OUS Payroll Audit

Issue Brief

November 2004

Background

n A payroll audit was undertaken by the Secretary of State’s Office after receiving an anonymous call that inappropriate raises were being given to campus employees during the state pay freeze period.

n The Secretary of State’s auditors found that the allegation was not justified but decided to conduct further auditing to determine whether the OUS was complying with the salary freeze.

n The audit findings questioned 126 salary increases granted to OUS employees between May 27, 2003 and June 30, 2003; this is about 1% of the total of 12,247 employees in the System.

n The audit findings were based on the premise that the OUS should have known the Legislature’s intent to freeze pay for the 2003-2005 biennium upon the passage of a Budget Note by the Joint Ways & Means Education Sub-Committee; thereby effectively making the OUS freeze date effective on May 27^th, 2003.

OUS Response to Audit Finding

n OUS respectfully disagrees with the premise that salary/pay increases were not in compliance with the salary/pay freeze directive from the Legislature.

n We believe that the disagreement revolves around the effective date of the Budget Note that prohibits any salary/pay increases during the 2003-05 biennium.

n All OUS salary/pay increases:

o Were effective, committed or obligated prior to July 1, on which date the biennium began

o Were made within the standard practices and timelines of universities; were the result of normal business practices; and, the majority were in process over 6-8 months, generally beginning the prior October/November with finalization of approval in April/May

o Were fully within the law and in full compliance with the Legislative directive

o Met the institutions’ legal, contractual obligations to their employees.

n The report cites that “legislative intent” should have driven campus actions, yet:

o Budget notes defining legislative intent must go through several stages of approvals, during which time the parameters of the budget note intent can change

o Legislative intent has never been cited in the past as driving campus actions before the passing of a law and the provision of an implementation date

o This budget note was not passed by the Legislature and signed by the Governor until late August, retroactive to July 1.

n OUS does appreciate the recommendations to strengthen existing systems of communication, coding, and documentation; and efforts have been underway and will continue towards these continuous improvement initiatives.

For More Information

Please contact Nancy Heiligman, assistant vice chancellor for budget operations, Oregon University System, at 541-346-5759, or nancy_heiligman@ous.edu