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Photo contributed by the Tennessee Comptroller of the Treasury / A banner hangs at Hiwassee College in Madisonville, Tenn., where an audit by the Tennessee Comptroller of the Treasury indicated deficiencies during the closing of the school.

Results of a Tennessee Comptroller's Office investigation into allegations around the operations and closing of Hiwassee College in Madisonville, Tennessee, have been turned over to the 10th Judicial District Attorney's Office for review.

Findings indicated the school had multiple operating deficiencies, but no wrongdoing was indicated.

The district attorney's office asked the comptroller for assistance related to "questionable transactions," officials said in a comptroller's investigative report on the college dated Oct. 15. Deficiencies were found in disbursements, travel reimbursements and the release of restrictions on monetary gifts, according to the report.

Auditors noted released funds were deposited into the operating account, and their review found no indication the institution failed to use those funds for the college's benefit, investigators state in the report. Board members indicated that they had corrected or intended to correct the deficiencies, state officials said.

On Friday, the United Methodist Church-affiliated Hiwassee College Board of Trustees released a statement on the report.

"We are presently reviewing this report, but in our initial reading, we are pleased that it confirms our belief that financial improprieties did not occur under the school's management," the statement signed by board chairperson, the Rev. Jason Gattis, said.

"The Comptroller's office has advised us that they had received several anonymous allegations indicating that financial resources at Hiwassee College were improperly used for personal gain or for expenditures unrelated to college business, and the Comptroller's thorough and detailed investigation revealed no such instances, just as we had expected," Gattis said.

He said one reimbursement that was paid twice "many months apart" was noted by investigators, and board officials since addressed the error.

"We are delighted with this favorable report and grateful to the staff of the Comptroller's office for their very diligent, thorough, and comprehensive analysis of Hiwassee's financial records," Gattis said in Friday's statement.

According to the report and the comptroller's statement on the probe, investigators reviewed accounting records, bank statements and supporting documentation for the period of July 1, 2016, through Sept. 2, 2019, and noted several deficiencies.

"In one case, the former college president was reimbursed twice for the same expense," the comptroller's statement on the investigation said. "The former president approved a travel expense report in November 2017 and was reimbursed $1,510.77 for lodging. She then approved a second expense report in March 2018 and was reimbursed $1,510.77 for the same lodging expenses.

"The former president has agreed to reimburse the college," state officials said.

Officials said investigators also determined college officials did not ensure all provisions of state law were met before releasing funds with donor-imposed restrictions from its endowment.

College officials released at least $1,135,170 before meeting all provisions of state law, but comptroller's officials noted the released funds were deposited into the college's operating account, and no indication was found that the funds were not used to benefit the school.

Investigators did not suggest any criminal wrongdoing was involved but said, "[these] deficiencies can be attributed to a lack of management oversight and inadequate maintenance of accounting records," the report states.

IF YOU SUSPECT MISUSE OF PUBLIC MONEY

Anyone who suspects fraud, waste or abuse of public money in Tennessee should contact the comptroller's toll-free hotline at 800-232-5454 or file a report online at: tncot.cc/fraud. Follow the Tennessee comptroller on twitter: @TNCOT.

Hiwassee College officials announced the closure March 28, 2019, after 170 years in operation in the tradition of the United Methodist Church, according to a 2019 statement on the closure released by college's board of trustees. The college closed at the end of the spring semester on May 10, 2019, citing an "unsustainable economic model."

In February 2013, the board of trustees voted to cut annual tuition by $6,000, the board said at the time, in order to help middle-class families that couldn't afford a private college qualify for financial benefits.

Hiwassee College, a four-year school and nonprofit corporation, was founded in Monroe County in 1849 with a focus on liberal arts, according to comptroller's documents. The college generated revenue primarily from tuition and fees, investment income, gifts and contributions.

College officials advised the attorney general of plans to dissolve and terminate operations in May 2019 and have remained in communication with investigative authorities on plans and actions, state officials said.

The dissolution and termination of the college is ongoing and assets remaining afterward "will be conveyed to the Holston Conference of the United Methodist Church, as is required in Hiwassee's Articles of Incorporation, or as otherwise directed in the college's endowment gifts," Gattis said.

"The closing of Hiwassee College remains a sad event to all of us, but we have learned that the college's struggles were not at all unusual in small colleges all across the country," he said. "We are hopeful that the long and proud tradition of Hiwassee will be continued by other colleges affiliated with the Holston Conference, including Tennessee Wesleyan University in Athens, Tennessee, and Emory and Henry College in Emory, Virginia."

Contact Ben Benton at bbenton@timesfreepress.com or 423-757-6569. Follow him on Twitter @BenBenton or at www.facebook.com/benbenton1.

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