September 21, 2020

Tags: {!{wpv-post-taxonomy type=’post_tag’}!}

Runtime: 00:30:06

Below is a transcript of episode 7. We encourage you to listen to the episode. It was written to be heard, not to be read. 

Sara Ganim narration: From the University of Florida’s Brechner Center for Freedom of Information, I’m Sara Ganim, and you’re listening to an episode of ‘Why Don’t We Know’ the podcast that dives deep into data and comes out with real stories. In April 2018. The worst-case outcome for a university scandal.

Fox news: “The former chancellor and vice chancellor at UW Oshkosh, misconduct in office”

Sara Ganim narration: Criminal charges.

Fox news: “The criminal charges follow a civil lawsuit filed by the state”

Sara Ganim narration: Coupled with financial ruin.

Fox news: I am extremely remorseful for my actions and the harm that has been caused by them” Sonnlietner?: “It was never my intention to hurt the institution. I was trying to help.”

Sara Ganim narration: What happened here, at the University of Wisconsin, Oshkosh, it wasn’t a sex scandal, or a sports scandal, or any of those scandals that make for salacious headlines. This one didn’t really get a ton of attention. It was a financial scandal, a white collar crime case that mostly took place behind the scenes.

Fox news: The state says the men signed comfort letters to banks, promising the school would pay millions of dollars for projects that the private foundation could not

Sara Ganim narration: In fact, this scandal was pretty unsexy even for a financial scandal. The university officials weren’t charged with misusing money in a way that benefitted themselves. There were no fancy cars, no big splashy purchases.

Fox news: Personally I don’t think this should have been a criminal conviction, let alone a felony,

Sara Ganim narration: What they were accused of at its heart was trying to help the university and its students. So what went so very wrong? To really understand that we gotta go back in time a little bit. We could start about forty years ago, but really, I think it’s probably more fun to go back to the 1600s. 

Alexa Capeloto: Giving money to a college has been around as long as we have. I mean, Harvard was doing it in the 17th century.

Sara Ganim narration: To the first time it was documented that a university held a fundraising campaign, bringing in money, outside of tuition dollars to help make the university better.

Alexa Capeloto: They hire basically an executive to help them raise money.

Sara Ganim narration: That’s Alexa Capeloto. She’s an associate professor at the John Jay college of criminal justice in New York City.

 Alexa Capeloto: It’s the 1980s where the foundations become really popular. 

Sara Ganim narration: Fast-forward to the Reagan administration.

C-span: This plan is aimed at reducing the growth income of spending and taxing.

Alexa Capetolo: You see public support for all sorts of things starts to decline and privatization takes hold.

Sara Ganim narration: Reaganomics.

Alexa Capetolo: Reaganomics.

C-span: Whatever reductions we’ve proposed in that 8 percent will amount to very little in the total cost of education.

Alexa Capetolo: So that includes for higher education. So as the public support declines, these institutions need to find money from other resources. They start turning to the private sector.

Sara Ganim narration: Despite the fact that university fundraising entities can be tracked back centuries, the 1980s is the decade when we see it become very popular to legally break off the function of fundraising from the actual university, creating a separate non-profit foundation to do the work. Up until then.

 Alexa Capetolo: It’s kind of an unusual thing to have this separate arm that’s raising money for a public institution.

 Sara Ganim narration: By the 1990s, Capeloto says.

 Alexa Capetolo: We saw it as kind of a common part of a public university. And since then, it’s only gotten more common.

Sara Ganim narration: The majority of major universities now have these foundations.

Alexa Capetolo: The reason that these foundations exist, I mean, a lot of it makes sense. They are nonprofit, private corporations that have a lot more flexibility in how they raise and invest money. State institutions are really beholden to kind of these very safe strategies for money management, low risk. And so you have these separate bodies that can be a little more nimble in how they handle money. Property transactions can happen faster because they’re not regulated by the state. There’s flexibility in how they’re operated. A lot of times you’ll see kind of high profile CEOs and financial experts on the boards and running these foundations because they know money. And so it makes sense that the university would want to have this.

Sara Ganim narration: So what’s the big deal, you’re asking?

           Alexa Capetolo: It’s just that all of that extra flexibility then also creates more wiggle room when it comes to transparency.

 Miranda Spivack: If you wrote to the university president and said, “I want to give a big gift and I want to put all these conditions on it. It can only go to the “firstborn white children of alumni,” those conditions would be made public under every state’s open records laws.

