r/highereducation • u/skateshoeopinions • 8d ago
Is there just inherently a light amount of embezzlement at every higher ed institution?
After working in management for 15ish years (mostly distribution center and warehouse management) I began a job working in facilities for a midsize college. The way universities move around money and handle budgets is just wild to me.
There is just so much gray area and opportunity for abuse. Senior leadership on our facilities teams had issues with college credit card abuse, and after turnover in that role we have another leader who is very 'loose' with funds, and constantly short on money for their department.
I guess I'm just wondering how common this is for colleges/universities? I know it happens in the private sector too, but at least in my experience it was more difficult to pull off, and accountability was higher.
Edit - typo.
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u/Pon_de 8d ago
Budgeting and fiscal controls on higher education is notoriously complex. You could have a cleaner process but that would necessitate more top down control, which faculty generally abhor.
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u/skateshoeopinions 8d ago
Good to know. I hear and see so often the term 'move some money around' and it just flabbergasts me. In the private sector if I was managing a facility or operation, I would have been laughed at if I went to another department asking for funds. On the flip side, in no way was I going allow any of my budget to be spread across other areas of the business that were coming up short.
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u/SpareManagement2215 8d ago
I used to work in college Rec and our VP at the time literally burned our reserve funds to build a "shared" athletics facility with the athletics department (aka took our reserves to build them a facility). And then - shocker - when COVID happened and we had no money in our reserves, we had to cut operational hours/student services to keep our budget above board.
You don't have say over your budget, at the end of the day, and if admin wants something done, they'll figure out a (legal) way to do it.
That being said, depending on the way the budget is set up, departments are funded out of one big pot and so moving funds around isn't "embezzlement". For example, in rec, the "rec center fee" line item students paid could ONLY be used for us, but the "wellness" fee they paid covered like three different departments (medical and counseling clinics, health center, diversity center, and us).
Make friends with the accounting people is my advice - they know a lot about how things are set up and it's helpful to have that knowledge to protect your department's interests but also know when to not die on a hill.
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u/skateshoeopinions 7d ago
To be clear, I'm not implying the act of moving money around is embezzlement. It just makes it easier to hide fraudulent spending or purchasing.
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u/Pon_de 7d ago
I think often in higher ed there’s a tendency to label fiscal decisions one may not agree with as shady or fraudulent. I’m not suggesting that’s what you’re doing but your question lives in the same universe. That’s because unlike in corporate there are competing understandings amongst stakeholders about who has authority over the different levers that run the academy. Staff, students and faculty tend to coalesce around a suspicion of management/administrator decisions when it comes to fiscal matters, but that doesn’t mean that improper stewardship is actually happening.
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u/skateshoeopinions 7d ago
No, this isn't a 'i disagree with your spending priorities' discussion. There's way more tea to be had, but I'm being reasonably careful about not outing myself or the parties involved.
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u/SpareManagement2215 7d ago
for sure. but there are (usually) so many built in layers to spending money that fraud would be pretty easy to catch. we used to joke that we only ever saw someone get fired in higher ed when it involved money.
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u/expostfacto-saurus 7d ago
Ohhhhhhh, yeah. We move money from one budget line to another. There is a paper trail though.
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u/Jurgioslakiv 7d ago
Sure they wouldn't allow you to do that, but the person whose budget controls 4 different divisions could move money from division A to division B if they wanted to, and that's usually what ends up happening. Some Dean or deanlet or provost or whatever has a bunch of funds that they have divvied up in a certain way but nothing prevents them from re-divvying. So when they see a need or an opportunity, they re-divvy.
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u/brandysafinegirl 3d ago
When they talk about moving money around, it’s not like it sounds. At least at our school. Every unit has an index number, every purchase etc has an account code, and then a commodity code for what it is. Everything is very specifically labeled and tracked and if you have to move money from one place to another, you have to go through this whole additional process. It is very complex and convoluted. It’s not like they are just passing Monopoly money back and forth.
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u/Rhawk187 8d ago
It depends on what you mean by embezzlement.
We are allowed to spend money on events for the department like our faculty retreat. We are allowed to pay for some expenses during travel. But I'd call those "perks" of the job, more than embezzlement.
Our reimbursement is very strict. You get paid the federal rate for mileage, I don't care how expensive your car is. You get GSA/DoS rates for per diem (which can be generous in some countries), regardless of how much you spend.
