Publication:Providence Journal; Date:Mar 4, 2012; Section:Rhode Island; Page Number:A1


Shadowed by debt

For 25 years, URI staff raised red flags Documents obtained by Journal show unease over unusual relationship with Institute, unpaid bills


    On Aug. 18, 2010, after two and a half decades of failed efforts by a parade of people to fix or terminate the University of Rhode Island’s ill-defined and perpetually strained financial relationship with the Institute for International Sport, URI’s budget director Linda Barrett did what none had done before.

She said no. She refused to sign the official form — known as a “USP2” — that year after year had allowed the Institute’s executive director, Daniel E. Doyle Jr., to remain on URI’s payroll, with access to state-subsidized health and retirement plans.

    In the one sentence she appended to the annual renewal form for Doyle’s “position,” Barrett wrote: “Please note that I did not sign the USP2 … [for] Dan Doyle, as the Institute for International Sport owes the university approximately $400,000.”

    Barrett has declined comment, and Doyle’s $70,000-a-year position was renewed that year without her signature, with signoffs from, among others, the university’s vice president for administration and finance, Robert Weygand, a former state lawmaker, lieutenant governor and congressman.

    Weygand, who oversaw the most recent efforts to get the Institute to pay its debt to URI, has declined comment on why he agreed to keep Doyle on the payroll. URI severed its relationship with Doyle in November.

    Now, the state police are investigating the Institute, its probe sparked by a state audit that found the private, nonprofit organization could not account for most of a $575,000 legislative grant it received in 2007 for a building on the URI campus, while amassing a $380,846 debt to URI that remained unpaid until late last week. The report also questioned why the Institute’s executive director, Dan Doyle, had been on URI’s payroll for 26 years.

    Barrett’s note is one in a collection of internal documents that have surfaced in recent weeks that shed light on URI’s decades-long struggle to get reimbursed by the Institute for rent, dining services and Doyle’s own salary, despite recent assertions by Weygand and former URI President Robert Carothers that the relationship between the university and the Institute “worked very well’’ until recent years.

    Memos, letters and other documents obtained by The Providence Journal show high-level concern from the very beginning of the Institute’s unorthodox, 26-year financial relationship with URI, and the persistent efforts of URI’s top financial officers to chase down Doyle for repayment of hundreds of thousands of dollars the university advanced the Institute, even when struggling against budget cuts to pay its own bills.

    A widely-distributed memo from Barrett to legal counsel Lou Saccoccio in December 1998 summed up the dilemma: “In the late 1980’s, the Institute for International Sport established a unique relationship with the University of Rhode Island. We allow them to spend, and then they reimburse us … Currently, they are delinquent in excess of $325,000.

    “There have been numerous memos to the director of the Institute for International Sport regarding the Institute’s on-going cash deficit … I am concerned about the potential liability and exposure of the university should the Institute be unable to financially support itself at some point.’’

    Doyle, a former basketball coach at Trinity College, in Hartford, created the Institute in 1986 to foster peace among youth worldwide through sports. Doyle declined comment for this story, through his spokeswoman at the RDW Group, owned by his brother Michael.

    The documents The Journal reviewed cover a period from 1986 through 2000. URI has not yet fully responded to The Journal’s request for all documents pertaining to the Institute.

    On Dec. 18, 1986, not long after the Institute was founded, then-URI controller Ronald R. Osborne put then-Higher Education Commissioner Americo Petrocelli on notice that he had concerns about the university’s relationship with the organization.

    Days earlier, Osborne had received a memo from Jim Leslie who, as executive director of another nonprofit on campus — the URI Foundation — believed he had authority to sign payment orders for the Institute, the bill for Doyle’s leased car and other expenses, but no responsibility for any potential deficits.

    The Leslie memo said then-URI President Edward “Ted’’ Eddy had approved a budget for the Institute, “but only about half of this budget is currently funded with gift money, so any deficit will have to be funded by the university.’’

    Osborne asked Petrocelli if this was, in fact, what was intended.

    “The letter states that the foundation has no legal, financial or other responsibilities for the operation of the IIS. Yet, as director of the URI foundation, Jim Leslie will be signing payment orders?