Sara Ganim narration: That’s Miranda Spivack. She was a journalism fellow here alongside me at the Brechner Center, and she just wrote a big story about private donor influence at public universities.

Miranda Spivack: If they go through these foundations, often under state open records laws, the foundations are exempt from these public disclosure requirements.

Sara Ganim narration: Nearly all of these foundations are exempt from Sunshine Laws. That means, no open meetings. no open records. Almost everything they do is private, even though they exist for the sole purpose of benefiting a public institution. One of the biggest consequences of that donors can make big ticket gifts privately and also attach strings to their gifts privately.

Miranda Spivack: These universities were out there soliciting these big gifts, they could offer a lot of anonymity if the donor wanted it.

Sara Ganim: When I think of big donations, I often think of a new law school and someone’s name is slapped on it, right? Are there really donors that don’t want recognition when they give to a university? And why would they want to be anonymous?

Miranda Spivack: Yeah. Well, there are donors who don’t want recognition. Sometimes it’s just out of straight altruism. They just don’t want people to know. Sometimes it’s because they don’t want people harassing them for more money, other universities. Sometimes it’s because they want to lay conditions on the gift, and they don’t want anybody to know. You mentioned renaming a law school. That was the case of the renaming of the George Mason University Law School in Northern Virginia, which is now named for the late Supreme Court Justice Antonin Scalia.

Sara Ganim narration: One of the major donors to the George Mason University Law School the Koch brothers. And shortly after the gift, which as you can imagine was a pretty substantial one, a group called Transparent GMU asked the university to make public the conditions that were attached to the Koch money.

Alexa Capetolo: But the university told transparent GMU we don’t have those records and the foundation said, “We don’t have to tell you that, we’re private.” So they took them to court.

Evan Johns: Well, I guess, it’s in some ways the most successful case I’ve ever lost.

Sara Ganim narration: Evan Johns is the attorney who fought the case for Transparent GMU.

Evan Johns: The trial judge ruled against us, and that decision was upheld by the Supreme Court.

Sara Ganim narration: But even though he lost, the information ultimately did came out.

Alexa Capetolo: And it did not look good.

Miranda Spivack: There were all kinds of conditions. 

Alexa Capetolo: They basically agreed to let the foundation have a say indirectly but have a say in faculty hiring.

Miranda Spivack: The donors would have influence over who the Dean would be.

Sara Ganim: So I mean, that’s a lot of influence.

Miranda Spivck: Yeah.

Sara Ganim: Being able to decide or help decide who’s going to lead the school, that’s huge. And that comes from someone that we don’t know?

Miranda Spivack: Yes 

Sara Ganim narration: Eventually though this becomes public which is why Evan Johns calls this the most successful case he ever lost. Technically, under the law, privacy won but practically speaking.

Alexa Capetolo: Basically under pressure, they did share the agreements and acknowledged that some of the conditions fell short of their standard of academic independence.

Miranda Spivack: The president, who apparently acquiesced, or let’s put it this way, on whose watch that occurred is now the president of Georgia Tech, by the way.

Sara Ganim narration: And as a result of that case, George Mason University now voluntarily makes all gift agreements public. But they are the minority. And at most public universities, the lines of separation are so blurry, it’ll make you a little dizzy.

Miranda Spivack: They’re legally separated. I think to say they’re completely separated leaves people with the wrong impression. In fact, they seem to work hand in glove in most cases. 

Sara Ganim narration: Here’s a very basic example of what she means. I wanted to see whether these foundations make any attempt to separate themselves at least from a branding perspective. So I went to google, and I typed “give to the University of Arkansas,” to see what would come up. The very first result was a “giving” website, which had the university’s logo, and a .edu web address, which is reserved for the university itself. There’s a bright red ‘give today’ button, which I clicked, and the option to choose my donation amount and where it would go. I made a small donation to the university’s access and diversity fund. But before I did, I searched the page. There is no mention of the university’s foundation anywhere. The address on the website is for “the office of annual giving” and the building address is on campus. Immediately after I made my donation, I got an email from “onlinegiving@uark.edu”, a university email address with university letterhead. I repeated this exercise at other schools, just to see what would happen. Many of them were the same. Some of them at least used a .org web address and a .org email. Some did clearly say that it’s the foundation that is taking the donation. But not all of them. What was pretty uniform is that all of them used the school logos or mascots and were pretty symbiotic with the university.

