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USF owes payback of $6.5M, feds say

— The federal government is seeking the repayment of $6.5 million in grant money that it says was used improperly by the University of South Florida, including unallowable salaries and equipment purchases.

The Department of Health and Human Services’ Office of Inspector General said the university did not follow federal and National Institute for Health guidelines in 34 out of 112 salary transactions it examined and 40 out of 110 non-salary transactions it studied from October 2009 through September 2011.

During that period, USF claimed $198 million in costs on 302 grants, contracts and other agreements with Health and Human Services. The office examines a fraction of those grant-related transactions and extrapolates the results.

“The University of South Florida takes seriously its responsibilities in managing research dollars, and is looking forward to working with the Department of Health and Human Services to resolve any concerns about the individual items charged to audited federal research grants,” said Paul Sanberg, USF’s senior vice president for research and innovation, in a statement released by the university.

Sanberg said USF expects the final amount of the unallowable items to be “significantly reduced” once the audit process is concluded.

The inspector general’s office provides a recommendation for the amount to reimbursed. The actual funding agency within HHS will determine the final number.

In addition to the repayment of $6.4 million, the federal government recommended that USF enhance oversight of charges to federal awards to ensure consistent compliance with regulations. The report was dated April 2014.

The inspector general’s report said USF was reviewed because it received a high level of HHS funding and there have been “significant findings” in other audits. Federal auditors said they were “concerned that the University’s grant management is a high-risk area.”

Sanberg said USF “will continue to work internally on its own processes to ensure that expenses billed to federal research grants are properly documented and are allowable under the regulations.”

The HHS audit said among the improper salary transactions were 27 for administrative costs and clerical work, which should be covered by university administrative and facility costs; three for excessive pay; two exceeded limits for graduate student compensation; one for an employee doing work that was not allowed under the grant; and one was allocated incorrectly.

Among the improper non-salary costs were 16 that were treated as vendor costs rather than subcontracted costs, which are limited; 11 had insufficient documentation; four related to specialized service centers that were not charged in accordance with federal regulations; four were for general-use supplies such as toner, computers and tablets that also should have been treated as university administrative and facility costs; three transactions, for media consulting, a donation and promotional items, are not allowable; one was considered unreasonable; and one was for a large amount of fiber-optic cable with no justification that it was used for the purpose of the grant.

“While it is not unusual for large and successful national research universities to be audited and asked to return federal dollars at the end of the audit, USF respects and adheres to the great responsibility trusted in it to properly spend and manage public research dollars,” Sanberg said in the USF statement. “America’s taxpayers invest a great deal of money and trust in our nation’s academic research capabilities and we are grateful to have a diligent partner in the Department of Health and Human Services to ensure those dollars are expended properly.”

USF is ranked 43rd in the nation for research expenditures among all U.S. universities, public or private, by the National Science Foundation for fiscal year 2012. That year, USF took in $414 million in research grants.

Transactions within federally sponsored projects are one of the most heavily audited items by the federal government. In 2008, the federal government sought $1.6 million after a similar audit of Duke University. That same year, Yale University agreed to a $7.6 million settlement with the government in another case.

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