Archive for Thursday, November 16, 2000

Watkins trust ruling stands

Scholarship hall residents win another round in legal battle

November 16, 2000

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Watkins Hall residents have won another round in their legal quest to learn more about management of a trust fund set up to support the KU scholarship hall.

The Kansas Court of Appeals on Tuesday denied a request from Bank of America for review of a Douglas County judge's ruling on questions raised by a group of Watkins Hall residents.

The bank has 30 days to appeal the decision to the Kansas Supreme Court. An attorney for the bank did not reply Wednesday to a phone message left at his office.

If Supreme Court action is not requested, one of the nation's largest banks soon may have to answer questions posed by a dozen college women about the management of a trust fund set up to support Watkins and Miller halls.

Kansas University also may have to explain to that same group of women how money received from the trust has been spent.

In September, Douglas County District Court Judge Jack Murphy agreed with the students and said the reports filed by Bank of America on the $3 million trust did not provide enough information on how the money was disbursed to KU. Murphy also questioned why income from the trust fund was decreasing at the same time the total value of the trust fund was increasing.

"We're confident the trust has been managed properly," KU spokeswoman Lynn Bretz said Wednesday afternoon.

KU housing officials meet with residents of Watkins and Miller halls every fall to explain how income from the trust has been spent. Education and financial regulatory agencies, including the U.S. Comptroller of the Currency, have looked into questions raised about the trust fund and said they found no mismanagement.

Most irritating to Watkins residents and alumnae is an account maintained by the university with the KU Endowment Association for excess income from the trust fund. That money is held until major repairs are needed, KU officials have said.

David Brown, attorney for the Watkins Hall residents said the excess income account is a "slush fund."

"The reason they haven't answered our questions is because they have that slush fund," Brown said.

Watkins residents and alumnae contend that excess income from the trust fund should go to pay for repairs to the buildings or to reduce the rent of the residents. If not to those purposes, the money should be returned to the trust.

They say those provisions are consistent with the wishes of Elizabeth Miller Watkins, who built the two buildings at her own expense and sold them to the state for a $1 a piece. She established the trust fund as part of her will, and it began operating upon her death in 1939.

The women are not suing the university about the operation of the trust. They claim to be beneficiaries of the trust and are asking questions about the trust's operation, as allowed by law. They can ask the questions because Watkins' will required that the bank managing the fund report each year to the Douglas County District Court on its operation. Kansas law provides a charitable trust must fulfill the goals set for it when it is established.

Watkins Hall was the first scholarship hall established at KU.

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