This is a Friday, Sept. 16, 2022 photograph of Wellness Center at the University of Southern Mississippi in Hattiesburg, Miss. The center is the home court for the women's volleyball team. (AP Photo/Rogelio V. Solis)

The Southern Miss facility has been at the center of the investigation into state welfare fraud.

The University of Southern Mississippi’s new volleyball facility has been at the center of the Mississippi Department of Human Service (MDHS) welfare investigation.

Today, USM released a statement on the matter for the first time.

The University says that in 2017, with the approval MDHS, the University of Southern Mississippi Athletic Foundation signed a 5-year agreement with Mississippi Community Education Center (MCEC), a non-profit Temporary Assistance for Needy Families (TANF) grantee, headed up by Nancy New, for the use of existing facilities and the to-be-constructed Wellness Center known more commonly as the volleyball facility.

However, as first reported by Y’all Politics in September, the decision to use the funds was made by the Institutions of Higher Learning (IHL) Board of Trustees, an independent state agency with voting trustees represented and informed by legal counsel from the Attorney General’s office. The terms were approved twice by IHL on the recommendation of the Attorney General’s office who acted as its legal counsel which knew that the source of the money was from a grant through MDHS.

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IHL counsel Stephanie Ganucheau from the Attorney General’s staff provided a memo 10 days before the October 19, 2017, IHL Board meeting supporting the amended lease and sublease to Dr. John Pearce, Associate Commissioner of Finance and Administration at IHL. IHL Trustees would ultimately rely on that legal recommendation when they voted to approve the expanded lease and sublease involving New’s MCEC organization and the USM facility.

But, as State Auditor Shad White has said repeatedly, those TANF funds were not to be used for construction of such facilities, something MDHS, the AG’s office and IHL should have known.

USM now says the University and the Athletic Foundation engaged in this agreement in good faith, “following thorough due diligence by outside legal counsel, and after multiple assurances from officials at the highest levels of MDHS.”

“Unfortunately, that due diligence did not and could not uncover the alleged fraud by the MDHS grant fiduciaries that was reported nearly two years after the Athletic Foundation signed the agreement with MCEC,” USM’s statement notes. “Although MCEC shared projections of planned programming with the University, its actual utilization of the facilities did not align with those projections.”

In the spirit of the initial agreement, USM says it is committed to seeking ways for campus facilities to be utilized for the benefit of Mississippi families and individuals in the spirit of the original agreement.

“Even though our facilities are owned by the state, the University does not have the autonomy to provide programs, services, or other resources to another agency without specific legal guidance and authorization,” USM’s statement continues. “Therefore, to the extent allowed by law, the University will make available to MDHS its campus facilities (including, but not limited to, the Wellness Center) for a five-year term to assist MDHS with its mission of serving the people of south Mississippi.”

USM says there is the potential opportunities for collaborative pursuits between MDHS and existing University clinical and academic programs, with guidance and input from faculty across disciplines, including serving underserved persons and families in need.

“The University community can offer great help to MDHS as it works to accomplish its mission of serving families with the greatest need, and the University looks forward to working with MDHS and others to develop a path forward – which may take time,” USM says.

USM adds that it has provided hundreds of pages in public records requests and will continue to work through those as they come in. The University also makes it clear that they will continue to “fully cooperate with ongoing investigative processes.”

USM concludes by stating that it is their intention to refrain from further statements out of respect for those investigations.

You can read USM’s full statement below:

In 2017, with the approval of the Mississippi Department of Human Services (MDHS), the University of Southern Mississippi Athletic Foundation signed a five-year agreement with the Mississippi Community Education Center (MCEC) for its use of existing athletic facilities and future use of the then to-be-constructed Wellness Center, for proposed MCEC programming and services to benefit thousands of eligible individuals in south Mississippi. The University and the Athletic Foundation engaged in this agreement in good faith, following thorough due diligence by outside legal counsel, and after multiple assurances from officials at the highest levels of MDHS. Unfortunately, that due diligence did not and could not uncover the alleged fraud by the MDHS grant fiduciaries that was reported nearly two years after the Athletic Foundation signed the agreement with MCEC. Although MCEC shared projections of planned programming with the University, its actual utilization of the facilities did not align with those projections.

The University remains deeply troubled by the current situation and is committed to seeking ways for campus facilities to be utilized for the benefit of Mississippi families and individuals in the spirit of the original agreement. Even though our facilities are owned by the state, the University does not have the autonomy to provide programs, services, or other resources to another agency without specific legal guidance and authorization. Therefore, to the extent allowed by law, the University will make available to MDHS its campus facilities (including, but not limited to, the Wellness Center) for a five-year term to assist MDHS with its mission of serving the people of south Mississippi. It is hoped that the proposed partnership with MDHS will prove so successful that the relationship will extend well beyond the initial 5-year term.

If approved, there is the potential for this proposal to create exciting opportunities for collaborative pursuits between MDHS and existing University clinical and academic programs, with guidance and input from faculty across disciplines. The University community can offer great help to MDHS as it works to accomplish its mission of serving families with the greatest need, and the University looks forward to working with MDHS and others to develop a path forward – which may take time. Legal considerations beyond the University’s control could change the shape and content of the proposal, so the advice and direction of the appropriate authorities must guide the University’s next steps.

The University has, to date, provided hundreds of pages of public records to requestors seeking information on the topic of the Wellness Center and will continue to respond to proper requests as received, in accordance with Mississippi law. Information about how to submit a public records request may be found online at https://www.usm.edu/compliance-ethics/mississippi_public_records_act.php.

The University will continue to fully cooperate with ongoing investigative processes, and its intention is to refrain from further statements out of respect for those investigations.