DALLAS — The University of North Texas System received $84 million in questionable state funds over a 10-year period, according to officials.
The state funding was misapplied to cover benefits for employees whose salaries were not paid by the state, according to an audit report. State funding can only be used to pay for benefits of individuals whose salaries are paid with state money.
Consulting firm Deloitte & Touche determined that the UNT System received up to $84 million from September 2003 to April 2014. The conclusion was disclosed in a May 28 filing with the Municipal Securities Rulemaking Board submitted by the University of North Texas System's vice chancellor for finance, Janet Waldron.
In the disclosure statement, the university said that "the total amount, schedule and form of repayment is unknown at this time.
"It is anticipated that additional detail regarding the final resolution will be known by fall of 2014 after further discussion with state officials," it says.
The state auditor is currently conducting its own audit of the university's finances that could come in a few months.
UNT System has been reviewing its financial accounting practices and those of its flagship university in Denton after the revelation of multiple issues during a pre-audit analysis last year.
The latest disclosure notes that the system has become aware of "additional financial reporting issues that are expected to impact the prior year financial statements of net position for both UNT and the UNT System."
The disclosure comes after reports of accounting irregularities that could affect UNT's credit.
Moody's Investors Service and Fitch Ratings shifted outlooks on UNT to negative from stable on April 9, citing the accounting problems. Moody's rates UNT Aa2, while Fitch has the university system at AA.
"Fitch's concern regarding the system's financial profile is compounded by management's recent discovery of certain internal administrative errors which may have resulted in UNT-Denton being historically overfunded by the state of Texas for employee benefits and could lead the state to seek reimbursement for previously expended funds," said Fitch analyst Alexander Vaisman.
The university system's $511 million of outstanding debt includes $411 million in revenue financing system bonds. About 35% of those bonds are tuition revenue bonds that receive debt service reimbursement from the state.
