A review by the University System of Georgia (USG) of the $16 million budget shortfall in 2012 at Georgia Perimeter College (GPC)— a review that was explicitly relied on by Attorney General Sam Olens in his decision not to investigate further–found no evidence of fraud or criminal activity.1
That conclusion—that no crimes were committed–is based largely on the USG’s acceptance of claims by GPC’s Executive Vice President for Financial and Administrative Affairs, Ron Carruth, that he had no knowledge that his official reports of an ample budget surplus, even as reserves were being depleted to cover revenue shortfalls, were false. In particular, Carruth blamed GPC Budget Director Mark Gerspacher for misinforming him about spending overtaking revenues and depleting GPC’s reserve funds—which contained $20 million at the start of 2009 and disappeared by the end of 2011. 2
The following 2011-2012 timeline demonstrates, however, that budget reports for GPC were knowingly and willfully falsified in felony violation of OCGA 16-10-203 & 16-10-8.4
It appears that accurate budget information was withheld for over a year,5 in violation of those statutes, as well as GPC Policy 302 that required Carruth, as Executive VP for Financial and Administrative Affairs, to inform the President of any indication that the GPC budget was not sustainable.6
March 10, 2011: VP of Finance Ron Carruth and Budget Director Mark Gerspacher reported a budget surplus of $38 million to the GPC Faculty Senate.
July 1, 2011: According to Gerspacher,7 Carruth ordered Gerspacher to withdraw $1.5 million from the reserve fund to cover revenue shortfalls—three months after reporting the $38 million surplus to the Faculty Senate.
July 2011: According to Assistant VP of Finance Sheletha Champion, in the USG review, she passed on to Carruth a report of negative balances and dwindling reserves, but Carruth took no action—though GPC Policy 302 gave Carruth an affirmative duty to inform the president.
September 22, 2011: state auditors at the budget exit interview inform GPC budget staff of multiple negative balances in GPC accounts. The interview was attended by Carruth, Champion, and Gerspacher—who never brought this negative review to the attention of GPC management outside Carruth’s department, contrary to GPC Policy 302.
January 23, 2012: GPC budget staffer in charge of auxiliary reserve funds, Keith Chapman, writes to Assistant VP of Finance Sheletha Champion complaining about a decrease in two different reserve funds of $4.5 million and $3.2 million, and refers to plans by Carruth “to spend additional auxiliary reserves this year.” In the email, Chapman expresses anger that millions in reserves are “gone with no explanation.”
February 3, 2012: In response, Champion requested Gerpsacher to prepare a report on the GPC reserve funds depletion by February 10—and asked all GPC budget staff to report to her any knowledge they have of Champion and Carruth being aware of the reserve funds depletion.
February 9, 2012: Gerspacher sent Champion the report on reserve depletion she requested. The report referenced discussions as early as July 2011 with Carruth and Champion about spending GPC reserve funds to avoid revenue shortfalls. This report was never shared with Tricoli or GPC management outside Carruth’s budget office, contrary to GPC Policy 302.
March 6, 2012: Carruth’s official report to the President’s Cabinet states $3.6 million in reserve and “normal USG budget process.”
March 8, 2012: In the annual USG budget hearing attended by Carruth, President Tricoli informed Chancellor Hank Huckaby of Tricoli’s plan to raise GPC faculty salaries, using an $800,000 reserve set aside for that purpose.
March 15, 2012: Budget Director Mark Gerspacher’s last day on the job. He leaves GPC for a job at another USG institution.
March 21, 2012: Champion forwarded Gerspacher’s February 9 report on reserve depletion to Carruth—who in turn forwarded it without comment to Gerpsacher’s replacement, Amy Jurgens. Champion’s March 21 email references a prior conversation with Carruth about spending the auxiliary reserves.
March 23, 2012: Tricoli emails Carruth and Huckaby about Tricoli’s plans to use the $800,000 set aside to raise faculty salaries. Carruth makes no mention of depleted reserves (per February budget report) or $6.1 million operating deficit and $6.7 million fringe benefits arrears (per March budget analysis—see March 24).
March 24, 2012: The day after the discussion of faculty raises, Champion emails a budget analysis prepared for accreditation agency, saying the final report is due to the USG on March 26. That budget analysis shows $6.7 million arrears in employee fringe benefits with three months left in the fiscal year, as well as a $6.1 million deficit in GPC’s operating expenses. Champion’s March 24 email refers to Carruth’s knowledge of “over spending and little to no fund balance” over the last two years—the day after Carruth made no response to Tricoli’s discussion of spending the reserve supposedly set aside for faculty raises. This March 2012 report detailing at least a $12.8 million deficit was never shared with Tricoli or GPC management outside Carruth’s budget office, contrary to GPC Policy 302.
