A Douglas County District Court judge sided with 13 Kansas University students Friday in questioning the operation of the Watkins and Miller Scholarship Hall trust.
Judge Jack Murphy said too little information is being provided by the trust fund's manager, multistate giant Bank of America, for the court to monitor the operation of the $3 million trust intended to fund the two halls.
In his ruling, Murphy also asked some of the same questions as the students.
"The accountings also raise questions regarding the declining return on the trust assets," Murphy wrote. "The market value has steadily increased while the income has decreased."
David Brown, attorney for the Watkins Hall residents who challenged Bank of America's report on the trust's operation, was pleased with Murphy's decision.
"I alleged their reports were deficient," Brown said. "It's a big victory for my clients. This means a lot to them. They've gotten a lot of pressure from the university for filing this in the first place."
KU's spokeswoman said the university administration was glad to have the ruling in hand.
"We're pleased this will move forward to a hearing," said Lynn Bretz, interim director of university relations. "We have always maintained the trust has been operated properly."
Bank of America representatives could not be reached for comment.
Murphy did not mention allegations by Watkins Hall residents and alumni about an excess income fund made up of money left over after yearly expenses are met for the two halls. Brown calls it a "slush fund."
That fund is banked by KU at the KU Endowment Association and is intended to pay for expensive repair projects.
That matter may be a subject at the future hearing Murphy ordered in Friday's ruling, as might be the residents' contention that the halls are actually property of the Kansas Board of Regents, not the university.
The halls were constructed by Elizabeth Miller Watkins in the 1920s and '30s and deeded to the regents. The trust fund was established in her will. Watkins died in 1939.
Watkins alumni and residents have been questioning the operation of the trust and the halls for more than 15 years.
Murphy's ruling comes eight and a half months after the residents first appeared in court to raise their complaints about the trust.
Even with the ruling, the residents face more waiting. Murphy's ruling did not set the date of a hearing for their questions and complaints. The judge did order a scheduling conference for Sept. 29.
No comments
Commenting is turned off for this story.