UHart Impacted By Major Accounting Error: School Officials

WEST HARTFORD/HARTFORD, CT — The University of Hartford this week detailed a major accounting error regarding bonding for various campus renovations, resulting in the person responsible no longer being employed at the university.

UHart, whose campus is located in West Hartford, Hartford and Bloomfield, has to file financial reports as part of project financing through what is called "Series P Bonds"

According to an extensive statement from UHart this week, those reports necessary to secure the type of financing the school received were based on budgeted project expenses.

Those reports, UHart said, should have been based on year-to-date expenses.

Citing financial challenges, UHart admitted to a deficit between the projects' budgets and what the university is taking in.

Essentially, it means UHart was erroneously receiving the type of bond it was obtaining, according to UHart.

"Updated calculations based on the university’s audited financial statements resulted in a financial ratio below the required level," wrote UHart.

As a result, UHart said it is working with an auditing consultant to do a follow up report on what happened and how it can be avoided in the future.

"We have new leadership in our finance division and we are confident in the university’s overall fiscal health and budget planning processes," UHart said.

"The university is current on all interest and principal payments, including the Series N Bonds and Series P Bonds, as well as all other financial obligations."

UHart said it, like many other universities, are dealing with complicated fiscal factors stemming from the pandemic, smaller class sizes, inflation and increased competition.

Recently, for example, the school scaled back its athletics program, opting for NCAA Division III status instead of Divison I, for financial reason, an unpopular move within the school's fan base and athletics community.

Said UHart this week: "With these known challenges in mind, the university has been focused on reviewing and adjusting our business model, operations and educational offerings to retain our position of strength."

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The full UHart statement is below:

University of Hartford Statement Regarding Notice of Corrections

"In January 2023, the University of Hartford discovered and disclosed an accounting error in its Preliminary Official Statement and Official Statement for its Series P Bonds, which were issued to finance a campus renovation project.

The calculations were erroneously prepared using the University’s budgeted expenses, rather than its year-to-date actuals available at the time of publication. Updated calculations based on the
University’s audited financial statements resulted in a financial ratio below the required level. As a consequence, the University is working with an approved independent consultant on a comprehensive follow-up report. No default occurred under the loan agreements. We have been forthcoming and transparent in the ongoing report process.

As we expect the independent report will detail, the individual responsible for preparing the erroneous calculations is no longer with the University. We have new leadership in our finance division and we are confident in the University’s overall fiscal health and budget planning processes. The University is current on all interest and principal payments, including the Series N Bonds and Series P Bonds, as well as all other financial obligations.

The University’s endowment is strong at more than $175 million (January 2023) with no borrowing against our $15 million revolving line of credit with JPMorgan Chase. The University will continue to manage our financial position and operations closely to ensure compliance with all financial ratios in the future.

Colleges and universities nationally, including institutions with strong reputations like the University of Hartford, are all currently navigating similar challenges, including pandemic recovery, increased competition, and inflation. The University has two smaller classes due to the pandemic that will be here for the remainder of their four-year educational experience, which reduces tuition and room and board revenues. Like many of our peers in the state and across the country, these factors contributed to an operating deficit for the fiscal year ending June 30, 2022.

With these known challenges in mind, the University has been focused on reviewing and adjusting our business model, operations, and educational offerings to retain our position of strength. Our Board and leadership recognize the need to continue to make intentional investments in our students and in areas such as access and affordability, in-demand academic programs, residential life facilities and experiences, athletics, student support services, health and wellness, and career preparation.

In the last five years, we have launched 16 new and in-demand academic programs. We built the 60,000-square- foot Francis X. and Nancy Hursey Center for Advanced Engineering and Health Professions, part of a $58 million investment into technology-rich facilities for our growing programs in engineering and health professions. We enhanced student support services by opening the Center for Student Success, as a one-stop-shop to help students and improve retention. Last summer, a $20 million residential renovation included updating all of the Village Apartments, home to more than one-third of our residential students. A new track and field project was recently announced.

In the same timeframe, we have also raised more than $75 million through impactful fundraising and many new, robust partnerships. Currently, we are encouraged and excited to once again see significant increases in applications, admitted students, and committed students for fall of 2023, after enrolling a strong class in fall of 2022.

We made these plans and investments while also making necessary and strategic decisions that were in the best interest of the University of Hartford students of today and tomorrow. In today’s environment, and until our enrollment returns to pre-pandemic levels, we will continuously explore and evaluate resources across the University to remain strong and sustainable.

The University is a secure enterprise with great momentum, and the essential pieces are in place to continue its success."