Repository: UIHistories Project: Board of Trustees Minutes - 1956 [PAGE 195]

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192

BOARD OF TRUSTEES

[December 20

W e discussed the situation with University personnel and were informed that a plan was being worked on to put the Hospital on at least a break-even basis. Withholding Tax Monies During our survey and examination, it was noticed that the University is acting as its own withholding tax agent. W e made a survey in Springfield and discovered that the University is the only State agency receiving State appropriated monies for salaries for which the State Auditor does not act as the withholding tax agent. W e were informed that the University became its own withholding tax agent several years ago. We could not find an Attorney General's opinion supporting this practice. T h e State Auditor writes all salary checks paid from State appropriations. The amount of withholding tax deductions is totalled and a covering check is written by the State Auditor for this amount which is deposited in a State Treasurer's account. In the case of the University, a check for total withholding tax is forwarded to the University, which in turn at some later date directs it to the Collector of Internal Revenue. We believe the legality of this practice should be studied as it could become a serious problem. For instance, if a withholding tax check amounting to several hundred thousand dollars should be forwarded to the University and deposited in its Treasurer's general bank account, after which the bank should suffer a financial loss and be closed, from whom would the Collector of Internal Revenue legally demand payment of the withholding tax ? T h e Internal Revenue code clearly states, "every employer making payment of wages shall deduct and withhold upon such wages a tax." The point in question is whether the State of Illinois is the employer or the University of Illinois, a body politic and corporate, is the employer. In the absence of a legal opinion, as of record, on this procedure both the State Auditor and the University may be subjected to criticism. University Property Control Under the State Property Control Act, the President of the University of Illinois is responsible for "the supervision, control and inventory" of more State-owned real and personal property than any other officer of the State government. To discharge this responsibility effectively, a University central inventory unit is maintained in the business office in Urbana, operating with the use of punch cards and serving the various divisions of the University with periodic recapitulations of property holdings. The State Property Control Act requires the Auditor of Public Accounts, as property control administrator, and each major agency of the State to maintain matching sets of property records. This duplication is necessary in the case of the ordinary State agency, particularly where the agencies do not have access to business machines which process punch cards, but because of the magnitude of the University's property holdings the wisdom of this duplication becomes questionable. The Auditor's property control division carries on its records University property valued at an aggregate of $82,342,380.13, accounted for at 445 different locations and sub-locations, and comprising 238,776 items. It is recommended that the Auditor of Public Accounts and the University explore the possibility of eliminating this duplication by agreeing to joint custody and operation of the central records unit in Urbana, maintaining only summary lists of University property in Springfield. Co-operation in this area should reduce property control costs for both agencies and result in improved methods of control. Exhibits and Schedules Exhibit A. This is a summary of the receipts deposited to the University Income Fund as shown on the books of the State Auditor which we commented on earlier in our discussion and will comment on later in our suggestions. Schedule A - i . This shows in detail the many income accounts of the University. T h e total of $5,314,688.18 does not include the income from the Chicago colleges. Exhibit B. This exhibit was taken from the books and records of the State Auditor. W e have grouped line item accounts from the various appropriations