In a letter obtained by The Washington Post, the deans said Howard’s external auditor, PricewaterhouseCoopers, had cited “grave concern about the quality of fiscal decision-making” recently as it terminated its work for the university. Above all, the deans blamed the “fiscal direction” of Robert M. Tarola, an independent contractor who serves as the university’s senior vice president for administration, chief financial officer and treasurer.
“We believe this direction places the very survival of the University at risk,” the deans wrote in the June 6 letter addressed to Howard trustees.
Howard President Sidney A. Ribeau rejected the allegations, saying the university is making tough decisions to secure its future and remains in strong shape.
“There is not any kind of mismanagement administratively or financially that is damaging the university,” Ribeau said in an interview Saturday. “Unequivocally.”
Ribeau said the 10,000-
student university has taken aggressive steps since he took office in 2008 to shore up its financial affairs.
The allegations from Howard’s academic deans provide a window into a debate seething within one of the nation’s premier historically black universities as it grapples with federal budget cuts and high hospital expenses. Revenue shortages this year, including a loss of tuition from an unexpected drop in enrollment, led the university to slash spending.
Debate over Howard’s situation burst into public view June 7 with the disclosure of a letter from Board of Trustees Vice Chairwoman Renee Higginbotham-Brooks, in which she said the school was “in genuine trouble.” Three days later, Board Chairman Addison Barry Rand responded in a statement that Howard “remains academically, financially and operationally strong.”
On Saturday, Robert L. Lumpkins, a Howard trustee, said the university has begun a search for a long-term CFO. But Lumpkins and Ribeau defended the performance of Tarola, a financial consultant who has held the position through a month-to-month contract since 2010, an arrangement unusual in higher education.
“My view is that the university is in the best financial condition that it has been in in the last five years,” Lumpkins said.
Tarola said PricewaterhouseCoopers served as Howard’s external auditor for seven years but declined this year to seek reappointment. The firm did not state a reason, Tarola said. He said PwC told university officials “there was no integrity concern.”
In October, after an audit, PwC reported finding “certain deficiencies in internal control over financial reporting” at Howard that it considered “material weaknesses.” In March, it issued a “material weakness” caution about aspects of “internal control over compliance” after an audit of government-funded programs at the school.
The university pledged to fix the problems. Tarola and other top officials said that audits at Howard in recent years have gone much more smoothly, at lower expense, than they had previously.
A catalyst for the deans’ concerns appears to have been a meeting March 25 of numerous top officials, including the deans, to discuss financial issues. A PwC representative made remarks about Howard that caught some people by surprise. Though exactly what was said is unclear, one person in attendance said the remarks raised alarms.
“I was just shocked,” the person said, speaking on the condition of anonymity because of the sensitivity of the matter.
A PwC spokeswoman, Caroline Nolan, said the firm could not comment because of its client confidentiality policy.
Tarola said the university has balanced its budgets, cut administrative overhead, produced sound financial statements and raised money through the bond market for residential and academic buildings now under construction.
“The record pretty much speaks for itself,” Tarola said. “Just walk around the campus, and you’ll see the cranes that represent the activity going on.”
Howard, founded under a congressional charter in 1867, occupies a unique niche among historically black colleges and universities. It operates as a private institution but receives a quarter of its operating budget through a federal appropriation.
The federal budget sequester this year cut the appropriation 5 percent, to $222 million. Meanwhile, the university suffered a 5 percent enrollment decline last fall, to 10,002 students. University officials blame the decline in part on a cut in the federal Pell Grant program and a tightening of federal standards for lending to parents of students.
Ribeau announced spending cuts in January, including a temporary suspension of contributions to employee retirement accounts. In June, the university said it was cutting about 75 staff positions in a restructuring.
In their June 6 letter, the academic deans lamented that the university had raised undergraduate tuition more than 40 percent over four years. Tuition and fees, about $22,700 in the last school year, will be unchanged in the coming year.
Several deans The Post contacted referred questions to a university spokeswoman. The version of the letter obtained by The Post included a page signed by deans of 12 schools and colleges, in fields ranging from business to social work.
Mark S. Johnson, dean of the College of Medicine, acknowledged his signature when shown a copy but declined to talk about the letter.
Ribeau said he sympathizes with deans because there is often tension in universities between academic units and the central administration. He said he met with the deans after they sent the letter to explain the university’s financial strategy. Afterward, the Council of Deans thanked him for his transparency and pledged its help in tackling the problems.
“The detailed information you provided gave us a better perspective of the tough decisions that must be made to find concrete solutions which will sustain the future of the University,” the council wrote June 11. “Please note that we truly understand the gravity and magnitude of the University’s state of affairs and consider ourselves an integral part of the heavy lifting that is necessary at this critical juncture.”
But the council did not withdraw its criticism of Tarola.
In an e-mail to the deans, Tarola expressed regret that he had not spoken with them directly for almost a year. He pledged to improve communication.
“I acknowledge that we can do a better job of keeping you informed — and I commit to doing so going forward,” Tarola wrote the deans.
Tarola, 63, of Baltimore, has an unusual relationship with Howard. A former CFO for W.R. Grace and MedStar Health and a former partner with the accounting firm then known as Price Waterhouse, Tarola in 2008 launched a consulting company called Right Advisory.
The next year, Ribeau hired Right Advisory to assess Howard’s finances. Tarola took on the role of chief financial officer in January 2010 as the university was searching for a successor to a CFO who had departed.
After that search failed to find a suitable candidate, Howard retained Right Advisory on a month-to-month contract in September 2010, and Tarola continued as CFO.
Tarola said Howard pays Right Advisory a fixed monthly fee for his services and those of a business partner, plus hourly fees for other professionals who work on specific tasks.
Federal tax returns show that Howard paid Right Advisory $1,085,230 in 2010 and $1,606,867 in 2011. Tarola’s salary is not specified on the returns, but he showed The Post a copy of his W-2 wage statement, which indicated that he earned $478,000 in 2012 from Right Advisory for his work for multiple clients.
Ribeau and Lumpkins said Right Advisory has been essential in the push to improve what previously had been weak financial systems.
For example, Howard officials said, the National Science Foundation in June lifted extra layers of review of Howard’s research grants that had been imposed years ago because of what federal officials regarded as deficient financial and administrative controls. Now, Howard is a normal NSF grant recipient.
The Right Advisory contract has been “an unusual strategy, to be sure,” Lumpkins said, “but it’s worked.”