State auditors charged the state's School Institution and Trust Lands Administration with those management sins - and more - in a sometimes scathing review of SITLA's operations that was released Thursday.
SITLA manages 4.3 million acres of state lands and natural resources, and through land and mineral transactions has built a permanent school fund that since 1994 has grown from $83.5 million to $569 million.
But auditors have found at least some of the agency's methods wanting.
Last week, in a sneak preview for legislators, they took the independent state agency to task for paying out salaries and bonuses to staff that, overall, are 26 percent higher than comparable salaries and bonuses handed out at other Utah government agencies and trust land administrations in surrounding states.
Auditors took out their scalpel again Thursday, essentially accusing SITLA's development arm of operating under the radar, hyping its bottom line, minimizing its overhead and playing favorites when it comes to striking deals with consultants and developers.
"SITLA's Development Group lacks the administrative and operating controls usually required of public organizations to prevent possible abuses," the audit said.
The lack of controls, it added, "allows revenues to be overstated and project costs to be understated. The lack of controls also leads to a general concern over the increased development activity."
Those worries are heightened, they said, by the fact that the development group plans to request nearly $60 million for capital improvements over the next six years.
Other state trust land development groups and even SITLA's other departments - most notably the Surface Group, which deals in straight land transactions - operate under much stricter guidelines, auditors said. Why such sloppy oversight in this instance?
SITLA director Kevin Carter blamed at least some of the identified problems on the sheer growth of his agency's development arm, noting it has expanded from virtually "zero revenues a few years ago to $30-plus million in the current fiscal year. He also insisted that SITLA has "consistently sought competition for its offerings."
But Carter said the agency would begin to insert more formal controls. Account procurement rules will be reviewed, and the use of requests for proposal will continue to expand. Auditors criticized SITLA for making too many one-on-one deals at the expense or more wide-ranging requests for proposals or auctions.
"SITLA recognizes the need for additional controls in its disposition of development lands, given the greater scale at which it is operating," Carter said in his response letter to the audit.
Other audit criticisms were more structural.
Auditors suggested tweaking SITLA's revenue distribution in order to allot more money toward ongoing education costs. Currently, most agency revenues are funneled into a savings fund. And they proposed allowing the state treasurer more flexibility in investing those permanent trust funds.
The current Money Management Act does not allow SITLA funds to be plowed into things like hedge funds or private equity.
"Other states have allowed the custodians of their permanent funds substantial investment flexibility . . . with good results. Utah's treasurer should be given similar flexibility," Carter concurred.
jbaird@sltrib.com
