One of the Northern Arizona University Foundation’s longtime funds has entered the limelight after appearing in a state audit of university President Rita Cheng’s international travel early this month.
The president’s fund, an unrestricted fund allocated for presidential activities, was used to reimburse nearly $38,000 Cheng and her husband spent last year on improperly documented business-class airfare to Russia and Israel, visas to Russia and early check-in fees. Cheng has since announced she will contribute part of the total funds back to the Foundation, though she did not provide a specific dollar amount.
“Because of the lack of documentation noted in the State Auditor General’s report, I will make a donation to the NAU Foundation approximate to the difference between business and coach airline tickets for international travel last spring,” Cheng told the Arizona Daily Sun.
While Cheng initially reimbursed the university $179 for a duplicate hotel stay noted in the audit, the foundation, a separate nonprofit that uses public donations to support NAU, reimbursed the university $37,785 in travel costs.
Foundation CEO Rickey McCurry said Cheng’s current contribution is not “repaying” the foundation, though.
“I would not use the term ‘repay’ because you only repay something that you owe. … Those dollars that were used to support this trip were in line with what the donors intended those dollars to be used for. There were no dollars that were taken from some other area to support this,” McCurry said.
He said the Chengs make regular contributions to the foundation.
The president’s fund, or president’s excellence fund, is used for the president’s activities, of which travel is a small part, McCurry said. Because it is unrestricted, money donated to this fund can be used for anything “that will support the mission of the university.” He said a fund to support the university president has existed almost as long as the foundation itself, which was established in 1959.
Recently, McCurry said the fund was used to bring in performers for the School of Music’s Summer Music Series and to match contributions made by university employees during the first “NAU Giving Day” last April.
On the foundation website, the president’s fund is described as the foundation’s area of greatest need; McCurry said such unrestricted funds, which provide greater flexibility of use, make up only about 2% of all donations received and that the president’s fund is not one of the larger unrestricted funds. He estimated the foundation has less than 50 unrestricted funds, whereas there are more than 800 endowed funds, which make up only a part of the restricted funds.
“It’s not something that generates a whole bunch of money,” he said of the president’s fund.
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According to NAU’s 2019 Comprehensive Annual Financial Report, which includes the foundation’s Statement of Activities, public contributions without restrictions totaled nearly $57,000 last year. Donors later redefined their intent and $13,000 had to be subtracted to join $12.7 million in restricted public contributions.
“Unrestricted funds provide flexibility — the greatest need that an institution has is flexibility — so this [fund] provides us the opportunity to have flexibility. … As great as [restricted funds] are, and I don’t ever want to underplay the importance of restricted funds, the one thing that those restricted funds do not do is give us flexibility,” McCurry said.
McCurry and Cheng previously worked together while at Southern Illinois University Carbondale, when Cheng was chancellor and McCurry was vice chancellor for institutional advancement and CEO of the Southern Illinois University Foundation.
“Rickey and I crossed paths at Southern Illinois in 2010 and ’11,” Cheng told the Arizona Board of Regents during its June meeting, prior to McCurry’s report on the foundation. “He went on to a private university in Illinois and then to Tennessee. So when our position was vacant and we were searching nationally, we worked with a search firm who mentioned Rickey and that perhaps he might be available. And things happened after that and he was the strongest candidate to come to campus.”
President’s travel
As mentioned in the audit, Cheng visited Israel last year as part of Project Interchange, a nonprofit educational institute of the American Jewish Committee, while Cheng said the Russia trip was needed for the opening of a forest biosecurity research lab that will be shared between NAU and Tyumen State University in Southwestern Russia. During the same trip, Cheng participated in negotiations about additional funding and collaboration, such as student exchange agreements with Russian Universities and work to create a Russian language program at NAU this spring.
She said international partnerships and programs through NAU’s Center for International Education typically fund international travel.
“Neither taxpayer funds nor resident tuition dollars were used to purchase these tickets,” she said.
In an email to the NAU Faculty Senate dated Jan. 7, Cheng further commented on the audit.
“Please note that while the auditor general does characterize the travel reimbursement as ‘inappropriate,’ this word was used solely because the auditor general found that documentation was insufficient — importantly, the report does not question the legitimacy of the travel itself. I can assure you that the travel was appropriate,” she wrote, also mentioning changes to internal controls that are now in place.
Cheng was invited to comment to faculty during the next senate meeting on Monday.