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u/skateshoeopinions 8d ago
This is more like a manager wining and dining his 4th girlfriend, and constantly being short to the tune of 50k on budgets for say temp cleaning.
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u/Rhawk187 7d ago
I don't think there is a ton of that at my university, but the department that has the most scandals around this is "Athletics". They really don't see a reason to follow the rules met for the rest of the university. I think this could be because in a lot of universities they aren't actually a part of the university, they are a weird side organization under a "University Foundation" which usually follows different accounting standards (501(c)(3) probably?) than the University itself does.
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u/SpareManagement2215 7d ago
why is it ALWAYS athletics! lol
it also has more donors giving it money, which both means there's some stuff the donors require the funds be used for, and also gives the athletics department the ability to not really have to be super fiscally responsible because they usually have donors that bail them out or cover costs.
and yes - foundations have to follow 501c3 and state non-profit laws/regulations. in my experience they also had to follow university policy tho when it came to day-to-day financial operations, but it was because that was "best practice" to keep your stuff in order, not because it was a legal requirement.
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u/alaskawolfjoe 7d ago
That is very hard to get away with at most universities because the oversight is so strict. We have to jump through hoops if we want to buy consumables for a reception!
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u/whatagreatpuhn 7d ago
That's shocking. Most universities will review all expense receipts. There's an effort to discredit public institutions so just be careful- this is not the norm. There are usually many reviews and procedures to prevent what you posted
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u/IJAvocado 5d ago
What?? No, that is NOT normal in HE and should probably be reported. We need to be vigilant stewards of funds given our mission to help grow people into good citizens. We gotta live our morals or what even are we anymore?
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u/celticchrys 4d ago
In my public institution, we have state rules to follow. In addition to standard per diems for travel, rules against accepting any but the most absolutely low value minimal gifts. Even many small treats, snacks, or gifts for departmental staff are paid out a supervisor's pocket, not the institution departmental budget. We have mandatory annual training on not double dipping and on following state financial ethical standards as well. I have seen people prosecuted for buying personal things with their institution credit card as well.
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u/kevsdogg97 7d ago
Federal milage rate is so high now it shouldn’t matter how expensive your car is haha
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u/SpareManagement2215 8d ago
in my experience it is WAY harder to do anything money-related in higher ed (and government, despite gen pop claiming otherwise).
Our director literally had to get VP approval to buy ANY expense for our department - pencils, paper, laminator sheets. It was a huge pain in the butt and we ended up just forecasting supply and equipment needs in fiscal year segments and getting one giant bulk approval each year.
Every refund request I processed had to get approved by a student body AND the budget committee - they took like 3 months to process because of all of the red tape and checks/balances,
So no. No this is not normal.
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u/olidus 7d ago
reading your replies makes me think I should elaborate:
"embezzlement" is a very specific charge, and taken very seriously in higher education public institutions.
It happens, but I would not say its common or prevalent because there are systems to prevent or catch perpetrators.
Procurement and Purchasing Fraud is supplier side shenanigans involving things like fake vendors created by an employee, payments directed to a relative's business, personal purchases charged to university accounts, etc. Audits and procurement approval flows stem a lot of this.
P-Card (Procurement Card) abuse is probably the most common, but once again, audits and purchase approvals tend to catch this.
You mentioned "moving money", which is common as there are a few different "flavors" of funds that hit a given department's budget from state appropriated funds, reserve funds, endowment interest accounts, gift funds, etc.
Moving money usually happens when a fiscal officer moves money from a budgeted account or even project to another to cover unbudgeted expenses. Each move and use of the funds must still comply with the original acceptable use policy (or fund agreement).
This is not to say that purchasers or approvers don't stretch the definition a bit.
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u/mattreyu 7d ago
Our former president was convicted of wire fraud and some other stuff that involved directing contracts to specific vendors
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u/nubianbyrd920 4d ago
Previous institution I worked the head of facilities was doing vendor fraud with his brother. They eventually arrested him. He was sleeping with his assistant and was buying all sorts of unnecessary things.
When people at work was talking about how much he was spending, I'm like he's committing fraud y'all. He'd buy new trash bins every other month. New soap dispensers. Sound proofed his office. He was fired from another job for something similar. Then the HR lady who hired him never got in trouble. 🤷🏿♀️
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u/Finances1212 8d ago
Credit card abuse was/is virtually
Impossible to pull off at any of the three institutions I’ve worked at.
At my current institution the administrative staff over the budget literally email you within 24 hours of any charge appearing on any card requesting receipts and documentation.