Miranda Spivack: Yes, many of them are housed on campus. And many of them do share a staff with the university so that staff person is on the public payroll and also on the private payroll of this foundation or 501(c)(3), or whatever it is.

Evan Johns: As is the case with many universities, at GMU, the head of development at the university also served as the CEO and president of the private foundation.

 Sara Ganim: Yet, legally, they’re still two separate entities and I mean, you still lost the fight. I mean, that’s kinda shocking. It’s pretty stunning.

Evan Johns: It is stunning.

Alexa Capetolo: One of the scholars who’s written a lot about this before I did said he called it gymnastics, like the gymnastics they’re doing to keep this stuff from the public is just mind boggling.

Sara Ganim narration: As you can imagine, it’s a breeding ground for all kinds of misconduct.

Alexa Capetolo: The College of DuPage. The president of the college using the foundation as kind of his personal petty cash. I mean, he was buying all these kinds of extravagant things and then taking the money from the foundation. $1,300 in foundation money on a hunting excursion and buying rifles and then taxidermy and all these things. And that, we’ve seen a lot of cases like that. You can see how, because there is more privacy and secrecy and not as much oversight, someone in a position of power could misuse that money and you’re not going to know about it.

 Sara Ganim: Does that happen often?           

Alexa Capetolo: I think for the most part, they function as they should. But the whole point is that I can’t say that for sure, because I have no way of knowing. I can’t get a glimpse into these operations. So for me, that’s kind of a guess and a hope, but without tools to really compel transparency, I can’t say that for sure.

Sara Ganim narration: Another example is right here in Florida, where public universities use athletic associations to shield all kinds of documents. And to shield themselves from litigation. We talked about this a bit in earlier episodes. About how a 19-year-old football player.

Wesh 2 News: a redshirt freshman, was rushed to the hospital

Sara Ganim narration: Named Ereck Plancher.

Today Show: “Ereck Plancher collapsed and died after off season conditioning drills on campus.

Sara Ganim narration: Died after a practice in 2008, the family sued.

Today Show:The University of Central Florida’s Athletic Association.

Wash2 News: The university’s coaching and training staff were responsible for his death during practice in 2008”

 Sara Ganim narration: But the university claimed the association should be immune from litigation because it’s a state entity. Except, it also claims it’s a private foundation when people file open records requests.

Alexa Capetolo: When we talk about hypocrisy, when you have a foundation, when it suits them to say, we’re private, we don’t have to give you this information. And then at the same time, turn around and say, “No, we’re public, we have limited liability or no we’re public, we were entitled to those property tax exemptions”, you see that kind of the double plane, and that shows you that there is a problem that needs to be addressed.

Sara Ganim narration: In some states, universities can do what George Mason did after the Koch money controversy, and choose to make records available, even though they don’t have to. But Florida, which has some of the best records laws in the country, actually also has one of the worst exceptions, when it comes to foundations. Not only are foundations exempt, but most of their records are considered confidential, meaning, if someone decides to share them, they could be prosecuted for it.

Alexa Capetolo: There are a whole lot of why we don’t know questions and it will change from state to state, from institution to institution

Sara Ganim narration: These state-to-state variations of the law.

Alexa Capetolo: That’s part of the problem is that there’s no predictable standard.

Sara Ganim narration: We did our own test of public records laws in 9 states, by asking 21 public university foundations to hand over a pretty basic thing, meeting minutes. Here’s what we got back.

Camille Respess: As an independent 501(c)3 nonprofit organization, the Foundation is not subject to.

 Joe Hastings: Foundation is a separate legal entity. 

Tori Whidden: Foundation is a separate organization.

Camille Respess: Is not a public entity of the 

Joe Hastings: And its meeting minutes are not a matter of public record.

Tori Whidden: Therefore, their records are not subject to the public records law.

 Evan Johns: There are hundreds of cases that have still said that when you create an entity whose sole purpose is to perform a function that a government entity would have performed any way, that you really eviscerate the open records laws and you just create an invitation for agencies to take any unpopular part of their operations and outsource it to an entity that is nominally a private entity.

Sara Ganim narration: So these foundations claim they don’t have to let you go to their meetings, or see their records, because they are totally separate corporations that are not tied to the university. But let’s go back to the case that pretty much shatters that optical illusion. What happened at the University of Wisconsin, Oshkosh shows how that is just not true. Here’s what happened there.

