University of Central Florida's main entrance sign/photo by Jillian Cain Photography/Shutterstock.com

Following the revelation that the University of Central Florida improperly used operating funds to construct a campus building, the Florida Board of Governors is asking all universities to review projects built over the last decade and report on how they were funded.

In a Sept. 19 letter to the 12 universities and their boards of trustees, Board of Governors Chairman Ned Lautenbach asked the schools to “undertake a review of the funding sources for all university capital projects approved by a board of trustees since July 1, 2008.” The board oversees the state university system.

“Similar to the process the University of Central Florida is implementing, we ask that the president, the chief financial officer and the general counsel certify to the board of trustees and to the Board of Governors that the funding sources used were legally available for the projects as authorized in [state law] or as otherwise authorized in the general appropriations act,” Lautenbach's letter said.

In addition, the Board of Governors is making arrangements with an outside firm to conduct an “independent review of university financial controls and processes.”

The board's actions come after a state audit determined in August that UCF had improperly used $38 million in state funding to construct a campus building.

The 137,000-square-foot Trevor Colbourn Hall, which opened this semester on the school's Orlando campus, was built using state operating funds, a direct violation of state policy and law that restricts that funding to be spent on activities such as instruction, research, libraries, student services or maintenance.

Last week, UCF officials identified an additional $13.8 million in projects that appeared to be improperly funded with operating money. In all instances, UCF has replenished the improperly used funds with legally authorized funding, including money from auxiliary sources, such as concession fees.

On Thursday, the UCF board of trustees, which was meeting in Orlando, received an update on the investigation of the improperly funded projects at the school.

Beverly Seay, the trustee who heads the board's audit and compliance committee, said the Atlanta law firm of Bryan Cave Leighton Paisner has begun its independent review of how the UCF projects ended up with improper funding. The firm has also brought in a forensic accounting firm to help in the investigation, Seay said.

She said Julie Leftheris, the inspector general for the Board of Governors, is also participating in the process, which began with employee interviews last week.

UCF President Dale Whittaker has told state officials that the school's former chief financial officer, William Merck, took full responsibility for the improper funding of the Colbourn Hall project. Merck resigned earlier this month.

In a separate action, the UCF trustees formally approved a review policy for future capital projects that exceed $2 million. The school's president, chief financial officer, general counsel and the vice president submitting the request must certify that funding for the projects comes from legally authorized sources.

In addition to the UCF trustees' probe and the Board of Governors' review, the state House has announced a committee headed by incoming House Speaker Jose Oliva, R-Miami Lakes, will also investigate the issue.

Lloyd Dunkelberger reports for the News Service of Florida.