UT-Permian Basin had been overstating their financial condition to the UT System for five years, according to the UT System Board of Regents meeting Feb. 26.
The System’s Office of the Controller conducts a broad annual financial evaluation that rates UT system schools as either satisfactory, on watch or unsatisfactory, according to the UT System website. The university overstated $38.5 million in operating revenues, sponsored programs and tuition and fees, according to the UT System’s 2019 analysis of financial condition.
When UT-Permian Basin applied for the Southern Association of Colleges and Schools accreditation in 2018, the association’s analysis found inconsistencies with the university’s revenue reports.
Sandra Woodley, UT-Permian Basin president, reported the issues to the UT System’s Office of the Controller, which oversees financial and management accounting.
“I don’t think there was any malintent from before with the old accounting staff,” Woodley said. “It was a combination of lack of expertise and technology issues … that contributed to the statements not being correct on our financials.”
The Office of the Controller brought in their own financial experts and an outside accounting firm to correct the errors and implement changes. Woodley and Veronica Hinojosa-Segura, associate vice chancellor controller for the UT System, presented an action plan at the UT System board meeting to improve the university’s finances.
“Once the issues were identified, the business office engaged in intensive actions to begin correcting those inaccuracies,” Hinojosa-Segura said. “It’s also fair to note because the current accounting staff, almost 100% turnover, was not employed during those prior years.”
Woodley said the university replaced the accounting staff and the technology systems, which cataloged entries. The action plan also included resolving a substantial amount of debt compared to their earnings.
“As uncomfortable as it was to bite the bullet and make all of those corrections in one year, it was the right thing to do, and we are in a better place for it,” Woodley said.
Woodley also said UT-Permian Basin will increase tuition and fees next school year to aid in relieving the debt. She said she will mostly focus on increasing enrollment and degrees awarded to bring in the revenue the institution needs.
She said many local high school students in the Permian Basin take jobs, especially in the oil and gas sectors, instead of attending college because the jobs pay well and do not require higher education. Woodley said a career in low-skilled labor is not sustainable, however, when the economy changes or technology replaces these jobs.
“Part of what happens in the Permian Basin is there have been pretty severe cycles,” Woodley said. “When the economy is good, people choose not to go to college. When the economy is bad, they are not ready for the jobs that are available with college credentials.”
Woodley said UT-Permian Basin will invest more in the region’s labor force to increase enrollment and employment outcomes.
“Really it is one of the most important places on earth right now when you look at the economics of energy,” Woodley said. “Making sure the only four-year institution in the heart of Midland and Odessa is able to produce the degrees in our strategic plan is critical because we have to provide the workforce for the oil and gas industry.”