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Archive for Saturday, December 5, 2009

How KU uses endowment funds could influence giving

December 5, 2009

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Money, money, money. As the lyrics to a song in the popular Broadway show “Cabaret” said, “money makes the world go ’round.”

If there is any question about the validity of this statement, ask the folks at Kansas University.

KU athletic department officials say they need $34 million “up front” before they start construction of the proposed Gridiron Club on the east side of KU’s Memorial Stadium.

Along with this fiscal challenge, the athletic department is facing the need to pay off KU football coach Mark Mangino, plus the costs of buying a new coach and his coaching staff.

At the same time, the other part of the university — the part that deals with teaching, research, faculty, facilities and equipment — also needs a great deal of money when the state is cutting its level of support for the school.

This money crunch comes at the same time KU Endowment Association officers are ramping up for a major capital campaign with a goal likely to be in the $1 billion range.

Money is critical in determining the level of excellence a state-aided university can hope to achieve.

Getting back to the athletic department’s needs, this doesn’t seem like the ideal time to try to raise $34 million, by January or February at the latest, to build the Gridiron Club so 3,000 heavy-hitters can watch the 2010 Jayhawk football team in a luxurious setting. Or to promise such a facility to lure a new high-priced football coach.

Do athletic department officials plan to tap the Endowment Association for funds to start construction of the club? If so, will that take money away from far more important needs on the campus, such as in the academic community?

Chances are, many faculty members will be watching how KU administrators weigh the school’s needs.

It is interesting to note Mangino’s agent is the same agent used by the former Kansas State University coach, Ron Prince, who walked away from his Manhattan job with many millions of dollars. Those close to the Kansas State scene said the agent “is ruthless.” It must have been an interesting scene to watch two ruthless individuals negotiating the Mangino deal. One of the issues in the Mangino situation is the coach’s temper, but AD Perkins also is known for his temper.

Over the years, the KU Endowment Association has provided funds, private money, that many past chancellors have said helped make KU a far better state-aided university than it would have been otherwise. As the late Chancellor Franklin Murphy said, endowment money “provided the frosting on the cake.”

In recent years, the chancellor’s office, as well as others, including the athletic department, often looked at endowment money almost as their own cookie jar or a friendly banker from whom to obtain funds to pay for various projects.

Those giving money to the endowment association can designate their gifts for specific purposes. This likely will be the case for the majority of gifts in the upcoming capital campaign.

However, funds given as “unrestricted” are highly prized. Such gifts can be allocated or directed by the association’s executive committee to any program at the university, usually after the chancellor has requested funding. In the past, unrestricted money has gone to the athletic department, as well as for a variety of other priority needs favored by the chancellor.

As noted above, there are many pressing needs — in the athletic department, but, far more critically, on the other side of the university. Unfortunately, these needs exceed the available dollars.

So, who will make the decisions on how limited dollars will be allocated? When endowment association officials go public with their drive total, identifying the various components of this effort, the public and donors will learn how university officials, and the chancellor, have ranked the school’s most pressing long-term needs.

Money from the capital campaign, however, will not be available for many months and years.

Obviously, the state, its taxpayers and students will be called upon to pay the bulk of KU’s current needs, as well as those at other state universities.

Endowment association funds are used to take care of more immediate needs, but the manner in which these limited funds are distributed could influence how potential donors wish to give to the KUEA. If they question the priority or recipients of unrestricted funds by the association, they may be far more specific in directing how their money is to be used.

For example, are there needs at KU more important than building the Gridiron Club or buying high-priced football coaches? Do faculty, classroom, library and equipment needs trump athletic needs?

Another need facing the university is continued massive funding for the KU medical complex in Kansas City if the institution is to have any chance of being named a national cancer center.

A highly successful capital campaign is terribly important for the school because these donations help pay for many “extras,” programs state money will not cover.

This is why it is so important for members of the endowment association’s executive committee to be careful in how they spend their relatively limited dollars. How do they balance the needs of the athletic department against the academic needs of the university? What do potential donors think is the top priority and do they think endowment officials are spending, giving, dollars in the proper manner?

This “perfect storm” — the national economy, the university’s needs, the state’s economy and an upcoming capital campaign all surfacing at the same time — presents an extreme challenge for Chancellor Bernadette Gray-Little.

