The Vermont Attorney General’s Office is investigating whether Burlington College violated the terms of restricted scholarship funds when it used the money to pay for operating expenses, officials said Monday.
The review comes after VTDigger in August reported that the cash-strapped college in 2012 used $50,000 from the $70,000 Conway/Vance Memorial Scholarship Endowment to cover routine bills, the Attorney General’s Office said.
A former faculty couple, G. Jason Conway and Marcia Vance, in 2011 and 2012 donated the money, specifying that it was to remain in a trust and only the interest be used for student scholarships.
Financial audits of the school show the college borrowed the money shortly thereafter to pay operating expenses and as of the most recent audit from fiscal year 2013 the funds had not been repaid.
A 2012 audit shows that $166,500 in endowed scholarship funds were used to cover operating expenses at the college, including money donated by Conway.
Mike Smith, Burlington College’s interim president, said Monday that Attorney General Bill Sorrell’s office has requested by Oct. 6 documents about the Conway/Vance scholarship and any other restricted funds used to pay for operations.
Smith welcomes the review and has taken it a step further, he said.
“We have started an internal review on that and we are responding to the attorney general’s question as we speak; we actually welcome the attorney general’s review,” Smith said in a phone interview.
The college borrowed the money during the time Christine Plunkett was president. Documents show the board of trustees approved the borrowing and a repayment plan that was partially, but never fully, completed.
Plunkett resigned abruptly in August after votes of no confidence from students, faculty and staff. The school’s board of trustees three days later appointed three interim leaders, including Smith.
Burlington College is on academic probation from the regional accreditation agency because of financial problems. The college in 2010, under former President Jane Sanders, borrowed $10 million to purchase a lakefront property on North Avenue from the Roman Catholic Diocese of Burlington and has struggled to repay the loans.
Vermont statutes and common law give the attorney general the authority to supervise the administration of charitable trusts, said Wendy Morgan, chief of the public protection division.
The Conway scholarship fund was to be put in a trust in perpetuity where it would earn interest. The money was supposed to support deserving students majoring in the arts, humanities or social sciences programs, according to an agreement between Burlington College and the executor of Conway’s estate.
“I fully anticipate that the new management team is going to be cooperative with us and that we will reach a resolution that comes out of whatever we find,” Morgan said in a phone interview. She said she does not expect criminal charges to be filed.
Morgan said she is not aware of any formal complaints filed about Burlington College, but is not the lead attorney on the matter.
Ellen Fallon, the college’s lawyer, will look into not only the scholarship incident but other incidents Smith said he read about in VTDigger and other media outlets, or heard elsewhere. He would not elaborate on what they are.
VTDigger also reported that the school had neglected to deposit some employee withholdings and employer contributions, into employees’ TIAA-CREF retirement accounts for 16 weeks this summer. That money, as well as missed interest, has been repaid, Smith said Monday.
Smith said he informed the faculty and staff about the attorney general’s review.