CHICAGO - The Glen Ellyn, Ill.-based College of DuPage board has hired financial services firm AlixPartners LLP to manage the top-rated college's fiscal affairs after putting its treasurer and controller on paid administrative leave after questions were raised over their investment decisions.
The community college board approved the contract with AlixPartners at a special meeting Thursday. Earlier in the week acting interim college president Joseph Collins put the top fiscal officers - Thomas Glaser and Lynn Sapyta - on paid administrative leave pending the outcome of an investigation by Schiff Hardin LLP.
Glaser is senior vice president in administration and treasurer and Sapyta is an assistant vice president in financial affairs and controller.
Glaser is well known to the local public finance community as the former chief financial officer of Cook County. He later moved over to serve as chief operating officer for the county treasurer, a position he left in 2009 to join the community college west of Chicago.
The college placed the pair on leave after Collins and the board learned of an internal audit that questioned investment decisions. The audit found various violations of rules governing investments and concluded that college staff acted without authority to increase investments in the Illinois Metropolitan Investment Fund last September to a level in violation of college limits.
The fund for municipalities and public entities previously disclosed it was the victim of fraud resulting in widespread losses for its local government investors. The college suffered a $2.2 billion loss. If the investment limits had been observed, the loss would have been limited to about $380,000, according to an audit.
"COD administration recommended hiring AlixPartners, a leading global consulting firm with significant experience in financial crises and turnarounds," said a statement from the college. AlixPartners will provide on-site assistance in managing top fiscal matters, conduct a formal evaluation of COD's finance operations and provide advice to the board.
"The urgent need for day to day financial services and ensuring complete response to pending investigations makes this situation an emergency," the board agenda item said.
The board vote to hire the outside firm was divided at 4-3 and some members questioning the rates and whether the two finance officers should have been put on leave. One trustee, Dianne McGuire, questioned whether the school had moved too quickly to put the finance officials on leave and noted they presented monthly reports to the board on investment actions.
Officials have raised questions over why the finance team sat on audit recommendations distributed internally in March and why they were not disclosed to the board until last month.
The financial leadership probe marks the latest development in a series of controversies dogging the college related to questionable spending and contracts and lax fiscal oversight. Lavish spending by college president Robert Breuder and questions over contracts were chronicled on the front pages of the Chicago Tribune, leading to county and federal criminal probes, and prompting a voter overhaul of the college board in April's election. The board recently put on Breuder on administrative leave pending the outcome of various investigations.
The previous board and Breuder agreed to a deal in which he would retire three years early in March 2016 but the college must pay him $763,000 under the deal.
The college's top ratings have remained intact during the controversy as the fiscal issues haven't impacted the overall health of its balance sheet.
Moody's spokesman David Jacobson said analysts were monitoring developments but "given the district's sizable and wealthy tax base coupled with very healthy reserves" of $160 million which provide coverage of a full year's operations "we do not see any immediate credit pressure" on the district's Aaa rating.
The college, formally known as Community College District 502, has $340 million of outstanding general obligation debt and most recently issued $84 million in 2013 to finance a wide range of capital improvements. The sale completed the college's issuance under a voter approved $168 million bond referendum from 2010.