BATON ROUGE, La.

The Southern University System's finances are getting into shape - several problems remain, but none is major, according to the latest audit.

``The system's overall financial position is strong,'' the audit states. ``Even with relatively flat funding from state sources for the fiscal year 2006 and a decrease in enrollment, the system had a modest increase in net assets'' - 6.5 percent growth from June 2005 to June 2006.

The legislative auditor's office says enrollment at Southern's Baton Rouge campus, which lost new students to selective admissions and Hurricane Katrina, is now stable.

It refers several times to recovery from the hurricane, especially in Southern University at New Orleans, which is working out of trailers with a state promise to rebuild.

Nearly $1.7 million in property is missing from Southern's various campuses. Unaccounted-for properties is an area that the auditor has cracked down on for all higher education institutions this year.

Interim Southern President Ed Jackson did not return phone messages Monday.

Southern spent $1,200 of taxpayer money for an unnamed employee's retirement party, but the money was reimbursed with private money after the problem was pointed out, the audit said.

The auditor also noted concern that the system has no policy about the risk of losing deposits if a bank fails.

The Baton Rouge campus also had not reconciled $1.6 million of its Federal Family Education Loan Program, so amounts owed to students or the loan lender, Sallie Mae, were not known, according to the audit.

SUNO was cited for not properly preserving public records, which SUNO officials blamed on damages from Katrina.

- Associated Press