April 08, 2020

Financing questions in Bulgaria

The fish rots from the head down.” (Bulgarian proverb)

About a year and a half ago, I provided evidence to the United States Agency for International Development’s Inspector General’s Office about the American University in Bulgaria, a four-year “American style,” liberal arts university in Bulgaria. Since its founding in 1991, AUBG has received approximately $30 million in funding from USAID. The evidence I provided to AID indicated that a significant portion of AID funding was being wasted due to poor planning and mismanagement at the university.

Approximately nine months ago I filed a Freedom of Information Act request with AID asking that it release documents related to its financial relationship with AUBG. After exchanging letters with AID officials for the last nine months, AID has finally agreed to waive the fees. However, it has not yet decided to release the documents. But despite an annual budget shortfall of $3 million, AID insists calls for an audit of AUBG are unwarranted.

Given this sort of stonewalling, one is tempted to wonder just what it is AID is trying to hide. But once one gets past the dramatic allegations of former university presidents being drugged and kidnapped, matters settle down to some rather mundane basic accounting and management problems. In fiscal year 1995, the university had a budget variance of over $1 million in a total budget of approximately $7 million.

The primary source of the variance turned out to be a fund-raising/development office on K Street in Washington, D.C. In 1995, that office spent nearly $1 million on fund raising and development efforts. In 1996, it spent a much more modest sum of money: only $500,000 per year.

Despite spending almost $2 million on fund-raising and development in the last few years, AUBG has yet to identify a significant source of funding beyond its initial donors. Its primary accomplishment appears to have been to use AID money to successfully lobby AID for a “quasi-endowment” of $15 million.

The “quasi-endowment” was granted on the condition that it last for ten years and that in that time AUBG identify another source of funding. But with a budget shortfall of $3 million a year, and the past performance of the fund-raising office, it seems unlikely that those goals will be met. AUBG may soon be asked to leave its rent-free building, once inhabited by the Bulgarian Communist Party.

Meanwhile, academic appointments at AUBG continue to depend on personal favoritism. The university has reversed the recommendations of the Faculty Evaluation Team on several occasions. In three cases the university has refused to renew the contracts of faculty that Facultry Evaluation Team recommended for renewal. Additionally, the university denied long-term status, the university’s equivalent of tenure, to its longest serving faculty member despite a favorable recommendation by the faculty committee. In at least two other cases, faculty had their contractual status unilaterally altered after receiving positive recommendations. At the same time, faculty who the FET has recommended not be renewed, have been offered new three-year contracts. One faculty member who the FET recommended not be renewed was promoted to dean of faculty.

Not surprisingly, four grievances have been filed with the Faculty Grievance Committee in the past year and a half. In each case, the grievance committee has found evidence of improper handling of personnel matters and has recommended that the university follow its own stated personnel policies. In three of those four cases the university has refused to follow the recommendations of the grievance committee. The final outcome of the fourth grievance is still pending.

Public universities are not petty fiefdoms. They depend on taxpayer support and goodwill. If taxpayers are to spend money on an educational institution in Bulgaria, they should be assured that the money is being spent properly and that the university adheres to standard U.S. academic norms. AID’s relationship with AUBG needs to be made public. The American and the Bulgarian people need to know exactly what AID intends for the American University in Bulgaria. The financing of the university needs to be open and above board. It is time for AID and the administration of AUBG to render an honest accounting of what it has done with the more than $30 million granted to it by the American taxpayer.

Clifford Poirot is a former economics professor at the American University in Bulgaria.

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