State Auditor’s Office Releases NC A&T Investigative Report

An Investigative Special Report from the North Carolina Office of the State Auditor (OSA) confirmed North Carolina Agricultural and Technical State University (NC A&T) improperly directed $5 million to students as financial assistance without evidence of merit or need-based criteria.

NC A&T had contacted OSA after discovering improper conduct with student financial aid was taking place, and OSA promptly conducted a review of the matter. The examination shows that Administrative Recovery Funds (ARF), which are fees charged to NC A&T students in association with services such as housing, dining, and parking, were used to improperly provide $5 million in financial assistance to students, and that students received funds because of connections to former senior university officials.

Of the $5 million evaluated, more than $780,000 in ARFs was directed to students who were university employees, family members of university employees, or otherwise had a direct personal or professional connection to the university. As stated in the report, 24 students who received more than $238,000 in total were either university employees or family members of university employees. Examples include:

• The former Executive Director of the Real Estate Foundation's nephew received $73,063 in financial awards.
• An NC A&T Center for Teaching Excellence External Advisory Board member's daughter received $23,052.
• The son of a former Part-time English Instructor received $22,545.
• The son of the former Associate Vice Chancellor for Campus Enterprise received $18,707.
• The former Assistance Vice Chancellor for Business and Finance's daughter was awarded $14,888 in funds.

There was also an instance where the former Vice Chancellor for Business and Finance used preferential treatment to award an out-of-state student $49,024. The former Vice Chancellor then authorized tuition assistance of $36,654 and $12,000 for two friends of the same out-of-state student.

"Through our investigations, we at the State Auditor's Office seek to hold individuals accountable for misguided actions," said State Auditor Dave Boliek. "What's been uncovered at NC A&T represents gross misconduct. Given the findings of our investigation, we've made a criminal referral to the State Bureau of Investigation and I have fully informed and updated the Guilford County District Attorney. I want to thank NC A&T Chancellor Martin for working with the State Auditor's Office and for the corrective actions being taken on this matter."

"I appreciate the work of State Auditor Boliek to complete a rigorous investigation, and I appreciate Chancellor Martin bringing forward the concerns originally," said UNC System President Peter Hans. "The chancellor and his team have been diligently working to correct issues and move forward with transparency and accountability. In this situation, the process worked to set things right again, and that's why we have layers of oversight in a public university."

"NC A&T identified this problem through our own internal audit process, and I personally contacted State Auditor Boliek because full transparency demands nothing less," said NC A&T Chancellor James R. Martin II. "I am grateful to Auditor Boliek and his team for the thoroughness and professionalism of their review. Our students deserve to know that every dollar they pay is managed with integrity, and the corrective actions we have taken reflect that commitment. We welcomed the Office of the State Auditor's review, we support the referral to the Guilford County District Attorney's Office and State Bureau of Investigation, and we will continue to cooperate fully."

OSA's investigation also homed in on actions between the former Associate Vice Provost for Enrollment Management and the former Director of Financial Aid Operations as well. Following a discussion between the two officials, the former Associate Vice Provost's son was able to remain at the university despite university policy that would have prevented him from continual enrollment. Additionally, the student received a $10,000 scholarship award, far exceeding the $2,000 budgeted amount for that scholarship.

As a result of the findings uncovered in this investigation, OSA has made a criminal referral to the State Bureau of Investigation. The report outlines 15 recommendations to improve the financial aid approval process, and includes a response from NC A&T outlining steps the university is taking to improve operations.