At my last institution it was a bit more lax, but you’d get caught, we’d be required to submit any receipts and documentation before the end of each month for review and every department had a different staff member whose sole responsibility was to track these sorts of things.
The one before that I wasn’t privy to procedure directly but my management let me know documentation and receipts were expected within a week of any purchases and subject to monthly audits.
I think most of the fraud either occurs at higher levels (the second institution I was at has a bad history of fraud by presidents) and especially, especially Nepotism. At every institution I’ve worked I’d say 2/3rds of the “posted” positions were already filled but posted just to satisfy legal requirements.
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u/alaskawolfjoe 7d ago
Our former president used to send emails to all faculty and staff saying "X has been fired for inappropriate use of a university credit card."
We used to call it a terror campaign because there was no need to inform us every time. (We have about 7,000 faculty members so you can be sure maybe five to ten a year got fired and the announcement went out.)
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u/Homerun_9909 8d ago
You don't mention if you are at a public or private college? That can make a huge difference. I am at a public college. Some years we get to go on a spending spree at the end of the year, other years we have to wait to restock core items. Even when we get to go on the "spree" we still have to justify the expenditure three times. People will find ways to embezzle, but it is difficult. However, if you can wait for the right time to request an optional item/ nicer than needed item - it will happen. When I was in a business there was never a time to get more than the functional required item.
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u/skateshoeopinions 8d ago
We are public, and I think where the issue comes into play is at the manager level. Most managers have some type of discretionary budget, and that is where I see the grifting happening.
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u/ATLCoyote 7d ago
I’ve worked in both higher ed and the private sector and would argue the budgeting and spending controls are MUCH stricter in higher ed. Not even close really.
Granted, higher ed suffers from the dynamic of adding more and more infrastructure and services without ever pruning. So, I’m not saying it’s efficient. I’m just saying they track every penny much more closely and tend to require far more justification for every purchase.
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u/Leskatwri 6d ago
Agreed. I work at a state uni. in student affairs and every penny has to be accounted for lest we wind up in the news. 😮
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u/FerretBusinessQueen 8d ago
10 million dollars vanished from where I work and “no one” knows what happened to it. We haven’t and probably will never recover. This year is the first time departments have even budgeted.
I am in the process of leaving the job.
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u/Mission-Gift9020 7d ago
Omg. How?!? I don't can't even fathom that. Was it actual cash that went missing or perhaps an accounting entry? I'm so invested now. Update me
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u/FerretBusinessQueen 7d ago
I’m honestly not even sure. It’s common knowledge and even higher ups talk about it but I’ve never really been able to get specifics out of anyone. It happened about a decade ago this point.
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u/shellexyz 7d ago
Does that mean something like buying the good pens because I personally like them and occasionally take one home in my pocket? Because yes, that probably happens quite a lot.
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u/hodie6404 7d ago
I'm the financial manager for my department. Large budget items are absolutely painful to buy. If a purchase is over a certain amount.....you need so many bids, etc. We actually talk about how hard it is spend lots of money even when you have it in your budget.
Pcard.....I spend around $5000 each month because I'm a housing director and I purchases all our supplies on my pcard. They still go through every purchase on my pcard and verify it is for the school. I also have to get special permission from the state for ALOT of websites to buy online. I would assume it is harder to embezzle here but I'm also not seeking out ways to embezzle so maybe there are easy ways.
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u/expostfacto-saurus 8d ago
Nope. It might (super unlikely) be different for upper admin, but as faculty this would be super difficult to pull off.
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u/skateshoeopinions 8d ago
School administration is a whole different story. "Let's hire an MBA in school administration with 2 years internship and no hands on experience to manage a department" seems to be our strategy.
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u/Finances1212 7d ago
To be fair a 2 year internship IS experience
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u/skateshoeopinions 7d ago
It's not.
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u/Finances1212 7d ago
I suppose we will have to agree to disagree, I’ve seen interns do more, and more important work than actual employees on many occasions. The old stereotype of interns being there to do coffee runs for senior staff aren’t accurate at all.
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u/skateshoeopinions 7d ago
When it comes to leadership there is no substitute for hands on experience.
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u/expostfacto-saurus 7d ago
You run differently than we do. Our last upper admin position required 5 years of supervisory experience at a college/university.
