday that there was no agreement between Mr. Armenti and system officials. It was unclear if Mr. Armenti is entitled to a severance package.

Provost Geri Jones is serving as interim president while the trustees sets up a search committee for a permanent successor.

Larry Maggi, a Washington County commissioner and vice chairman of the council, said the news was "a real surprise" to trustees. He and other trustees were notified by chairman Robert Irey during a Wednesday evening conference call that Mr. Armenti had been "released without cause" as of 4 p.m.

"All of the sudden, out of nowhere, he's terminated and we've not been given any reasons," said Mr. Maggi, a 1979 Cal U graduate and trustee for two years.

Mr. Maggi said the trustees supported Mr. Armenti and weren't concerned with the mounting debt -- an issue that persistently dogged Mr. Armenti during his two decades as president.

"Under his guidance, there was unprecedented growth," Mr. Maggi said.

Mr. Armenti's critics weren't so kind.

Michael Slavin, theater and dance department chairman and campus head of the faculty union, has been critical of Mr. Armenti and the debt undertaken by the university for noneducational expenses, such as the convocation center.

"It is a shame that the president had to leave under such a bad light; all the good he did was stained by the last years of over spending on his vision of 'value added,' " Mr. Slavin said. "You can't have value added if the basic mission of the university is being undermined."

education - neigh_washington

Laura Olson: lolson@post-gazette.com or 717-787-4254. Janice Crompton: jcrompton@post-gazette.com or 412-851-1867. Staff reporters Taryn Luna, Karen Langley and Bill Schackner contributed. First Published May 18, 2012 4:00 AM


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