After a 10-month investigation into financial operations at Berkeley Divinity School (BDS) at Yale, Connecticut Attorney General Richard Blumenthal issued a report October 9 that criticized the Episcopal school for sloppy accountability. Officials at the Divinity School and Yale University, affiliated since 1971, pointed out that they accepted the report, that most of the problems cited had been identified and corrected earlier.
Blumenthal strongly urged the school to implement reforms, restore more than $100,000 to a scholarship fund, and refund money used to pay tuition for the daughter of the former dean at Berkeley, Dr. William Franklin, who resigned in the face of criticism last December. 'The message here is that we will be as exacting and rigorous in demanding accountability in the nonprofit sector as we are in the corporate sector,' Blumenthal said.
Bishop Frederick Borsch, acting dean at Berkeley, said that the scholarship funds had been spent on student retreats and other services--and has been restored. 'Nothing illegal or seriously unethical was done, but poor judgment was used, and poor standards were in place,' he said, and all necessary steps are being taken to address the criticisms.
An earlier audit by Deloitte & Touche concluded that the school's bookkeeping was sloppy but not necessarily negligent. A report of the audit and procedures committee at Berkeley, released October 14, concluded that 'financial controls at BDS have been weak for a long time,' pointing out that 'there was no audit committee in place' and no finance and business manager accountable to the BDS board. (Both reports are available from BDS at 203-764-9359.) The board now has an outside auditor, an audit committee and is hiring a finance and business manager.
In addressing the complaint that the board was 'more generous in compensation than the minimum required,' the Berkeley committee's report said that 'there can be differences in judgment as to what is appropriate compensation.' The attorney general 'recommended that board members make an offsetting personal donation' to cover tuition for Franklin's daughter--and that has been done. 'There is no allegation of impropriety,' the committee said.
On the use of scholarship funds, the committee said that the board's action 'was a judgment call as to whether standards for the use of restricted funds are met' but promised 'more discussion' on the use of those funds in the future.
'There can be no defense of poor record keeping and imprecise reporting,' the committee's report conceded, promising improvements in the future. Yet the report argued that 'Dean Franklin has acted with the highest standards of personal integrity and that any report to the contrary is inaccurate.'
The original audit by Yale found records at Berkeley in disarray and criticized the school's oversight of spending and questionable expenditures. Yale President Richard Levin asked Berkeley's board to fire some administrators and Franklin but the board defended Franklin. Yale has subsequently renegotiated its affiliation agreement with Berkeley, including more financial oversight and a role in the selection of deans.