DSU Foundation working to recover after troubled months

Amid shoddy recordkeeping and a behind-the-scenes legal dispute, the Dickinson State University Foundation board is also shrinking. In the past few months, the board has lost three members over philosophical differences, run into problems with it...

Press Photo by Katherine Lymn The Dickinson State University Foundation house sign is shown Saturday afternoon on 8th Avenue West, across the street from campus.

Amid shoddy recordkeeping and a behind-the-scenes legal dispute, the Dickinson State University Foundation board is also shrinking.
In the past few months, the board has lost three members over philosophical differences, run into problems with its development projects in town and is now in the middle of a legal dispute with one of its project managers. It has hired consultants to help solve bookkeeping issues raised in a recent audit.
Between Sept. 26 and Oct. 14, three board members resigned in separate emails to fellow board members.
“There were philosophical differences between the direction of the Foundation board and what I thought was in the best interest,” said Vaune Cripe, a senior vice president at American Bank Center and one of the three who resigned.
“There was a couple events that gave me pause, and then I just realized that if I couldn’t be a cheerleader for the Foundation anymore, it was better for me to step aside.”
Ex-board member Shannon Galster, a Dickinson dentist, would only say he left because of “different visions of where the Foundation was going.”
Because of confidentiality agreements with the Foundation, the board members could not elaborate on the reasons they left. The Dickinson Press obtained the messages through an open records request.
Beth Ehlis, president of Dickinson-based FunShine Express Inc., would only say in an interview that she left because of “philosophical differences.”
But in her Sept. 26 resignation email, Ehlis blames “much of the situation the board currently faces” on “Mr. (Granville ‘Beaver’) Brinkman’s project management.”
Members of the board had questioned his involvement, and board “accounting and proper auditing procedures,” she wrote.
At the Sept. 13 board meeting - apparently the last straw for Ehlis - board members’ questions were “shut down,” she wrote.
But Kevin Thompson, CEO of the DSU Foundation, and board President David Schultz say they interpreted those events as a good discussion that had run its course, and that Ehlis was not in the majority with her concerns.
“There comes a point in the discussion when it’s time to close the discussion and move on,” Schultz said in an interview.
In a response to Ehlis, Schultz wrote that while “the DSU Foundation still has challenges to face,” these troubles will make it stronger.
At that Sept. 13 meeting, auditors -- a new firm after the board decided that year to get a larger firm to match its growth -- gave a preliminary presentation of their results, which showed discrepancies between the gift and accounting side of certain assets.
“It didn’t quite match,” Thompson said in an interview.
In its Sept. 27 audit report, Bismarck-based Brady, Martz and Associates issued a qualified opinion, writing, “Because of inadequacies in Dickinson State University Foundation, Inc.’s accounting records, we were unable to form an opinion regarding the proper amount and classification of unrestricted and temporarily restricted net assets.”
The problem, Thompson said, was how data was entered into a program.

‘No money is missing’

As with many problems brought up about the foundation, Thompson and Schultz blamed others.
The former auditor did not come on-site to do the work, while the new firm the board chose sent four or five auditors to examine documents, they said. They attribute some of the recordkeeping errors to staff who did not do the training for the “complex” computerized accounting system the foundation uses, but also said they did not make the training required.
After learning of the discrepancies in the temporarily restricted and unrestricted assets in discussions with the auditors in August, the foundation hired a software consulting firm to prevent further error.
The errors in recordkeeping could have gone back further than the 2013 fiscal year -- because of the transition between auditing firms, Thompson said he doesn’t know if the same problems were occurring before. The consultants spent two weeks with the foundation in October and November.
Thompson said the foundation did not make a point of telling donors what the audit found.
After all, he and Schultz said, dollars still went where they were supposed to. The problem was an internal one.
“No money is missing,” Schultz said.

Other projects encounter trip-ups

Unlike the board resignations and accounting issues, some of the foundation’s other troubles haven’t been kept in the family.
It has run into issues with its development projects, the Blue Hawk Square student housing and Hawks Point senior living facility.
Edgewood Management Group, a senior living facility management company, severed ties with the foundation in early November over philosophical differences of how to run Hawks Point, said Gene Hysjulien, vice president for the Edgewood region including North Dakota.
“It was a friendly departure,” Hysjulien said. “Basically it’s our differences in terms of how we perceive administration and the style of administering assisted living and probably even more to the core, how we view assisted living philosophy and service living. … We just felt that, after that period of time, that we probably thought that it was in the best interest of both of us if we didn’t continue that relationship.”
Hysjulien said he anticipated the partnership lasting a long time and, to his knowledge, Edgewood has never severed ties with an organization so much sooner than expected.
Thompson said the differences in opinion between the foundation and Edgewood were over whether the facility would be an assisted-living or independent-living community.
Hawks Point was designed for independent living, he said, but Edgewood’s “long-term goal was to make it an assisted-living facility.”
Now, the foundation itself manages the facility, with some nursing assistance from Sanford Health -- an agreement penned shortly after Edgewood cut ties.
The foundation also built the Blue Hawk Square housing project for DSU students, who moved in last August.
Oasis Motel owner Shel Thompson said while working with representatives from the foundation has gone well, “there was a while when we were dealing with a contractor that got a little off-track, put it that way.”
“He had his focus, which was to get it finished, and he didn’t have too much concern for anything else."
Shel Thompson said he thinks the student housing, which is attached to his motel, could have been “a bit more aesthetic” with more open space.
“It’s just like any other project," he said, "you need plenty of time and you need plenty of consideration and … undue speed sometimes diminishes the potential of things.”
Some have questioned why the foundation would go back to Brinkman after his problems with the notoriously dragged-on Elks Building renovation in downtown Dickinson.
Kevin Thompson said in response to those concerns that the foundation was at the time a minority owner in the Blue Hawk Development LLC, which made the decision to hire Brinkman.
The foundation was a single vote, he said. But when asked how the foundation voted, Kevin Thompson did not say it explicitly voted against Brinkman joining the project.
Because Blue Hawk Development LLC is private, he didn’t say who else was involved in the decision as an investor.
Loose ends on the project range from tweaks, like drainage issues in the courtyard, to larger issues, like the common lobby space between the Oasis and Blue Hawk Square, which “the Oasis and ourselves need to figure out” yet, Kevin Thompson said.
Brinkman is no longer involved with any foundation projects, and the foundation has initiated out-of-court legal action against him.
Thompson and Schultz couldn’t elaborate on the legal matters because they are ongoing.
There have also been cost overruns on the Blue Hawk Square project, but Thompson wouldn’t elaborate and Schultz said they’re common in construction projects.
“We are dealing with that the best that we can,” Thompson said.


Looking ahead

At the foundation house Saturday morning, in a dining room set and decorated for the foundation’s yearly Yuletyme fundraiser later that day, Schultz and Thompson recounted the previous day’s board meeting, which stretched from 8:30 a.m. until 5 p.m.
DSU President D.C. Coston gave a longer-than-typical update on the school’s status, Schultz said, also interacting more with the board than in past president presentations.
He and Thompson said members also openly discussed policies and procedures for the next year.
Said Thompson, “It’s just good governance.”

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