November 10, 2017

Special audit finds ‘tangled web,’ problems at UNM Athletics

A special audit of the University of New Mexico Athletics Department found a variety of problems dating back years.

According to the Office of the State Auditor,  responsibility ultimately lands in the lap of the university’s Board of Regents, which is supposed to ensure the university, including the athletics program, is fiscally responsible. Auditors found in many cases the UNM Athletics program fell short of that goal.

The problems include “a tangled web of transactions” according to State Auditor Tim Keller. At the center of many of the findings are two non-profits that aid the athletics department in fundraising, the UNM Foundation and the UNM Lobo Club.

“Decades of decentralization and the maze of structures has clouded financial transparency at our flagship university,” Keller said. “This structure has historically allowed boards and management to defuse direct responsibility when it comes to important issues. We appreciate the University’s recognition of the problems we’ve highlighted and for their stated desire to get things fixed.”

The full audit is embedded below.

“From my standpoint, I’m actually excited that it’s out here already, that it’s there,” UNM Athletic Director Eddie Nuñez told NM Political Report Friday evening. He said it would help UNM move forward.

Nuñez said UNM had already started making changes, some before he was even hired on Aug. 31 of this year.

”I can’t speak too much of what happened before me, because I’m just learning as many of you guys are what’s the best way to go about this,” he said.

Auditors learned that money raised by booster clubs and the Lobo Club “went directly into the UNM’s General Ledger and bank account” where they mixed with public funds. Then, money  from the general account, that included public money, was spent on “meals and alcohol, hotels golf outings, and other expenditures that may be appropriate perks to purchase with donor funds, but are not appropriate uses of public funds.”

The perks themselves were problematic. The audit found 23 people who received “donor perks” never donated  to UNM or any of the related entities. These perks included charter flights, meals and other expenses paid by the university for trips related to UNM Athletics.

Sometimes,  when money was donated, it did not always go where it was intended. Money meant for  the cash-strapped ski team’s  scholarships and equipment instead went towards a scholarship for a women’s basketball player.

Some of the findings previously-reported by the watchdog website, the Albuquerque Journal and KRQE-TV For example, the state initially failed to collect $432,000 in revenue for luxury suites and club suites at what is now called Dreamstyle Arena, but commonly known as The Pit, where UNM men’s and women’s basketball teams play their home games. Over half of the money owed for suites or club seats, the audit says, are without any contracts or invoices before the issue came to light. While UNM has collected some of the funds, there is still nearly $240,000 in uncollected revenue for Pit Suite and club seats.

While UNM owns Dreamstyle Arena, the Lobo Club manages to the sale of the suites and club seats. The audit found no written documentation of this arrangement. A private contractor used by UNM to aid in donor relations and getting sponsorships, Lobo Sports Properties, has also occasionally sold these suites and club seats as part of packages. The Lobo Club bills the company afterward.

UNM says it is in the process of updating a May 2015 Memorandum of Agreement between the Board of Regents, the UNM Foundation and the Lobo Club to outline the responsibilities of each entity.

Another previously-reported finding was overpayment to coaches. That $185,000 has “since been recovered” according the audit.

The infamous Scotland Golf Tour was also mentioned. The 2015 trip was first revealed by KRQE. While the trip ended up making more money than it cost, because the payment came from public coffers, it opened up the university to potential violations of the Anti-Donation Clause in the state constitution, according to the audit.

And the purchase of tickets to the NCAA Men’s Basketball Final Four happened for years—though UNM has never advanced to that level of the tournament. It is unknown who used those tickets, though UNM procedures require this to be reported.

Lobo Sports Properties and UNM agreed on a deal for some multi-media and sponsorship rights. However, the company underpaid by a total of $256,000 over two fiscal years. In the deal, the company gets “the exclusive right to the use of, and the revenues generated from, nine luxury suites in the football stadium per year.”

“So tangled are the lines of financial accountability that without the implementation of these recommendations, it is likely these types of issues will continue to occur and it will be increasingly difficult for the University to restore the confidence of the public, donors, students, and the Legislature,” Keller said.

For his part, Nuñez said he wants to let students and parents know that UNM is working hard to earn their trust.

”What we’re trying to do here is we’re trying to earn their trust and we know there have unfortunately been some hurdles, some shortcomings out there,” he said.

  University of New Mexico Athletics Special Audit, Nov 2017 by New Mexico Political Report on Scribd

Update: Added quotes by Eddie Nuñez.