April 15, 2012: Carruth informed President Tricoli that GPC had $4 million available to the end of the fiscal year (June 30). [Carruth did not mention that, according to his department’s March 2012 budget analysis, these funds fell $6.1 million short of operating needs.]
April 25, 2012: Carruth informed Tricoli that there was actually a small deficit of $1-2 million. Tricoli called in GPC management the same day to find savings to balance the budget. However, Carruth then informed Tricoli that the deficit was larger than Carruth reported earlier that same day. Tricoli informed Chancellor Huckaby and called in USG auditors to assess GPC’s financial condition.
April 26, 2012: after reviewing GPC books, USG auditors estimate deficit at $16 million. Huckaby demands Tricoli’s immediate resignation.
May 7, 2012: Huckaby terminates Tricoli by letter stating that Tricoli’s annual contract expiring on June 30 will not be renewed by the Board of Regents.
May 10, 2012: USG begins, in place of a scheduled state audit, its own review of how the $16 million deficit occurred.
September 17, 2012: The USG’s review of the GPC budget crisis, the “Special Report,” released. The Special Report faults Tricoli and finds no evidence of fraud or criminal activity.
The USG and Georgia Attorney General, when they determined that there was no evidence crimes were committed in connection with the GPC budget crisis, had all the same documentation referenced in this timeline available to them. This documentation on its face supports a different conclusion: that official GPC budget reports of Georgia Perimeter College, a state agency, were knowingly and willfully falsified and affirmatively misrepresented, and that material information was knowingly and willfully concealed, in violation of OCGA 16-10-20 & 16-10-8, resulting in $16 million in overspending ($9 million of which has never been accounted for), the loss of 300 jobs, a drop in enrollment by several thousand students per semester, extensive negative publicity for the school, and the destruction of the career of one of the USG’s “rising stars”—Anthony Tricoli, who has never been able to obtain another job in higher education after being publicly blamed by the USG for all this damage.
Other possible criminal violations are documented in the record. Those include concealment of GPC payments of up to $1.5 million, fraud in the termination of Tricoli’s contract, lying to state investigators, and attempts to conceal or destroy the documentary evidence on which this timeline is based. However, those other crimes are beyond the scope of this timeline, which concentrates strictly on the knowing falsification of budget reports to President Tricoli and to other GPC management outside of Carruth’s department.
The Attorney General of Georgia has refused to investigate any of this available documentation, on which the timeline is based, that supports the allegations of criminal actions. In fact, the Attorney General is defending Carruth and others in a civil lawsuit brought by Anthony Tricoli. Governor Nathan Deal has not responded to repeated requests to appoint an independent special investigator.
Is it any wonder Hank Huckaby moved so swiftly to have GPC swallowed by Georgia State University? I have not found anyone of any repute who argued this “merger” made any sort of sense.
1 The USG review, titled the “Special Report,” also affirmed the USG decision to lay blame on GPC President Anthony Tricoli, who was removed from office immediately, prior to any investigation of the 2012 financial crisis.
2 The $20 million reserves had been explicitly ordered by President Tricoli after the budget crisis Tricoli inherited when he assumed the presidency in 2006 was resolved by almost doubling enrollment and tuition revenues, which created a large budget surplus.
3 A person who knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact; makes a false, fictitious, or fraudulent statement or representation; or makes or uses any false writing or document, knowing the same to contain any false, fictitious, or fraudulent statement or entry, in any matter within the jurisdiction of any department or agency of state government or of the government of any county, city, or other political subdivision of this state shall, upon conviction thereof, be punished by a fine of not more than $1,000.00 or by imprisonment for not less than one nor more than five years, or both.
4 An officer or employee of the state or any political subdivision thereof or other person authorized by law to make or give a certificate or other writing who knowingly makes and delivers such a certificate or writing containing any statement which he knows to be false shall, upon conviction thereof, be punished by imprisonment for not less than one nor more than five years.
5 Information on the depletion of the GPC auxiliary reserve funds was withheld by VP of Finance Ron Carruth for over a year, at a minimum, according to the available documents described in this timeline. It is possible that such knowledge was withheld and misrepresented for a longer period of time.
6 Policy 302 states, in part: “The Executive Vice President for Financial and Administrative Affairs shall inform the President of any expenditure trends that may affect the College’s ability to live within its budget, any changes in revenue that were not anticipated in the original budget, and any external conditions that may require adjusting expenditures. The President will decide if mid-year budget adjustments are necessary. “
7 The USG review implied fault by President Tricoli for not attending the exit interview with state auditors at which these negative balances were noted. However, USG policy in place at the time called for EVP Carruth and his budget staff to attend the interview—not the president. After the GPC budget fiasco of 2012, the USG changed its policy to bring the president of USG institutions into these conferences. Thus the implication of fault, based on an after-the-fact policy change, is misplaced.