The I.U. had been operating on a shoestring since the beginning. I had no idea until a couple of months into my tenure how tenuous things really were. One morning, close to Thanksgiving, I got a call from our insurance broker, Gene Burns. He asked me to look into something for him. He told me that his insurance bill for about $19,000 had not yet been paid. I told him that I would get on it quickly. I asked him when he sent us the bill. He told me it was August, not 1982, but 1981. I asked him if he was sure it was a year and some months late. He said he had tried to get someone to pay it, but was not successful.
As it happened, the person responsible for paying the bills and sending in official budgets to the Department of Education was out hunting and could not be reached. Since I had some experience with Department of Education budget forms and such, I went into the office and looked around and found piles of unpaid bills and requests for funds from the Department lying on a filing cabinet, dated July of 1982. I was stunned. How were we surviving when we did not have any money? I did not know where to turn. I called Charlie and Mike into the office. They told me that this was the way we had gotten in trouble in the first place. I calmed down and created a plan of action. I called Gene Burns and told him that he would get both of his bills paid within the next week (the board had already voted to pay them). He was grateful and thanked me.
When the person responsible for the business affairs in the I.U. returned the following day, I called him into the office and presented him with the facts of his actions. He sorrowfully told me that it was all true. I told him that he could not remain as an employee of the Intermediate Unit and would have to submit a letter of resignation immediately. He asked for a few days to meet with his lawyer and then asked if I could meet with both of them. I did meet and worked out a leaving that was acceptable to both sides. I had informed the board ( all 17 of them) of what had happened. Many of them kind of knew something was wrong. Others were astounded that we could continue to operate under those conditions.
What kind of trouble were we in? During the height of interest rates in the country ( sometime in the late 70’s and early 80’s, my predecessor evolved a plan to make things easier for the I.U. He established an account in a bank in a neighboring county. The I.U. would then purchase CDs ( certificates of deposit) or keep money in an interest bearing account there. The interest that was accrued was placed in the account set aside and was used for the I.U. to purchase things whenever they needed anything. The purchases were made and paid for by a check from that account signed by the Assistant I.U. Director. The approval from the I.U. Board was done post facto. Some of the purchases, of automobiles, for instance, were done without bidding.
Someone at the I.U. called the Auditor General and the Department of Education to tell them of this practice. In its final form, there were 35 board members over the years who had voted on these items in the affirmative. The total of all the purchases was about $360,000 and eventually the board members were to pay back the funds as individuals ( not from I.U. money). This became an embarrassment to the organization. To this day, I do not believe that those who created this scenario believe that there was anything wrong with it. However, the Auditor General and the Attorney General and the Department of Education thought that it was illegal.
I had to do something about it. Among my other duties, I researched what had happened and saw no way out. I would get calls from former board members and even the son of one board member who had passed away. I was determined to do something about it. Fortunately for me and those board members, the Secretary of Education at that time was Bob Wilburn a former V.P. of Chase Manhattan Bank, President of Indiana University of PA and former Budget Secretary under Governor Thornburgh. His chief of staff ( that was not his real title) accepted a meeting with me and the I.U. attorney. We pleaded our case and said that we had corrected all the errors that were made, let the chief business official go, hired new auditors and had a decent audit the last time and would do most anything to get these surcharges removed. We left the meeting with no idea what would occur. A week later we were notified that the surcharges were dropped. I had Penny Knight send out a letter to all present and former board members.
There were however two board members who had not voted yes on any of the expenses. One of them had actually voted against me becoming I.U. Director. Strangely enough, both of them-Ray Beichner and Caesar Maruca became some of my strongest advocates. When Caesar passed away a number of years later, the family specifically called and asked me to come to the viewing and funeral. I was happy that I went. I was sad that Caesar was not around any more. He was a really nice guy.