ATTACHMENT D

Testimony

Finance, Revenue and Bonding Committee

President Philip E. Austin

University of Connecticut

April 13, 2005

Thank you for the opportunity to appear before you today.   While we have had the chance over the last several weeks to meet separately with some of you, I welcome the opportunity for all of you to hear a full accounting of the recent problems in our construction program, to understand the initial improvement plan we have undertaken, and to ask any questions you may have.

As you know, the UCONN 2000 program has transformed the University of Connecticut, and we have you to thank for the remarkable success the University has seen in the intervening ten years.   All the important indicators are pointing upward: student enrollment, academic achievement and diversity, research productivity, private investment and national rankings.   We are achieving the goals you set for us, but we have also made some mistakes, which I deeply regret.   I would like to use this forum to explain to you the problems we have uncovered, what we have done to address those problems, and what safeguards we are putting in place to prevent their recurrence.

Let me begin with a brief description of the construction problem.   Last August, as a result of our routine air quality monitoring, we were alerted to elevated levels of carbon monoxide in two student apartments.   In the course of investigating and correcting the cause of the air quality problems, we discovered code compliance deficiencies in our three newest residential complexes.   Because student safety is our first and foremost concern,   we called upon the expertise of the State Department of Public Safety.   We were able to review all of the residences in question within 48 hours and determined, with the concurrence of the State Fire Marshal and State Building Inspector, that it was safe for students to remain in the dorms.

Since that time we have been engaged in a detailed assessment of the three residential building projects as well as a broader review to identify weaknesses in the construction program that allowed these problems to occur.   We secured external experts to assist us, both in the correction of the code violations and in improving the management of the program.   Our goal is to maintain the positives of the first 10 years and to make any changes necessary to establish a strong foundation for the next 10 years.

We immediately began to address the problems we found:

• An organizational structure for the construction program with inadequate checks and balances

• A reliance on architect and contractor certification with regard to code compliance, coupled with insufficient resources dedicated to code compliance

• Inadequate communication and controls to ensure timely and thorough reporting to senior administration and the Board of Trustees

• Personnel who failed to fulfill appropriately their professional responsibilities

Let me say at this juncture that it had already become clear to me that, with the post-UCONN 2000 growth of the University, the program needs of the University had outstripped the administrative structure.   Among other things, it became clear that the growth in infrastructure, enrollment, research and instruction required greater operational support.   As a result, I undertook an organizational restructuring that culminated in August 2003 with two new positions, a Chief Operating Officer and a Chief Financial Officer.   Soon thereafter, our Board of Trustees and I decided to strengthen the University’s audit, compliance and risk assessment function by restructuring and expanding the role of the Board’s Audit and Compliance Committee and expanding the University’s audit capabilities – an effort that was undertaken in consultation with the Auditors of Public Accounts.   Both of these actions led to additional organizational improvements.   Still, the events of last fall made it clear that, despite the many chances, there was more work to be done.

Over the course of several months, we have developed and begun to implement – and our Trustees have endorsed – what we believe is a good start on a comprehensive improvement plan that addresses each of the problems identified.   The elements of the plan fit into the following seven categories:

• Strengthened oversight

• Organizational restructuring

• Establishment of a new University Office of Fire Marshal and Building Inspector

• Revised project budgeting and reporting

• Enhanced contract and expenditure approval and administration

• Personnel action

• Financial recovery

You will find each of these detailed on the attached sheet, and Linda Flaherty-Goldsmith’s testimony will amplify further.

These are the measures we have undertaken to date.   This winter, our Board of Trustees initiated two reviews of the construction program, one by our internal audit function and another by an external independent firm.   The Board has also scheduled two additional meetings for the coming month to review findings and recommendations from those assessments, and to evaluate the adequacy of this preliminary plan.   Should the Board determine that additional measures are necessary, we will implement them as well.   I respect and appreciate the flexibility you have provided us to build and maintain a great University for the people of Connecticut.   I also understand the responsibility that comes with flexibility and take that responsibility very seriously.

Today we focus on the shortcomings of a program that otherwise has been an overwhelming success. The new South Campus, the new Information Technology Building, the new School of Business, the new Chemistry facility, our regional campuses--the list is too long to recite here.   If the overwhelming number of our efforts have been successful, however, we recognize the critical importance of addressing the small fraction that have not.   No system we design will ever overcome the possibility of human error.   But the changes we are putting in place will assure accountability, timely detection of error, the reinforcement of checks and balances and, where needed, the redundancy to protect the program, and to protect the University as it strives to accomplish its mission.  

As you know, Governor Rell just announced a special panel to take an in-depth look at the University’s oversight of the construction program.   We welcome her decision to commission an independent review of the program and look forward to a cooperative and productive effort.

Yesterday, the Governor made reference to UConn’s “tremendous growth and improvement.”   In spite of our great progress, we at UConn view these construction issues with enormous concern.   As President of the University, I am accountable—to the Governor and our Board of Trustees, to our faculty and staff, to our students and their parents, to our alumni and donors, and importantly to you, the members of the General Assembly who represent the citizens and taxpayers of our state.   While our improvement plan is a necessary course adjustment, the University continues its positive trajectory – an institution transformed by your vision and dedicated to the aspirations of Connecticut and her sons and daughters.

I have been honored to lead UConn and I appreciate your longstanding and continuing support.

With me here today are Lori Aronson and Linda Flaherty-Goldsmith.   They will make brief statements and then we invite your questions.