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TOPEKA — Kansas State University's new president said he hopes it can move on now that a final report on widespread financial irregularities found that no crimes were committed.
The report released Thursday also clears football coach Bill Snyder of any wrongdoing, said president Kirk Schulz. Nearly $846,000 in previously unexplained athletic expenses found by outside auditors were legitimate expenses, Schulz said.
Schulz took over at KSU in June, the same week an audit revealed undisclosed payments, conflicts of interest and accounting mistakes at the university and in its Athletics Department.
But even the task force created by Schulz to review the audit's findings concluded that former president Jon Wefald gave too much power to Bob Krause. Krause was the former campus vice president and athletic director, whose management of university funds was a focus of the original audit.
"It was clear there was an awful lot of power invested in too few people," Schulz told regents, adding that the university is taking steps to correct the problems.
Wefald and Krause could not be reached for comment Thursday. Wefald retired from the university earlier this year. Krause resigned following revelations of a previously unknown arrangement to pay more than $3 million to a company owned by former football coach Ron Prince. That arrangement, revealed before the June audit, is being challenged by KSU in court.
The Regents said they were satisfied that questions surrounding KSU's administration have been resolved and that officials have accounted for all the money. Still, they asked Schulz to give them a progress report in April.
"It's one thing to say 'these were the things that need to be changed,' " said Regents member Donna Shank. "But I would like to know at some point that those things were done ... so we can really, truly put this behind us."
The original 34-page audit, conducted as a routine review when Wefald announced his retirement, found a pattern of commingled funds, sloppy record keeping and weak or nonexistent oversight.
Among other findings, the audit revealed that two years ago the university foundation's scholarship fund experienced a $2.4 million shortfall; a former athletic director received a $500,000 personal loan from the athletic department, and records for more than $845,599 in athletic department expenses couldn't be located.
In response to the June audit, Schulz created a task force to recommend reforms and hired two outside auditors to focus on specific areas of concern.
To investigate the 13 unexplained Athletic Department payments, the university hired auditors from Deloitte and Touche. The auditors pieced together what records existed and found that $630,000 of the $845,599 went to Snyder as part of his contract.
"All that (speculation about Snyder) can be laid to rest now," said Regent Dan Lykins. "Coach Snyder did nothing improper."
Other expenses related to the use of university aircraft for travel to legitimate athletic events.
"After all this there was no criminal activity," said Regent Gary Sherrer, but he added: "There was a lack of policies. There was an ignoring of policies... and some really poor judgment."
One announced change requires an Athletic Department committee to review each compensation package for coaches and other key personnel. Previously, individual athletic officials personally signed off on contracts.
The Athletic Department Board also adopted a new policy limiting transactions from a discretionary athletics fund to $5,000. A university financial officer will now review the fund monthly.
Finally, all personal business expenses for the athletic director will be reviewed by a campus vice president.
Another team of auditors hired after the initial audit looked at the National Institute for Strategic Technology Acquisition and Commercialization, a nonprofit economic development group based in Manhattan with ties to KSU.
Wefald, Krause and Krause's wife were investors in a company that received NISTAC help. Krause also served as the head of NISTAC's board. The June audit raised questions about a potential conflict of interest, since Krause and Wefald stood to benefit financially from NISTAC's decisions.
The latest review recommended that NISTAC reassess its conflict of interest policies to avoid any future problems.
In regard to the $2.4 million scholarship shortfall, Thursday's report recommends better communication between the university and its foundation to ensure the scholarship fund remains solvent.
It also calls for a more robust system of checks and balances, transparency and communication between different layers of university leadership.
Many of the reforms already have been adopted, Schulz said.