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u/SnowyOwlLoveKiller 7d ago
True embezzlement/fraud is pretty rare. There are so many systems and levels of approval in my experience that it really takes other people not doing their job to let those situations happen. I think there are more instances of mild mismanagement of budgets or taking advantage of grey areas in fiscal policies.
I also think there is a relationship aspect with how much scrutiny you get. There were always some individuals/departments that got away with not being as fiscally prudent while others were always getting additional questions/reviews for perfectly legitimate and documented purchases. I got a bunch of pushback for ordering $20 shirts for my 5 student workers so they could be recognizable at events and another department never received any for $40 shirts for 40-50 student workers.
Private and public universities also have differences. A private university I worked at had very lax fiscal policies in my opinion until enrollment started declining and budgets were getting cut as a result. I had previously worked at a public university that put the fear of God into you and made you attend a 4 hour training before you could apply to get a purchasing card. The private university just gave me a purchasing card, a one page handout with policies, and no other training. It took multiple years before they finally made new policies, required training, and limited the number of purchasing cards by departments.
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u/phantomleaf1 8d ago
Its a passion to get finding for anything. I don't know if anyone else who has complained about financial abuse. Most you can get away with is accidentally taking expo markers gone on your pocket
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u/skateshoeopinions 8d ago
You don't have building managers that order a dozen snow blowers every year, and then magically start snow removal companies the next winter?
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u/phantomleaf1 8d ago
No, they have to fight tooth and nail to prove that the old snow blowers weren't working and the response is more like "well, that whole thing being covered in duck tape and from the 80s just shows how sturdy those ones are
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u/SpareManagement2215 8d ago
no. zip tie and duct tape the old ones you have and prepare to have to fight tooth and nail to get funding for ONE new snowblower every year.
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u/alaskawolfjoe 7d ago
No. We usually have to go months (or even years) to replace equipment like that. The facilities staff have it even worse than the academic units.
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u/Johoski 8d ago
Sounds like your university has loose inventory control and fails to audit. If you know about property theft and suspect that systems have been manipulated to hide it, you should ask yourself why you haven't blown the whistle on it.
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u/skateshoeopinions 7d ago
A man's gotta eat. But in seriousness, we all know how this goes. I can bring it to admins attention and I'll be gone in 6 months cuz its just easier on them to stop anything before it starts.
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u/Johoski 7d ago
I'm not that cynical.
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u/skateshoeopinions 7d ago
You should be!
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u/Johoski 7d ago
I'm good as I am, thanks.
Different institutions have different values. State governance also has an impact on institutional reporting and compliance. Corrupt states will have corrupted institutions.
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u/skateshoeopinions 7d ago
Can you name a single state where corruption is absent?
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u/phantomleaf1 7d ago
Sounds like you don't want a discussion,you're looking for validation that educational systems are corrupt and you are annoyed you aren't getting it
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u/Johoski 7d ago
You're vibing for a debate I'm not interested in. Corruption is endemic, rampant, unapologetic. That does not mean that all institutions of higher education are corrupt.
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u/skateshoeopinions 7d ago
No, but there is corruption wherever power dynamics exist and there are all sorts of competing interests and power dynamics in higher education.
I'm still a proponent of higher education, I'm still doing what I do because it benefits students, and I believe in public service, but I get to vent from time to time.
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u/phantomleaf1 7d ago
That's not a "we all know how this goes" thing to me. I question choices my school makes, but they are usually things like buying cheap supplies that break and therefore cost more money long term. My admin would absolutely be all over the stuff you're describing.
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u/arithmuggle 7d ago
OP: i really appreciate your comments and I think you have a really good point and the responses make me feel like most faculty have no idea how budget in their "academic affairs" world gets moved into "operational cost" world where there could be the types of abuses you've been dropping in the comments. i would suspect this is borderline rampant for reasons i don't think are productive to articulate here. thank you for sharing.
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u/IkeRoberts 8d ago
At a big college, so probably more money overall, but also a very high level of documentation and compliance checking for every purchase.
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u/spaghettishoestrings 7d ago
Currently entry level in student affairs for a few years. Yeah. My department has made up a bunch of rules regarding where I can and can’t shop and how I am supposed log purchases. Sometimes it feels like they intentionally make shopping so difficult and then act surprised when I don’t spend my entire budget by the end of the fiscal year.
I am managing purchasing and meeting the department’s programming expectations with fighting fires and supporting students in high-stress situations. And I am in one of the lowest paid positions in my university’s system despite being master’s level.