    “Is the deficit planned for IIS budgeted? Are we expected to fund IIS expenditures with URI cash? [Are] there any contracts between URI and IIS … to substantiate the planned receivable and its collectability for financial statement purposes?

    “I am very uncomfortable regarding the [lack] of clarity of responsibilities between the university and foundation,’’ Osborne wrote. “Which entity is responsible for the finances of IIS? Who is expected to monitor the financial condition: URI accounting, URI budget, Dan Doyle, Jim Leslie?’’

    It is unclear if he got a response, but within two years, the URI Foundation –– an independent organization that manages URI’s fundraising ––ended its involvement with the Institute.

    April 5, 1988: “The URI Foundation has had no new funds deposited for the Institute and has been carrying the Institute in a deficit position,’’ explained Ruth Jarrett, the foundation’s assistant treasurer, in a memo to Osborne. “We are at the close of our fiscal year and would like to have the deficit erased before our audit.’’

    On April 22, 1988, then-Gov. Edward D. DiPrete and his director of administration, the late Fred Lippitt, signed what appears to be the state’s first formal agreement between the Institute and the Governor’s Office of Intergovernmental Relations, though there is some question when the agreement first took effect, how long it lasted and how much the Institute got paid by the state.

    The contract said: “The state of Rhode Island hereby agrees to engage the services of the IIS to develop a Peace Corps-like program called the sports corps, involving travel to places that offer little or no opportunity to play sports, or working with handicapped or special needs athletes worldwide.’’

    In exchange for an initial $150,000 from the state, the Institute also agreed to “attract a major sporting event to Rhode Island’’ and “offer seminars each year that will address issues of sport and society.’’ The only stipulation: that the Institute keep financial records, and make them readily available for “monitoring, inspection and audit by the state of Rhode Island.’’

    DiPrete, reached last week, had no recollection of signing the agreement and said he was “a little confused how intergovernmental relations got involved…. I don’t why it didn’t go directly to URI.’’ But he recalled thinking that it “sounded like a good idea for [a] relatively modest amount of money’’ the one time in “1985 or ‘86’’ that his chief of staff, Michael Doyle, mentioned that his brother Dan wanted to talk to URI about it.

    On Sept. 7,1988, URI President Eddy wrote Doyle “on behalf of the board of directors of the Institute … to outline our recent action reappointing you.’’

    Most state jobs come with a job description. This letter is the only document The Journal has found defining Doyle’s responsibilities as the executive director of the Institute. In that period, from July 1, 1988, through June 30, 1989, he was paid $65,000 through URI’s payroll system, with the expectation that the Institute would reimburse the university for his compensation.

    It said: “You will receive the normal benefits package accorded employees of the University of Rhode Island, which administers the personnel services of the Institute … You are authorized to continue leasing a vehicle’’ and “your duties remain as in the past … management of day to day operations of the Institute, oversight responsibility for all Institute planning and programming; fiscal management, budget preparation … and fundraising for both overhead and program operating expenses.’’

    Eddy apologized for not being able to give Doyle the “multi-year appointment’’ he requested.

    But “we want you to be certain that our decision … is not intended as a negative evaluation of your work. Quite, the contrary,’’ Eddy wrote. “Our assessment of your work and that of your staff in the brief lifetime of the Institute is positive and optimistic.’’

    A master fundraiser, Doyle had big expectations for the next two years that included a $175,000 state grant each year, and thousands more from the Digital Equipment Corporation, Merrill Lynch, American Airlines, Braniff Airlines, Donatelli Construction, Friends of Tel Aviv University, the Atlantic Philanthropic Service Company, the Irish American Sports Foundation and the Northern Ire-land Sports Council, according to assurances he provided URI.

    But things did not go smoothly, from URI’s financial perspective.

    On July 18, 1989, with bills rolling in from print shops, Diners Club and Bloom’s Hotel in Dublin, Robert Comer-ford, then URI’s vice president for business and finance, approved the payments, but told Doyle he would be “unable to do so again until the nearly $60,000 deficit in your account has been eliminated.’’