Alexa Capetolo: The UW Oshkosh foundation embarked on these building projects and took out loans to cover them and this included projects on campus and off campus.

Sara Ganim narration: To make this happen, the Chancellor and Vice Chancellor signed promissory letters to the banks, saying.

Alexa Capetolo: Look, if the foundation can’t cover this in the future, the university will help. And ultimately when the foundation couldn’t cover it, the bank said, okay, so we need the money. You said the university could cover it. 

Sara Ganim narration: It was $11 million dollars on the line.

Alexa Capetolo: And that is when this all came to light and they were never empowered to do that. They couldn’t promise that. They didn’t get approval from the board of regents. No one really knew that they had done this. And so they ultimately faced criminal charges and a civil suit over this. And the university did have to pay money. I think ultimately about $6 million to kind of get them out of this mess.

 Sara Ganim narration: Basically, even though the foundation exists for the sole purpose of benefiting the university and sending money it’s way, legally speaking, it isn’t supposed to work the other way around.

Alexa Capetolo: And in this case, the money flowed in the opposite direction. And that was the problem. 

Sara Ganim narration: In court documents filed in the case, a lawyer for one of the banks involved, laid out how obvious it was that the university is not really separate at all. He wrote, “all one needs to do to determine that fact is to go to the university’s website and see what it says about the foundation.” He then quotes the website which says, “the foundation exists solely for the benefit of the university,” and that it “was created to promote, receive, invest and disburse gifts to meet the goals and needs of the university.” And “the mission is to be a proactive leader in helping share and refine the vision of excellence of the university.” He also notes that “all employees of the foundation are state employees. The fact that the university chancellor and vice chancellor believed that it was ok to mingle funds, that he never considered that it might be illegal, that they saw this as one big checkbook, that goes to the heart of the problem. If these foundations exist to enrich the universities, it seems only convenient that they claim to be separate from a transparency standpoint because they’re not really separate in any other way.

Fox 11 news: It was never my intention to hurt the institution. I was trying to help.”

 Alexa Capetolo: They were basically trying to save these projects and it was not about benefiting themselves. They certainly paid the price.

Sara Ganim narration: The federal department of education estimates that three quarters of universities have some kind of non-profit foundation working on its behalf. Whether it be an athletic association, a fundraising association, or some other reason. Miranda told me.

Miranda Spivack: These have even been set up for food service at some universities.

Sara Ganim narration: And perhaps one of the most mind-twisting examples.

Miranda Spivack: Sort of an interesting hybrid in Indiana that was a model that I hadn’t seen before in some respects. 

Purdue University advertisement: With over 175 online programs, there’s one for you.

Miranda Spivack: Purdue University Global is what it’s called. And it was formerly Kaplan, which still exists. But what Purdue did was acquire Kaplan and basically a paper transfer for its online teaching. And then Purdue began this big online teaching well before the pandemic. But in order to set that whole entity up, and Purdue University Global is a nonprofit under Indiana law, and presumably under tax law, too. But to set that whole entity up, Mitch Daniels, who’s the president of Purdue, former Governor of Indiana, went to or had his people go to the legislature and they got it exempted from state open records law. It occurred in a surreptitious way. It was tucked into a budget bill. Even the state, Indiana, interestingly enough, has a state open government ombudsman appointed by the governor, who at the time was Mike Pence, and he didn’t even know that Purdue was going for this exemption. So even though Purdue’s activities are public and subject to public records requests, its online component is not, even though it is teaching and doing online teaching, as I said, well before the pandemic.

 Sara Ganim: But it’s a public university.

Miranda Spivack: It’s a public university. And it’s doing even more so maybe than the fundraising and the foundations. It’s really doing the work of a public university because these people are teaching. So that’s a model I haven’t seen. But who knows? May get replicated around the country. Although, not every state is going to be as compliant as the Indiana legislature in creating exemptions to open records laws. Virginia, in fact, just went in the opposite direction because of the George Mason situation.

Sara Ganim: But just to be clear, it’s a public university teaching students under the name of Purdue University. 

Miranda Spivack: Correct.

 Sara Ganim: Which is a public university, right?

Miranda Spivack: Right. 

Sara Ganim: And it’s not really public? 

Miranda Spivack: Right, right, right. Whether it’s public or not, that’s a matter of I think that could be debated. What it is, if it is a public university arm, it got a special exemption from what the public university is usually entitled to, which is a public records disclosure.