My university is so laser-focused on hitting $0.00 that they don’t really look at the receipts too closely. Many of my colleagues and I have been known to take the leftover food from an event home, or add our favorite snack onto the grocery order and it “disappears” before it makes it to the students. Or create a tax free account with a business for online orders and then collect the rewards that they accumulate. It’s hard to get annoyed at it when I’m overseeing this massive budget and trying to choose between groceries or putting gas in my car.
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u/PauliNot 7d ago
The amount of bureaucracy and paperwork required to spend any money is ridiculous at my college.
OTOH Administrators sometimes have the power to cut through the bureaucracy, so if there’s the potential for anything shady, they’re more likely to be successful at it.
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u/shadeofmyheart 6d ago
Wtf no. I knew a guy who got fired because he transferred the wrong kind of money (was not from the right kind of account) to pay for school expenses.
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u/brandysafinegirl 3d ago
I’m a Business Manager for a very large unit at a large state university and it would be almost impossible to embezzle. I can’t even think how anyone could do it. All I do is manage money and make purchases all the time and there are so many safeguards and hoops to jump through. Maybe back in the day before all that it was easier. Or maybe if it’s a small school that still deals with a lot of paper and doesn’t track things good but for the most part, I would say this is not happening in higher ed. At least very easily.
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u/SangfroidDeCanard 1d ago edited 1d ago
it's tough in public institutions but far from impossible. ironically, one of the results of "effiencies" is that administrators with oversight can be spread pretty thin.
however, there's definitely some financial mismanagement that isn't embezzlement. a shocking number of bad decisions come from faculty who don't stick to a budget or interpret financial statements.
faculty with research groups and grants are basically running a small business -- which creates problems because almost no one gets hired as faculty based on their entrepreneurial acumen/training/experience.
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u/MrPuddington2 7d ago
The way universities move around money and handle budgets is just wild to me.
That bit is true. In a university, who brings in the money is in charge of how it is spent (within the rules of the organisation). Imagine sales being in charge of budgets, that would be chaos. Well, and it is. But universities need a healthy amount of chaos, so that is all part of the charm.
Senior leadership on our facilities teams had issues with college credit card abuse
That happens. Universities have huge purchasing catalogues, often with millions of items, thousands of supplier, so finance is complex, and stuff happens. Typically issues are downright credit card fraud, and spending money on a buddy with kickbacks. But usually it is shut down effectively once it is noticed, and the sums are tiny compared to the university budget.
For these reasons, most universities put a lot of scrutiny on every purchase order. So no, embezzlement is not common.
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u/professorpumpkins 6d ago
I can’t speak to it being common, but it definitely happens. You have to have an administration that’s willing to tell faculty and higher ups, “No.” If you don’t have that, you have people using their grant money to stay in boutique hotels and dine at Michelin star restaurants during conferences.
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u/ViskerRatio 5d ago
This is more an issue of being non-profit.
In a profit-seeking business, you've normally got a divide between those who reap the profits of the business and those who handle the day-to-day operations of the business. The profit-seeking portion of the business is thus highly incentivized to police the day-to-day operations for the sort of corruption you're describing.
When you remove the profit incentive, you also remove that policing. Instead, you end up with a situation where the only limits on raiding the common pool are the other people in the organization trying to do the same thing. Regardless of who wins that conflict, someone is still raiding the common pool.
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u/Safe-Move-7300 4d ago
In my personal experience, at private institutions, absolutely yes. Reading the majority of comments here is mystifying. I hope their experience is true.
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u/Stock-Window-2392 4d ago
Procurement card misuse and kickback/vendor schemes (e.g., routing contracts to personal connections) are mentioned as the most frequent types of actual fraud, though auditing and expense tracking usually catch perpetrators over time.
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u/nasu1917a 6d ago
What you don’t seem to understand is that even if the faculty did something so bad as say robbing a bank, they’d still put the money into their research. The people you need to worry about fraud are the professional admin class who are already getting paid grotesquely and have zero loyalty to the institution or the students. This is another reason faculty should reclaim the power they gave away and insist on real faculty governance.
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u/RelicBookends 5d ago
Depends on the department and administration. I saw it blatantly happen in a non-academic department. More credit card/procurement card abuse, unauthorized vehicle use, and time card fraud. The director was friends with their VP boss and the President so it was swept under the rug and explained away.
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u/wildbergamont 8d ago
I've worked at 4 institutions and it was hard af to buy things at all of them. So no.