UMGC to pull in outside tech team after audit found waste, lack of oversight

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The president of the University of Maryland Global Campus has announced plans to “reintegrate” employees from one of the school’s business entities, which last year were the subject of a scathing audit stating that the ventures received hundreds of millions of dollars in state funding but operated free from proper evaluation or oversight.

In a recent message to university faculty, staff and others, UMGC President Gregory Fowler didn’t say exactly what led administrators to decide to “reintegrate the technology team” at one of its spin-off companies back into the university, but he said the decision came after viewing results from an independent consulting firm that the school retained to assess its relationship to the companies.

The university had reportedly initiated the third-party assessment months before the state published its audit in fall 2024.

“I know that change can bring uncertainty, and questions are sure to arise about how this transition could affect individuals or teams across our operations,” Fowler said in his recent message, which was first reported in Maryland Matters. “Please know that we are committed to managing the transition thoughtfully and transparently every step of the way.”

Fowler said that he planned to share more details at the university’s July 1 town hall meeting.

A spokesperson for the university didn’t immediately respond to a request for the third-party assessment or offer clarification to parts of Fowler’s letter.

State lawmakers and auditors have been dubious of the relationship and apparent lack of transparency between UMGC and its businesses revealed in the 2024 audit, which also showed that the university cost taxpayers millions because of an abandoned project with one of its businesses.

After spending nearly $26 million for one of the companies to build out a new student information system, UMGC ended up abandoning the project and paying another vendor $719,000 to update the existing system, according to the audit.

In a statement last year responding to the incident in the audit, a spokesperson said that the university had “an urgent need” for an upgraded system but determined that the $26 million project wouldn’t meet its required timelines, “including those necessary to ensure the continued orderly processing of financial aid.”

UMGC, one of 12 institutions in the University System of Maryland, offers mostly online courses and comprises three major divisions — including in Adelphi, Maryland, Tokyo, and Kaiserslautern, Germany.

UMGC established — and the USM Board of Regents approved — a tax-exempt holding company called Ventures to commercialize the university’s technology, business process and intellectual property, increase enrollment revenue through corporate partnerships and build an endowment to reduce costs for Maryland residents.

During a legislative hearing that followed the audit, the University System of Maryland’s top administrator defended the university’s approach to creating the business spinoffs as example of entrepreneurship and innovation.

Despite largely funding Ventures and its subsidiaries, the university lacked oversight and control and was unable to provide information about the company’s salaries, procurement practices and ethics policies, among other topics, as part of the 2024 state audit.

When UMGC in 2015 created one of the subsidiaries, HelioCampus, it provided $10 million in start-up funding. The school’s vice president for data analytics and 15 other employees also transferred to the new entity.

When the university in 2016 launched Ventures and transferred HelioCampus ownership to the holding company, it gave the new entity $15 million in startup funding. Ventures later sold a controlling interest in HelioCampus to a private equity firm for $26 million but retained a 21.1% interest valued at $10 million.

Ventures’ current subsidiary, AccelerEd, began in 2017 as a spinoff of UMGC’s Office of Technology, including 100 employees, according to the 2024 audit.

Ventures remained almost entirely dependent on UMGC as a revenue source. Between fiscal years 2017 and 2022, $198 million of the $215 million that Ventures reported came from UMGC, the audit states.

The university’s operating expenses for fiscal year 2022 totaled about $252 million.

Fowler said in his recent message that the university’s plan to “reintegrate the technology team at AccelerEd into UMGC” is still subject to approval from the Ventures board.

He also said that administrators plan to bring the plan before the University System of Maryland Board of Regents at its June 13 meeting.