The News & Observer
 

January 12, 2006

A report by the state auditor has found that UNC-Chapel Hill's School of Education Foundation has operated without a board of directors for a decade.

The finding, released Wednesday by State Auditor Les Merritt, said the foundation had operated without the financial oversight of a board since 1995, in violation of state law and the foundation's by-laws. The violation could jeopardize the foundation's tax exempt status, the auditor wrote in a letter Dec. 12 to UNC-CH Chancellor James Moeser.

Merritt's report said the finding arose during an investigation of anonymous complaints about financial mismanagement and the absence of a board for the foundation, which raises money for UNC-CH's education school.

In a letter to the auditor late last month, UNC-CH education dean Thomas James wrote that the school had taken steps to reconstitute its board of directors. James said the school would begin this month to recruit five new members, who will join seven board members who originally had been appointed in 1994. A meeting of the foundation board will be scheduled for April, James wrote.

Nonprofit foundations connected to universities have been under increased scrutiny since 2004, when a state audit of the N.C. School of the Arts in Winston-Salem found nearly $1 million in financial abuses related to its foundation, including undocumented overtime expenses, Cadillac payments, travel and a down payment on a home for the chancellor.