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New Jersey university that mismanaged COVID relief ‘likely violated federal law’: report

Board of Trustees declared financial emergency, allowed former president to resign with six-figure severance

A public New Jersey university improperly allocated $14 million dollars from its COVID relief fund as it dealt with  budgeting shortfalls, according to a recently released report.

New Jersey City University senior administrators in 2021 “submitted a budget for approval by the Board of Trustees…that proposed using nearly $14 million in federal COVID-19 relief funds to pay for an existing institutional scholarship program,” according to the executive summary of a report by the New Jersey Office of the State Comptroller.

Chief Communications Officer Ira Thor declined to answer questions regarding the comptroller’s report when contacted by The College Fix.

“Through interviews and a review of more than 50,000 pages of documents, OSC found that NJCU’s former administrators were aware that using federal COVID-19 relief funding from the Higher Education Emergency Relief Fund (HEERF) to fund the existing institutional scholarship program likely violated federal law,” the report, released May 18, stated.

“The administrators failed to inform the Board of this fact and failed to take corrective action, thus creating a budget crisis in the spring and summer of 2022,” it stated.

“The communications prior to the adoption of the budget indicate that the former CFO, the President, and the Enrollment VP were on notice that using HEERF to fund institutional scholarships was likely impermissible,” it continued.

“The administrators ignored repeated warnings from the school’s former CFO that the funds couldn’t be used that way and presented a 2022 budget proposal to trustees — one that showed a surplus — without revealing the university’s precarious financial position or the problematic pandemic-relief allocation, according to the report,” the New Jersey Monitor reported. “The board adopted the proposed budget.”

“Ultimately, the COVID-19 funds were not spent on this unlawful purpose,” according to NJBiz. “Instead, NJCU began draining cash reserves to fund the scholarship program in fall 2021.”

Exhausting the reserves led to “a projected year-end deficit of $13.8 million,” according to the report. “When this deficit was finally brought to their attention, NJCU’s Board of Trustees declared a financial emergency in June 2022 and imposed deep cuts to the University’s expenses.”

The university’s budget reforms included shrinking its academic portfolio by 37 percent, and sunsetting 111 degrees, including one of its three doctoral programs, according to its website.

Although the OSC found that the Board of Trustees was likely unaware of the mismanagement, it also noted that they “failed to exercise proper oversight over the administration” and that its members “received inadequate training” on their “legal and ethical responsibilities,” according to the report.

The board did not respond to an email request for comment by The Fix.

Former university President Sue Henderson announced she would step down immediately after the Board of Trustees declared the financial emergency.

Nonetheless, the university gave Henderson “separation benefits that included a $288,000 ‘transitional sabbatical,’ a car, and a housing subsidy,” according to the report.

Henderson did not respond to email inquiries from The Fix about whether she agreed with the report’s conclusion.

MORE: Professors face firing for criticizing funding of ‘social justice’ activities at public college

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About the Author
Nathan Biller -- Colgate University