TAMPA — The University of South Florida did not misuse nearly $2.2 million it received a decade ago for an endowed professorship in business ethics that today does not exist.
That's the conclusion of the University Audit and Compliance Office, which investigates claims of fiscal misconduct.
"There appears to have been a good-faith effort to use the money according to the original intent," investigators say in a 23-page report to USF president Judy Genshaft.
At issue is a USF endowment created with $1.25 million from the Exide Corp., plus $937,500 in state matching funds.
In 1999, Exide paid the money to settle a state investigation into allegations that it sold defective car batteries. At the time, the Florida Attorney General's Office said the money would go to USF "to establish an eminent scholar chair in business ethics."
The following year, however, USF administrators scaled down the plan.
Assuming a 5 percent rate of return, a $2 million endowment would generate about $100,000 a year — less than half the salary that USF administrators say a top business scholar could command.
So instead of hiring one professor with the endowment, the College of Business has used endowment earnings to pay annual $10,000 stipends to several faculty members who specialize in sustainability, an area that has come to encompass business ethics. They developed and teach much of a multicourse MBA program focused on sustainability, the study of environmentally sound and socially responsible business practices.
The college also has used some of the money to stage business case-study competitions for students, to pay students scholarships, to stage two symposiums on sustainability and to buy some instructional books and videos.
In all, USF so far has spent $409,325 in dividends from the Exide fund. Because of recent investment losses, the endowment's balance is $1.8 million.
"We're doing great things for our students and trying to make them better corporate citizens when they enter the work force," College of Business dean Robert Forsythe said Monday. It is appropriate to use the Exide money for those activities, he said.
Business professor Marvin Karlins and associate business professor Robert Welker disagree.
"The money was specifically designated to get us a position, a full position, as an endowed professorship," Karlins said. "There was plenty of money to do it. For 10 years, they sat on it."
In July, he and Welker filed a complaint saying USF's actions were possibly inappropriate and a breach of contract.
But University Audit and Compliance found that Exide never signed a contract with USF for the use of the money, so there was no way a contract could be breached. The same goes for the state matching funds.
To the contrary, investigators found that USF told state officials about their plans for the money, and "a good-faith effort to use the funds appropriately occurred."
Karlins called the investigation a whitewash. He said he and Welker would take their complaint to the attorney general, although it is not clear how far they would get with that.
In July, a spokeswoman for the attorney general said the agency did want USF to create an endowed chair, but the office lacked the authority to force the university to use the money for a specific purpose because USF was not a party to the state's settlement with Exide.
Still, Karlins said, "We want somebody who's not being paid by the university and who is not reporting to the university president to look at this."