HED chief: Key MCC officials may have broken laws

A letter from the leader of the New Mexico Higher Education Department to the state’s attorney general and auditor detailed concerns that officials at Mesalands Community College may have broken laws and created “a higher risk for fraud, waste and abuse at the college.”

The Feb. 15 letter from HED Cabinet Secretary Stephanie Rodriguez specifically names Mesalands President Gregory Busch and former board of trustees chairman Jim Streetman, who resigned from his post last week after more than three decades with the board.

Busch, who took a medical leave of absence, left town and hasn’t set foot on the Mesalands campus in more than a month.

The Quay County Sun obtained the letter and other documents from the HED regarding Mesalands through an open-records request.

Rodriguez wrote the letter after HED officials conducted an on-site visit of Mesalands in early February, shortly after the executive staff, faculty senate and staff senate issued no-confidence votes against Busch and the board of trustees.

Busch concerns

Rodriguez’s letter outlined several “significant concerns” about Busch:

— Busch in January 2022 obtained board approval to impose salary increases to bring staff “up to the mean” based on regional salary comparisons and to attract more experienced candidates.

— The board approved a second salary increase for all staff based on the college’s previous two failures to increase salaries approved by the state legislature.

— Busch said he was not expecting a 7% raise legislatively approved and appropriated in the General Appropriations Act of 2022. HED records indicated the increases were funded in two increments in April 2022 and July 2022.

— Busch said the board stated there were sufficient funds to cover the initial pay increases but not the 7% one in FY2023.

“Upon questioning as to the anticipated annual cost of these salary increase by the NMHED fiscal staff, President Busch’s administrative assistant, Margaret Ragland, stated the annual increase for the raises based upon MCC’s internal salary study was $400,000,” the letter states.

— HED received complaints from the college’s executive team and HR director Russell Irby “regarding a hostile work environment and retaliatory work environment complaints.”

— “Communications were sent from fired staff who are now seeking legal remedies,” the letter states.

— Busch ignored advice from Irby to stop hiring applicants at high salaries. Rodriguez urged the same during a meeting on Dec. 14.

— Busch ignored advice from the college’s chief financial officer to freeze hiring until the fiscal state of Mesalands could be clarified.

— Busch ignored advice to instruct staff to stop attending expensive training sessions “that were not financially feasible.”

— Busch “purposely” withheld communications about the college’s fiscal state from the board, campus and HED.

— Busch instructed the executive team to not communicate the weakened fiscal stated of the college or face termination.

— Busch stated that restricted nursing endowment funds appropriated by the Legislature and awarded by HED last year “could be used for other purposes and replenished later.”

— Busch’s wife, Mary Beth, was employed as a full-time director of Workforce Development at the college but had no presence at Mesalands. Busch also recently changed her job title from director of Workforce Development to faculty and no longer was her direct supervisor.

— Busch’s son, Nicholas, was a full-time faculty member but did not carry a full course load. He also was a head coach of the college’s e-sports team and did not attend any meetings.

Gregory Busch, Mary Beth Busch and Nicholas Busch have not been seen on the Mesalands campus since early February, said director of communications Josh McVey.

Messages from the Quay County Sun left on Gregory Busch’s cellphone were not returned.

Board concerns

The letter also detailed complaints against the board of trustees:

— A lack of awareness and execution of its obligations.

— Streetman’s “lack of transparency” in sharing the fiscal status of the college’s foundation and “a lack of cooperation” in lending financial assistance to Mesalands during its crisis.

— A conflict of interest because Streetman, the foundation’s chairman, also was chairman of the board of trustees.

— Accusations by executive staff that non-confidential college business matters were purposely discussed during closed executive sessions by board members.

— “It has been disclosed that Chair Streetman has been directly involved in making past personnel decisions at the college.”

Phone messages from the Quay County Sun to Streetman were not returned.

Fiscal trouble

In short, an analysis by the HED’s fiscal oversight staff determined the decisions made by Busch and approved by the board to increase salaries of faculty and staff “resulted in the financial distress that the college is currently facing.”

The letter also noted there was no chief financial officer on staff when those decisions were made.

The letter states the decisions “where not well planned or coordinated and included no clear agreement with qualified staff.”

It also stated Mesalands could lose its academic accreditation through the Higher Learning Commission.

“This would be devastating to the community and students who have a financial investment in the campus, both in pursuing education and in the jobs the college provides,” Rodriguez wrote.

Laws broken?

Rodriguez wrote the following “have a high potential for violations or disregard of applicable laws” and “a higher risk for fraud, waste and abuse at the college.”

— Violations of the Open Meetings Act.

— Using federal and state restricted endowment funds “for purposes not allowed by the appropriation of federal and state statutes and regulations.”

— Conflict of interest by Streetman as chairman of both the college’s board of trustees and foundation.

— Conflict of interest by Mary Beth Busch and Nicholas Busch, immediate relatives of Gregory Busch who were hired to work at Mesalands. “Hiring and personnel actions needs immediate review,” the letter stated.

— Failure to obtain necessary state approvals to increase budget authority.

— Failure to properly maintain an adequate inventory of assets.

Rodriguez said the board of trustees would undergo training on its statutory and governance duties. HED also would help the college obtain emergency funding, provide daily support to the executive team, and monitor weekly and monthly financial reports from the college.

Rodriguez’s letter was sent to the New Mexico attorney general and the state auditor’s office, according to HED staff. Her letter also requested the state auditor’s assistance in performing a special audit of Mesalands.

Other info

In another document, the HED assembled a timeline of events at the college:

— Busch sent a letter to HED on Nov. 16 that Mesalands “is experiencing a shortage of funds and needs assistance in meeting fiscal obligations.”

— During a Dec. 14 meeting with HED officials, Mesalands CFO Blanca Pauliukevicius said there was an 18-month backlog of transactions and accounting and that she was not sure of the college’s current fiscal health. She said she did not have the ability to produce cash-flow statements. Busch and Pauliukevicius said most of Mesalands’ data was “kept off the books” and required time-consuming manual entries.

“President Busch disclosed that many documents had been shredded or destroyed by former employees,” the timeline stated.

— On Dec. 22, Pauliukevicius said the college’s monthly payroll was about $575,000, and monthly state appropriations were $385,000.

— On Jan. 24, Pauliukevicius said cash reserves were down to $192,170 and that Mesalands’ cash flow was negative.

— On Feb. 6, HED was notified that Busch had resigned. A day later, HED was notified Busch had not resigned but was placed on medical leave.

According to report of HED’s site visit in early February, executive staff could not tell state officials how many full-time employees or new positions had been created.