    On July 26, 1989, Barrett apprised then-associate controller Fred Dolor that Higher Education Commissioner Petrocelli had approved a new agreement between URI and the Institute, aimed at keeping its deficit in check. The new deal: “The Institute can spend up to their state appropriation each fiscal year that a state appropriation is approved by the General Assembly. This is considered an advance to the Institute relative only to their state appropriation.’’

    “Based on the agreement and in the spirit of the program and the favorable public relations it provides for the university,’’ the memo said, URI would “continue to process payrolls and payment orders up to the amount of the $175,000 state grant for Fiscal 1990.’’

    On October 3,1989, Barrett wrote Comerford that things were not going as planned.

    By then, the Institute’s deficit had grown to $170,268. Promised corporate donations had not yet arrived.

    “Since payrolls are still being processed and operating expenses are still being incurred, we will add approximately $114,000 to this number by June 30.…’’ Barrett warned. “I think we may want to require a written document from the private companies as to the amount … the conditions and the date the check will be received by the IIS.’’

    In the interim, “should we continue to sign payment orders?’’ she asked her boss. With budget cuts ordered statewide, “a decision needs to be made relative to the financing of the IIS program as soon as possible.’’

    By Oct. 16, 1989: Money from donors had started to roll in and the URI budget office had created separate accounts for each of the Institute’s projects: “Peace & Understanding through Sport,’’ “Sports Corps Ireland’’ and “Belfast United.’’ But the state’s $175,000 grant had not yet arrived.

    Barrett advised Doyle, in writing, “Mr. [William] Woodcock from the Governor’s office called … to assure the university that the IIS appropriation is in a general fund account, and is in the hands of J.R. Pagliarini (Policy Office.) He will get the governor’s signature when it reaches his desk.’’

    In this same letter, she recapped for the other URI finance officials copied on the letter what Doyle had said at their last meeting: “Dan indicated that he did not think there was any chance that the state might not appropriate funds to support IIS in future years; however, if it did happen, he believes outside sources (capital fund campaign) could support the program.’’

    By March 29, 1990, however, concern had again peaked.

    In a letter to Doyle, URI’s new vice president for business and finance, Kenneth Kenerson, said he had recently reviewed the Institute’s financial status and was troubled by what he saw.

    “While it goes without saying that the Institute’s work is valued at the university, and that important mutual benefit accrues from our continued association, I am concerned about the future funding for the Institute, which has been a problem in the past, and how this impacts the university’s cash-flow position.

    “My predecessor agreed three years ago to finance the Institute’s operating expenses, including annual rent for space on campus, through university accounts with the understanding that full reimbursements would be made by the Institute at the close of each fiscal year.

    “This year … that has meant that the university has funded the operations by as much as $250,000 [which was] $75,000 more than the $175,000 state grant the institute has received for Fiscal 1990 … Other sources of funding, i.e. private grants and gifts and fees have not been sufficient for complete repayment …“After the initial three-year agreement had expired, it was anticipated that the institute would be self-supporting, i.e. would not require cash advances without hard evidence of pending awards, grants, gifts or contracts. However, the institute ended Fiscal 1989 with a cash deficit of $63,074. It is also projected to close Fiscal 1990 with a cash deficit of $81,700, assuming no additional funding is received …

    “In light of the budgetary constraints placed upon the university by the state of Rhode Island it becomes imperative that we … reach a new understanding about the financing of the Institute’s activities.’’

    Kenerson set deadlines. By April 30, he wanted Doyle to provide the university with the Institute’s projected revenues and expenditures for the rest of the year, including award letters. If all of this does not add up to a “break even operation,’’ he said, “the University reserves the right to stop providing cash advances to the Institute to fund its operations for the remainder of Fiscal 1990.’’

    On Oct. 5, 1990, associate controller Fred Dolor expressed concerns for another reason.

    By “loaning or advancing funds to finance the Institute’s operations,’’ he wrote in a memo to Kenerson and others, “the university is technically in violation of its fiduciary responsibilities to other accounts which temporarily fund the Institute’s operating deficits.’’ He offered his “personal services to assist the Institute to establish its own accounting system and to hire a fiscal coordinator.’’

    But problems continued.

