State withholds Dickinson State University grants

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BISMARCK, N.D. (AP) — State grants totaling more than $663,000 are being withheld from Dickinson State University due to financial problems with the independent foundation that supports the western North Dakota school.

The grants are part of the North Dakota Challenge Fund, which allocates $1 of state money to university foundations for every $2 in private donations that are raised. Lt. Gov. Drew Wrigley, who heads the committee that oversees the fund, said the grant money would be held until the foundation's finances are in order.

"The state could not possibly send those dollars out there until we're satisfied they'd be used for appropriate academic purposes," Wrigley told The Associated Press on Thursday. "When that happens remains to be seen."

The troubled Dickinson State University Foundation was put into receivership this month after Attorney General Wayne Stenehjem announced that the group's financial records were in "disarray." Stenehjem outlined several concerns, including a dispute in which a judge ordered the foundation to pay a building developer about $1.7 million.

Glen Young, the foundation's chief financial officer, was appointed interim CEO after its former chief, Kevin Thompson, quit following the order. Young said the group must report monthly to Bismarck attorney Sean Smith, the person appointed by a judge to oversee the foundation over the next six months.

"We'll get this taken care of," said Young, who referred questions to Smith.

"We are in the process of reviewing (the foundation)," said Smith, adding that an auditor has been hired to go over the foundation's records. "The management of the (foundation) board has been very cooperative."

DSU President D.C. Coston said the state grant money that was requested would be used to fund six endowed scholarships for students, and to partially pay for an endowed professor's chair.

Coston and University System interim Chancellor Larry Skogen both said they believe the foundation's finances will be fixed and the grant money will ultimately be awarded to the university.

"I do believe it will happen (but) I can't predict when," Coston said.

Gov. Jack Dalrymple proposed the Challenge Fund in 2013, and the Legislature funded it at $29 million during the current two-year budget cycle. The governor has recommended similar funding levels in his proposed spending plan for the state's next two-year budget.

Dickinson State University itself is on "solid financial footing," Coston said.

But the school has been mired in controversy in recent years. A state audit in 2011 found that the school had given hundreds of bogus diplomas to foreign students, padded its enrollment figures and maintained inconsistent policies in providing tuition discounts and financial aid.

The state Board of Higher Education named Coston to lead the school after Richard McCallum was fired as president after the audit.

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