IOWA CITY, Iowa – The consulting firm advising Iowa’s public universities on how to cut costs has been reimbursed $366,000 for expenses submitted without receipts, but will face tighter oversight going forward, the Iowa Board of Regents said Tuesday.
Deloitte Consulting LLP, whose employees are billing up to $450 per hour plus expenses, signed a contract amendment last week with the board agreeing to submit receipts for airfare, lodging, rental cars and other expenses over $25.
Deloitte will not have to submit receipts for meals but they will be capped at $20 for dinner, $12 for lunch and $8 for breakfast the same $40 daily out-of-state per diem that applies for state workers, according to a copy of the amendment released Monday under the public records law. Alcohol is not reimbursable, no first-class airfare will be allowed, and rental cars should generally be mid-sized or smaller, the document shows.
The requirements apply to expenses submitted after Aug. 11, when the regents formally requested to amend its contract after questions about Deloitte’s spending were raised, spokeswoman Jeneane Beck said Tuesday. It would have been difficult to apply them retroactively as some regents wanted because the contract signed in March didn’t require receipts and Deloitte employees didn’t need to retain them under the firm’s internal policy, she said.
Deloitte has been paid $366,000 in expenses submitted without receipts, including $217,000 for travel, $105,000 for lodging and $40,000 for meals, records show.
Deloitte has also billed the regents for more than $2.9 million in professional fees for work by roughly two dozen consultants, who are charging between $195 and $450 per hour, records show. The board has agreed to pay Deloitte up to $3.3 million in fees, plus expenses, and is considering whether to retain the firm to help implement some of its recommendations. Regents say they expect to save up to 10 times as much as what they spend on consultants.
The board hired Deloitte to look for ways to save money and operate the universities more efficiently in administrative and academic areas. Regents will consider next month whether to move forward with Deloitte’s plans to restructure human resources, information technology and finance operations, cutting as many as 250 jobs over time but saving tens of millions.
University of Northern Iowa employees expressed frustration with Deloitte representatives during a campus forum Monday, questioning how the plans were developed and the lack of specifics about how they would affect specific departments. Similar events are planned Thursday at the University of Iowa and Monday at Iowa State University.
Questions about Deloitte’s expenses arose after The Gazette in Cedar Rapids reported Aug. 5 that the firm had billed $220,000 without any supporting documentation. At a meeting the next day, regents said they would amend the contract to require receipts going forward and indicated they wanted them retroactively if possible.
Board President Bruce Rastetter said then that he didn’t want a controversy over the relatively small amount of expenses to overshadow the large and important cost-saving review that Deloitte is leading.