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Publication: Jackson Citizen Patriot
Edition: Sunday
3/21/08 3:31 PM
Date: 04/29/2007
More than $30K from Aramark put in account
By Chad Livengood
clivengood@citpat.com Ð 768-4918
More than $30,000 from a food-service contract at Jackson Community College was placed in 2004 in an
interest-bearing, discretionary fund controlled by the college president.
By moving the payments from contractor Aramark into the Harold E. Steele Fund, public money was mixed with
private donations in a pot used by President Daniel Phelan to pay for more than $13,700 in alcohol, travel and
entertainment since 2005.
The primary beneficiaries were Phelan, alumni, donors and members of the Board of Trustees.
"The Aramark thing is a red flag ," said Jack McHugh, a legislative analyst for the Mackinac Center for Public
Policy in Midland. "There should be accountability."
Money from Aramark wasn't deposited into the fund prior to 2004, nor has any been placed there since, said
JCC spokeswoman Cindy Allen.
Phelan and JCC's chief financial officer, Thomas Vainner, said it is not illegal to mix private and public funds in
this type of account.
Board Chairman Dennis DaPra said he took no issue with combining the funds, based on what he knows.
"I suppose you could use any other account as a holding account," DaPra said. "There's nothing wrong here."
The Steele fund stood at about $80,082 as of April 12, its interest income boosted by the $31,000 from
Aramark.
It is among 2,500 accounts reviewed annually by an independent auditor. The auditor never took issue with use
of the Steele fund, Vainner said.
"I don't have petty cash that isn't in the audit," he said.
Trustee Edward Mathein said Steele fund expenditures are included in every monthly spending report that
trustees receive for informational purposes.
Moving the money
According to college records obtained under the Michigan Freedom of Information Act, JCC deposited its 2004
annual payment of $10,000 into the Steele fund. No previous or subsequent annual payment from Aramark has
been placed in the fund, Allen said.
Asked to explain the exception, she said: "That was just the place it was parked."
On Jan. 26 2004, Aramark offered JCC a $21,000 "financial commitment" in exchange for a five-year contract
extension. That, too, was placed in the Steele fund, credited to the 2005 fiscal year, records show.
"It's like a re-signing bonus," said Allen, who signed the contract amendment when she was a vice president.
She later called it "a windfall for us."
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Phelan said it is the college's responsibility to "leverage" as much money as possible from private companies
that do business on campus for the betterment of the institution.
Accepting a bonus in exchange for a contract renewal is not out of the ordinary for a college, an expert said.
"It's an incentive to continue a harmonious relationship," higher-education attorney Shelley Steinbach said. "At
the end of the day, money talks."
Steinbach, former general counsel for the American Council on Education, spent 37 years advising colleges on
legal issues, particularly presidential expenses accounts.
In the agreement to extend the contract, Aramark directed JCC to use the $21,000 for "dining room furniture
and other costs associated with the Campus Food Service Program."
Though no timetable was specified, expenditure reports show just one upgrade - $3,340 stainless-steel kitchen
counters - has been made with the money in three years. Allen said other purchases are planned.
Phelan said other items have been purchased, such as new dining room tables, but not with the Aramark
money designated for this purpose and placed in the Steele fund.
The Citizen Patriot repeatedly asked college officials why they didn't just set up a capital-improvements fund for
the Potter Center cafeteria, but an explanation was never given.
"It doesn't matter," Phelan said. "This is acceptable under general accounting standards."
Asked how JCC is fulfilling its contractual obligation with Aramark for the re-signing bonus when the money is
still sitting in the Steele Fund, Phelan replied: "It's all the college's money, it doesn't matter."
JCC board policy requires sealed bidding for any purchase over $10,000. It does not apply to companies like
Aramark that pay the college to rent a space or perform a service. However, JCC did seek food-service bids in
1999, Allen said.
DaPra said the contract renewal never came to the board, nor is this required.
Keeping tabs
Under its contract with JCC, after Aramark recoups its administrative expenses, the first $15,000 in additional
profits go to the college. Any additional profits exceeding that amount are divided evenly.
Allen said she tracks expenses and revenues through money statements Aramark provides.
Based on this, as early as 2003, JCC asked Aramark to review its sales, Vainner said. With more students on
campus, Vainner said the college believed volume was up and that Aramark owed JCC an unknown amount of
profit-sharing money.
"We questioned, 'God, you're making a lot of money on us,' " Vainner said.
Regarding the $21,000 that was part of the contract, Vainner said: "Whether they found anything or they just
wanted to shut us up, they just gave it to us. I just know we kept pressuring them."
The contract amendment says the $21,000 was "for all amounts owed" to JCC through June 30, 2003, "in
connection with the profit-split" agreement.
Phelan said he had no knowledge of any contractual disputes with Aramark.
"We do not strong-arm the organizations we work with," he said. "We just don't do that."
Scott Maino, food-service director for Aramark at JCC, refused to comment on the company's dealings with the
college.
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"We can't release any of that information," he said. "If that's something they want to share with you, they can."
Timestamp: 11:05:34
Creation-Date: 04/30/2007
Docname: Aramark slushJNEWJ
1-Edit
Section: A
Byline: By Chad Livengood
Datatype: Text
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Status: Sent
Depth: 5"
Page: A1
Category: LOCAL-News
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