DeKalb County

Another example of cronyism and apparent violation of state rules has surfaced at NIU; President Baker paid his close friend $479,875 for a no-bid contract.

DeKalb Co. (ECWd) –

We introduced Ron Walters in our story Northern Illinois University – Ron Walters’ travel/hotel expenses’.  To recap, President Baker engaged Mr. Walters and had him added to NIU’s payroll as an “affiliate” employee. The simple designation of “affiliate employee” was enough to convince state auditors that Mr. Walters was a bonafide employee and that his travel reimbursements were, therefore, unallowable. It also apparently convinced NIU’s General Counsel as indicated in his letter to Mr. Walter’s lawyer when requesting the return of the improper travel reimbursements. But President Baker had repeatedly referred to Mr. Walters as a consultant (on travel vouchers and a Baker report).

So, was Mr. Walters really an employee or a consultant? The facts show that Mr. Walters was a consultant hired due to what appears to be cronyism and in violation of the open bid requirement of state procurement rules.

The first clue that Walters was a consultant was that President Baker had arranged for a set number of hours of Mr. Walters’ services PRIOR to his tenure as President.  In Mr. Walters’ August 18, 2013 email to President Baker, he refers to “Launch Plan with hours estimate which I gave to you in Moscow (Idaho-where Baker was then Provost of University of Idaho) was for 300 hours” and also “As you’ll recall, the initial budget we had decided on…was 400.”

The language of Mr. Walters’ description of the plan indicates a consulting agreement, not a salaried employee agreement. At Mr. Walters’ rate of $250/hour, the 400 hours that had been agreed upon would be a total cost of $100,000; the requirement for open bid on professional services is $20,000.

Secondly, Mr. Walters was not subject to SOEAA time reporting as would a normal state employee.  However, although he was reportedly a salaried “affiliate employee”, he submitted monthly INVOICES to the University.  Salaried employees DO NOT submit invoices to their employers.

Third, President Baker wrote in a guest column in the local paper that he had given Mr. Walters raises (first a 38% and then a 33% raise) because he had requested Mr. Walters to work more hours. Misleading at best, a lie at worst. The issue was not of increased hours in the future as implied; it was one of ‘catching up’ on salary payments as compared to the invoiced amounts.

In Mr. Walters’ 10/8/13 email, he points out that by the end of October, his invoiced amount will be greater than the “salary” payments; the result becomes a semi-monthly “salary” increase from $8,125 to $11,250 as shown on the Personnel Action Form (PAF) effective 11/1/13.  Then, in Mr. Walter’s 2/6/14 email, he complains that “even if I stopped working at all as of February 1, it would take 3 ½ months of payments to catch up.”  This email resulted in another increase in “salary” to $15,000 semi-monthly as shown on the PAF effective 3/1/14. Salaried employees are paid a flat rate per pay period regardless of number of hours worked; consultants are paid based on invoiced hours worked.

Fourth, when the University was instructed by the external auditors to demand repayment of improper travel/commuting reimbursement, Mr. Walters’ lawyer denied that Mr. Walters was an employee. The lawyer wrote “The Illinois Auditor General’s report is premised on the incorrect premise that Mr. Walters was an employee of the University. In fact, Mr. Walters is not and never has been a University employee. Rather, he was engaged by the University to provide consulting services to NIU and he functioned as an independent contractor to NIU.”(emphasis ours). The lawyer’s letter validates all the previous points as proof that Mr. Walters was a consultant.

Finally, and most importantly, the University acknowledged Mr. Walter’s status as a consultant when they agreed to settle the dispute over Mr. Walters’ travel reimbursement. Previously, it had appeared that the University had settled for a partial payment of $17,515.20 rather than the full amount of $34,265.20 that had been paid in improper travel reimbursement, thereby apparently waiving the remaining $16,750 balance. WRONG. Mr. Walters had billed NIU for 1,919.50 hours or $479,875; the University paid Mr. Walters only $463,125 through the payroll system as shown in the attached spreadsheet. The difference, $16,750, was the amount billed by Walters in excess of his “salary”. Therefore, by agreeing to this settlement, NIU Administration has acknowledged that Mr. Walters was a consultant. And this means this hire was done in violation of state rules.

Clearly, President Baker appears to have violated state procurement rules to hire his friend. But Baker is still only one man, albeit one with an ego apparently big enough for multiple people and a person with total disregard for state rules. Although the idea of hiring Walters as an employee rather than as a consultant may have been Baker’s, he did not have the personal knowledge of the state system and the internal paperwork required for processing. Therefore, his attempt to conceal this violation of state rules did not occur without help and/or approval of other people at NIU. We will look at some of those who assisted him in these apparent fraudulent actions next time.

 

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Categories: DeKalb County, feature, NIU

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