Colleges and universities were told by state auditors Wednesday to watch their budgets more closely and try more carefully to use each dollar for the specific purpose for which it is allocated.

Following the state's audit on personnel budgeting practices, the Utah System of Higher Education was taken aback by its implications.

"We can work with the recommendations, but we resist the tone that's being implied here," said Mark Spencer, USHE's assistant commissioner of finance. "We're not trying to hide any of these facts."

According to the audit, which was made public Wednesday, Utah's public institutions of higher education have been overstating personnel budgets and the additional funds are being used to cover expenses in underfunded operating budgets, while the remaining balances are carried forward. Auditors expressed concern with the practice, stating that it "does not reflect to the Legislature what is actually happening," said John M. Schaff, Utah's auditor general.

For fiscal year 2006, personnel budgets overstated needs by about 5 percent, while non-personnel budgets were understated by about 19 percent. In terms of dollars, these percentages amount to a $38.1 million overstatement for personnel and a $29.8 million understatement for non-personnel.

The surplus, if it continues year after year, could be "trouble," said House Speaker Greg J. Curtis, R-Sandy. "That's a fairly significant expense to run on a national average."

Auditors stated that institutions of higher learning "have an incentive to keep personnel budgets as high as possible because they are more likely to receive personnel increases in legislative appropriations, as they are based on budgeted amounts and not actual expenditures."

The main concern, however, is that positions allocated for within the budget are not being filled and, according to the data, may be left unfilled. It wasn't possible to determine whether they are being filled because Utah's schools don't keep track of each position on an annual basis. Auditors recommended that the Board of Regents track and report vacant positions, review their budgets along with actual expenditures for accuracy, ensure that those budgets better reflect past actual expenditures and finally, they ask that the board submit an annual report addressing budgeted vacant positions.

Commissioner Rich Kendell said in a written response that "in general, the USHE agrees with the findings and recommendations included in the report," adding that they will lead to a constructive discussion about the management of structural deficits in non-personnel budgets.