By Teri Walker —
After a 29-year partnership, Northland Pioneer College (NPC) is severing its relationship with the NPC Foundation.
The Navajo County Community College District Governing Board voted 4-0 Tuesday to cut ties with the college’s nonprofit arm, at the recommendation of college staff and attorneys.
NPC President Dr. Jeanne Swarthout conveyed the recommendation to the board, reporting the college had been alerted by its auditors that the foundation’s unwillingness to release its own audit results to the college’s auditors poses a significant problem for the college.
The board convened an executive session to discuss details of the situation and emerged unanimous in its decision to break away from the foundation.
In open session, Swarthout explained that for reasons unknown, the NPC Foundation has said it will not participate in the college’s audit process, even though by statute the Auditor General requires component units, including nonprofit foundations, to be included.
Board Member Dusty Parsons asked whether Swarthout knew if the refusal to submit the audit was a decision made by the foundation’s executive director Lance Chugg alone, or if the foundation’s board of directors participated in the decision. Swarthout and NPC Vice President of Administrative Services Blaine Hatch said the foundation had been afforded more than one opportunity to participate in the process and refused.
Swarthout said the college does not have access to the foundation’s board meeting minutes, so she didn’t know how the subject had been handled between Chugg and the board.
“We thought this might have been a mistake or error, so the request was posed to the foundation again to submit the audit,” said Hatch.
“There was quite an exchange between the foundation and the Auditor General’s office,” Hatch said, “It made it clear the foundation had no intention to provide the report.” In addition, Swarthout said Chugg has indicated that the foundation will no longer submit financial information with the college audit.
The bottom line, Swarthout said, is the foundation’s refusal to submit an audit to the Auditor General doesn’t harm the foundation, but it does have the potential to harm the college if it is found in noncompliance with state statutes.
“It seems incongruous that a foundation that wants to support the college would put the college in jeopardy,” said Board Member Ginny Handorf.
Community and college leaders started the foundation in 1983 to support NPC’s mission and enable the college to receive charitable support. In its articles of incorporation, the foundation says its purposes are to “advance education; promote and provide educational, cultural and recreational facilities for NPC by constructing, maintaining and operating buildings and equipment; to provide for scholarships, fellowships, grants and other financial assistance for students and staff; and to receive gifts, bequests or items either outright or as a trustee or beneficiary of a trust, among other activities.
The articles go on to say that the foundation isn’t empowered to engage in any activity which doesn’t further the stated purpose of the group.
While the foundation is set up in support of the college, it also receives support from the college. NPC pays a portion of Chugg’s salary and provides office space, phone service and other amenities to the executive director, a commitment that had been slated to endure through February 2016.
A financial summary prepared by NPC showed the foundation awarded $30,000 in scholarships during the 2007-2008 school year; $22,947 in 2008-2009; $8,315 in 2010-2011, with an additional $13,457 that was committed but not collected from the foundation by NPC. So far in 2012, the NPC Financial Aid Office awarded $17,280 in scholarships that came from the foundation.
Staff and board members noted they weren’t aware of recent activities by the foundation and that communication between the two entities has been lacking for some time.
Noting Chugg has not attended an NPC governing board meeting since April 2011, NPC Board Chairman Bill Jeffers said, “My concern is their unwillingness to share that (audit) and we’re providing funds to the executive director, and he hasn’t been here in almost a year.”
Parsons asked if Chugg was aware of the proposed board action and Swarthout said she assumed so since the agenda is published in advance of the governing board meeting each month.
Parsons said, “I support your recommendation 100 percent but I’d really like to see the (foundation) board president tell us their position.”
Following the executive session, the board agreed on a motion stating the college will sever the relationship in 30 days.
“That will give them time to respond if they want to,” said Parsons.
“I was the founding vice president of the foundation, and later served as president so this is tough for me, but if it’s not working…we have specific information this foundation doesn’t want to provide the audit,” said Jeffers, in support of the motion.
If an agreement is not reached with the foundation before the 30 days ends, the college will proceed with severing the relationship, which will result in the organization moving out of its current office space. The college doesn’t have the authority to disband the organization, but it will require the foundation stop using NPC’s name.
Swarthout said the foundation would be granted enough time to facilitate the physical move and to disperse whatever remaining funds it holds through scholarships or other mechanisms.
The Tribune-News was unable to reach the NPC Foundation for comment prior to press time.