Iowa Regents to require expense receipts from Deloitte

Change comes after Gazette report on $220K expenses to date

(The Gazette)
(The Gazette)

A consulting firm hired to conduct an efficiency review of Iowa’s public universities will start providing receipts for expenses including meals, travel, and lodging after the Board of Regents allowed the firm to expense $220,273 to the universities without receipts.

The move comes after The Gazette reported earlier this week about the lack of receipts and concerns from at least one regent about transparency.

Board President Bruce Rastetter said during a meeting Wednesday the state’s contract with Deloitte Consulting LLP, including its absence of a requirement for expense receipts, is typical for the industry and similar projects. But he and Regent Larry McKibben have asked Deloitte officials to provide any past receipts they can and to start providing documentation going forward.

“It just makes sense that those receipts and expense accounts be forwarded to the board office,” Rastetter said. “Deloitte is receptive to sharing those receipts going forward.”

The Gazette on Tuesday reported Deloitte to date has billed the University of Iowa, Iowa State University and the University of Northern Iowa $1.62 million for services, including $220,273 for expenses. At least one official with the board office expressed concerns about Deloitte expensing things like first-class airfare and alcohol, according to emails obtained by The Gazette.

Despite those questions and internal policies for the regents and the three state universities requiring employees provide receipts for expenses, the board did not ask Deloitte consultants to detail their spending until this week.

Rastetter told The Gazette Deloitte has agreed to go back and provide any receipts it can for past expenses and that contracts going forward will include a requirement for expense receipts. Deloitte officials have said they have not expensed any inappropriate charges, and Rastetter said he has no concerns with their spending practices.

Rastetter said he doesn’t want concerns over this “relatively small” expense total to overshadow the efficiency review’s potential savings — which has been projected at between $30 million and $80 million.

“We want to make sure that the public knows that this was an open and transparent process,” Rastetter said.

The board, to date, has agreed to pay Deloitte up to $3.3 million for its work on the first and second phases of the three-phase efficiency review, which aims to make each campus more sustainable through efficiency, cost-cutting, and revenue-generating changes. Deloitte officials have said those changes could include job cuts and department consolidations, but few details have been released.

Deloitte on Wednesday made public more details about how it suggests the universities save $16 million to $40 million over the next 18 to 24 months by improving sourcing and procurement practices. The board unanimously agreed to keep working with Deloitte toward these goals.

Deloitte’s advice includes entering the three universities into master contracts to help lower the costs of the consumables they buy. Questions were raised as to whether larger contracts might disadvantage Iowa businesses and keep them from being able to bid on projects.

Deloitte officials said their plan could preserve opportunities for local companies or firms that emphasize hiring minorities or environmental practices, but Rastetter said savings must be the regents’ top priority.

“The mission of the board is to make sure we are accessible and affordable, and our focus is on student cost and debt,” he said. “At the end of the day, if we are not efficient, we raise tuition and ask for more state appropriations.”

A new negotiated contract with Deloitte must be submitted to the Board of Regents for approval at a future meeting.

The payment structure for that new contract has not been made public, and Regent Bob Downer told The Gazette on Wednesday he believes details still are being ironed out. Several options exist, he said, including paying Deloitte based on time and material costs, with a guaranteed maximum price, or offering them a fixed fee with a share of the savings.

Downer said he’s pleased the regents will start requiring receipts. “As much detail as we can get, I would certainly support,” he said. “As far as board members are concerned, we have to provide receipts, and I believe all the institutions require that, so it seems to me that they should be under the same rules.”

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