She is new on the job, relatively unknown and untested. Now she has to make some hard decisions, as well as doing an exceptional and effective job of outlining the needs of the university to state legislators, friends of the university and potential generous donors.

Comments

repaste 5 years ago

Good job D I wish your political rants were this articulate and reasoned. Are there two of you? . . .

KU_cynic 5 years ago

"In the past, unrestricted money has gone to the athletic department, as well as for a variety of other priority needs favored by the chancellor."

Really? Unrestricted money has gone to athletics as opposed to scholarships, professorships, and academic buildings? I'm shocked, but not surprised.

This essay further suggests that KUEA might front money for the Gridiron Club, which rumor has it is not exactly blasting off in terms of initial fundraising.

If that were true it would be an almost criminal breach of fiduciary duty.

grimpeur 5 years ago

From the article:

"For example, are there needs at KU more important than building the Gridiron Club or buying high-priced football coaches? Do faculty, classroom, library and equipment needs trump athletic needs?"

The answers are "yes." Next week, the author's assignment: demonstrate why the answers are "yes." Enough with the rhetorical questions. But back to today's column.

First, don't ever put the word "need" and "Gridiron Club" in the same sentence again, except to say that KU, Endowment and the chancellor "need" to tell KAI to go jump in a lake. This inability to distinguish between wants and needs is an ongoing problem.

Second, the Gridiron Club is not a KU "need." It's not even a KU "want." KU is not seeking a Gridiron Club--Kansas Athletics, Inc., is, and for this separate corporation to approach Endowment after its recent spending spree, after arranging to be independent from KU for the purposes of collecting and controlling money from TV and gate and licensing, and after carefully arranging to still reap the benefits of its nominal relationship with KU while trying to feather its nest with Endowment money, all while important, non-athletic needs (please note the proper use of this word) go ignored, is inappropriate.

Third, stop conflating KU with KAI. This gives KAI legitimacy and standing (among regents institutions, the public, etc.) that it does not merit. Until gate receipts, TV revenue, and licensing proceed pass through KU's hands before KAI's hands, and until KAI is subject to the same budgetary constraints that KU is, stop pretending that KAI is KU's "athletic department."

Perhaps Kansas Athletics, Inc., could furlough some of the assistant coaches and half the football team.

Perhaps budget cuts budget cuts budget cuts budget cuts by Kansas Athletics, Inc., are in order.

Perhaps the salaries of the coaches, AD, and the (hopefully) few remaining assistant coaches could be reduced.

Perhaps there's just no money available for unnecessary showoff extravagances like the Gridiron Club. If there are enough donors who would like to sit in the GC, then KAI can build the GC when those donors have donated enough to build it.

Perhaps KAI should have thought of the GC when it chose instead to spend all that money on two completely unnecessary new football fields, ruining one of the nation's finest campus open spaces. Now they don't have enough money left? Too damn bad.

The request by KAI to be bailed out by Endowment in order to pay for 3000 more luxury seats to watch a losing football team is obscene,

Endowment should tell KAI that Endowment money is no longer available for outside groups like KAI, especially in light of KAI's hubris and spendthrift ways in the last 6 years. Endowment has more important issues--issues related directly to the University of Kansas. Remember them?

If Endowment were to give any money to KAI at this point, it would be a grave dereliction of its duty.

davidsmom 5 years ago

I have heard a rumor that the Gridiron Club has been scrapped. After what has taken place the past few months, it would not surprise me if this were true. When the KUEA has solicited donations from us in the past, it was specifically for the libraries. I don't remember why that entity was specified, but we have donated for several years, although we can't afford large donations (I wish we could.) I would also very happily make donations for KUMC.

wastewatcher 5 years ago

Dolph is right on, but he seems to have forgotten the huge payments to the retired Chancellor. Talk about a waste of money that has never been explained, I wonder why the Regents are so hesitant to explain their actions and I wonder why Dolph is not raising the question? At least with the coaches there are contractual obligations.

yourworstnightmare 5 years ago

Spoiled little Kansans, carping about having to pay the price that something actually costs.

A KU education is not cheap, and the state money is meant to keep tuition low, to make up for the actual cost of a KU education, which is much more than tuition covers.

If the state won't pay, KU is forced to raise tuition. It is simple capitalist economics.

I, too, think that there are two Mr. Simons. The irrational partisan political hack, and this one. I prefer this one, the reasonable, moderate, logical Mr. Simons.

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