Grambling University Investigated for Investment Decisions

Grambling State University faced some controversy recently when more than $2 million in restricted institutional funds was "inadvertently" invested in the stock market. The stocks declined in value during the crash of 2009, causing the university hundreds of thousands in losses. The funds were invested between 2002 and 2004 after accidentally being made available to an investment firm working on the university's behalf.

Since the time of the mistake, Grambling has stopped allowing its funds to be invested and placed the money in lower-risk securities. This measure was introduced by Grambling President Dr. Frank Pogue and endorsed by the Louisiana state Legislative Auditor's Office.

"None of this was serious enough for us to send for prosecution," said Tom Cole, director of financial audits for the Louisiana Legislative Auditor's Office. "They are making efforts to improve the control structure at Grambling."

The audit took place to review the financial decisions made under former Grambling President Dr. Horace Judson, which ended in June 2009. As of March of this year, the shares had regained much of their value, reaching $1.9 million. The university has also ended its relationship with the investment firm that made the original allocation.

It appears that mistakes do happen, and they seem to happen most at some of our HBCUs. All the while, we can't presume that there was any deliberate wrong-doing in this case. What tends to happen is that when people lose money, we all look for someone to blame. But in some cases, it's simply not anyone's fault, and that appears to be true in this case.

The worst case scenario would have been for the university to remove its money from the stock market completely. Then, it would not have been able to take advantage of the strong market improvements that took place during the latter half of 2009. To panic under fire would have led to a real financial tragedy at Grambling.

Dr. Boyce Watkins is the founder of the Your Black World Coalition and a Scholarship in Action resident of the Institute for Black Public Policy. To have Dr. Boyce's commentary delivered to your e-mail, please click here.