AU Scandal Atypical in Post-Enron Era, College Presidents Say

While most of the American board now says Ladner is too damaged to stay in his job, the scandal is likely to affect the university for years. Students and faculty are furious, and angry donors have barraged the school with e-mails threatening to cancel pledges. Board investigators are looking into the apparent breakdown of its auditing apparatus.

Despite Ladner's explanation that much of the spending was business-related, school administrators scoffed at the notion that a president has to spend tens of thousands of dollars to raise money. "My experience is that the truly wealthy philanthropists don't want you to spend money like that," said Patricia McGuire, president of Trinity University in Washington. "I took a big donor to lunch the other day at Union Station. That's where she wanted to go."

At the University of Miami, Shalala said she maintains all the guest lists for university-related events for auditors and the Internal Revenue Service. "I am very conscious of my spending. Everything is in the open," said Shalala, a former secretary of health and human services. "I was in the public sector. . . . When in doubt, I just pay for it myself."

Administrators also say that they must view themselves as role models for students and that Ladner's lifestyle does not set a good tone. "It's a values issue as much as anything else," McGuire said. "We have to reflect values that we expect our children to learn."

This is not the first time a university has been ensnared in a high-profile spending scandal. In the mid-1990s, Long Island's Adelphi University was embarrassed when it was revealed that the board had authorized a $1.2 million apartment in Manhattan for its president, as enrollment was plummeting. The New York State Board of Regents dismissed the entire board. Boston University also became entangled in a financial fiasco when it became public that many board members were receiving work contracts from the university.

Allen E. Koenig, partner in charge of the higher education section at R.H. Perry & Associates Inc., an executive search firm, said he advises board members to be "very careful to be able to justify a salary" and to audit a president's expense account on a quarterly basis.

University of Kentucky President Lee T. Todd Jr. hired a new internal auditor when he started the job five years ago so that audits would be done proactively rather than reactively. In August, at a board retreat, he had the school's treasurer go over the provisions of Sarbanes-Oxley for the board.

At Tufts University, the chairman of the board personally must sign off on Bacow's expense account before it goes through other checkpoints. Bacow also changed auditors after Sarbanes-Oxley. He said he does not have a university credit card, turned down a university car and never flies first class, although he is entitled to.

"When I took his job, I made a decision not to redecorate the house or my office," Bacow said. "You always run the risk of someone coming in and asking for $25,000 for something and you say no. I don't want anyone to hear anyone say, 'Well, he decorated his house.' "

Staff writer Valerie Strauss and research editor Lucy Shackelford contributed to this report.