    On May 13, 1991, Russell E. Hogg, the retired MasterCard president who chaired the Institute’s board, sought to reassure then-URI President Eddy that the Institute had legislative support.

    “Rep. Raymond Fogarty, who sits on the House Finance Committee, called me recently to indicate that he is heading up a group of legislators whose task is to insure that the IIS will continue its association with the state and University,’’ Hogg wrote to Eddy.

    “As you know,’’ he added, “the Institute was scheduled to leave the university accounting system in July and rent new space. While these discussion are being conducted, I would appreciate the Institute being allowed to stay in the accounting system and in Adams Hall…. As you are further aware, our account is in good standing and we have a significant amount of money coming in through our major grant.’’

    Eddy agreed, ending his reply letter: “I hope all goes well with plans for the 1993 World Scholar-Athlete Games.’’

    Jan. 13, 1992, Kenerson asks Doyle to provide his office with “an updated schedule within which the Institute expects to be self-supporting in terms of performing its own bookkeeping, payroll, personnel and accounting functions.’’

    Feb. 19, 1993, Kenerson tells Doyle the Institute’s “substantial deficit in the amount of $392,400… has further compounded the university’s cash flow problems….’’ He again tries to get Doyle to agree to a “deficit prevention plan.’’

    “Please extend to Fred [Dolor] the courtesy of your cooperation,’’ Kenerson’s letter implored.

    April 6, 1995: Kenneth Kermes, then vice president for business and finance, emphasized to Hogg, in a letter, how important it would be to URI to get the $218,300 it was owed by the Institute, by June 30, “given the current cash-flow problem’’ in the university’s own accounts.

    April 8, 1997: “Historically, the university faces a severe cash flow problem toward the end of the fiscal year…. Your issuing the university a check for $243,000 at the earlier possible date (before June 30th) will certainly help,’’ Dolor wrote Doyle.

    June 15, 1998: Associate controller Dolor advised Doyle that under “new reporting guidelines issued by the Board of Governors for Higher Education,’’ the university is required to submit to the board a “certified schedule of delinquent receivables.’’

    “We would like to avoid and are sure you also would like to avoid the publicity and embarrassment associated with the delinquent status of the [Institute’s} account…. Would you please see that a check covering the total past due amount of $246,636 is mailed … on or before June 25, 1998.’’

    June 1998: State lawmakers reduced the $275,000 annual grant they had been giving the Institute for operating expenses in recent years to $225,000, but provided another $300,000 to help cover the cost of building the Institute’s Hall of Fame.

    Sept. 21, 1999: Liliana Costa, assistant to the vice president, put URI’s top-tier financial staff on notice that the Institute had not paid a June 30, 1999, bill totaling $108,936 for dining services provided during that summer’s Scholar-Athlete Games, and that “residential life does not collect a dime on any of the housing (including incidentals like laundry) associated with hosting these games, based on a ‘verbal’ agreement with [former] President Eddy during the time of the first event.’’

    “It will be crucial to find out the level of support that President Carothers wishes URI to continue to provide,’’ she wrote. “By the way, URI is not given a thank you or acknowledged in any way in their publicity, posters or brochures for the games –– so much for the value of goodwill or p.r.’’

    The memo refers to the Institute’s bid for a 24-month line of credit from the university for all expenses, but notes this could place a “significant outstanding receivable’’ on the university’s books in the year following each of the end-of-June games.

    Looking back now, as Doyle and the Institute are at the center of a widening investigation, former associate controller Dolor said he’s not surprised.

    Retired and living in Tam-pa, Dolor said his job at URI was “to save the university from embarrassment,’’ and he had “a problem with the Institute [because] I cannot define its relationship with the University.’’

    As for former Rep. Ray Fogarty, he readily acknowledged he was an early and enthusiastic supporter of the Institute, but denied leading a legislative drive to finance its activities.

    “It’s sort of sad,’’ said Fogarty last week, of recent disclosures.

    “I don’t recall anybody who was against the concept,’’ he said. “I remember everybody being for it, from academic people to business people to governmental people, and they thought it was quite a coup for URI to be … having kids come from all over the world.’’

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