Sara Ganim narration: The president of Purdue University is Mitch Daniels. And before he was president, he was the governor of Indiana. He used that power to make this deal, and when it was announced, he proclaimed that Kaplan “is now a public university.”

Mitch Daniels: Our trustees today have authorized its acquisition in conversion to a non-profit, public university. 

Sara Ganim narration: But when open government proponents, for lack of a better word, freaked out, Purdue officials reframed things a bit saying this new university wouldn’t take any state funding, and would operate as a non-profit foundation, not as a state agency. This, they said, would give it the ability to remain nimble and innovate in the sector it serves. What they mean by that is online education is pretty competitive. So having this exemption allows Purdue global online to keep its business plans and marketing strategies confidential.

Sara Ganim: If I’m non-affiliated with the school, what bigger picture, why all the secrecy if I’m just a taxpayer, how does the secrecy impact me, and why should I care about this?

Miranda Spivack: Right. Well, I think there’s a relationship between taxpayers and what they know they’re supporting both at the federal and the state level. Obviously, we don’t know everything. But public higher education is really sort of the crown jewel in many states of what they have tax supported, publicly supported universities. You have a certain expectation that the word “public” really has some meaning and that things are transparent. I mean that’s what that means. So if you’re a taxpayer and suddenly you see that Michigan State, and I’m just holding that out as an example that I’m making up, not necessarily based on any particular event there. But if you see that suddenly the philosophy or the political science department is hiring a bunch of people who espouse a certain ideology, you’re thinking, “What’s going on here? I send my kid, or I support this university, to get a full, and fair, and robust, and objective to the extent possible education. And now, there is a tilt going one way or another. It could be going to the left. It could be going to the right, whatever. And I’m uncomfortable with that because I thought public education really was for all, and was something that I could support, and it wasn’t ideological.”

Evan Johns: When a huge chunk of a university’s revenue is coming from a private donor who is really outspoken in their political ideology. Even if there are no explicit strings attached to any gift agreement, it’s still helpful to know how much is coming in, when it’s coming in, for what programs it’s supposed to benefit, because those things are almost as important in sort of illustrating soft power as the contractual terms that are spelled out explicitly. 

Sara Ganim narration: Evan Johns told me that after his case resolved, and the effect was clear that sunshine would prevail over darkness, that proponents of these foundations began to say.

Evan Johns: That folks won’t want to donate. This will have a chilling effect on university donations, if they’re made public. Now the empirical evidence out there refutes that. There’s been some study of that and there’s no observable chilling effect on donations, but with the very fact that that’s trotted out in an argument in some of these legal cases makes you think that whether it’s the primary intent for setting up these organizations, it’s certainly something that can be important to attracting donors.

 Sara Ganim: I mean, if their view is the donors won’t want to donate if they’re not anonymous, I mean, doesn’t that speak to the problem? It seems like it goes right to the heart of the issue.

Evan Johns: Yeah. If you believe that public universities are an important part of sort of the public trust and state government as a whole, then yeah, it really does seem suspect. 

Alexa Capetolo: Honestly, I see university foundations as part of a larger trend and kind of a challenge for us because we’re seeing public institutions become more and more privatized. So this isn’t just colleges and universities, the private sector has come more and more into the public domain. And there have always been clear cut laws about transparency in the public domain. If you’re a public agency, it’s pretty clear that you need to tell people what you’re doing with their money, how you’re managing their community. I mean, that’s kind of the basis of any democracy. It certainly is here, but there’s no clear cut way to address it when those functions move into the private sector. And so this is just one part of this larger issue. And I think we need to care when we can’t find out even the most basic information about how things are being run. I mean, that’s a real failure and it could ultimately harm us if things are being done, especially if they’re being done improperly and we have no way to know it.

Sara Ganim narration: It reminds me of this song. It’s kinda catchy and it gets stuck in my head a lot.

Broadway show song: Sorry not sorry bout what I said.

Sara Ganim narration: Sorry, not sorry. Yeah, it’s a pretty trendy thing to say these days.

Broadway show song: Don’t worry, don’t worry. 

Sara Ganim narration: It’s basically a sarcastic way of saying I don’t care if you like what I’m doing.

Broadway show song: Don’t lose your head, didn’t mean to hurt anyone 

Sara Ganim narration: This song is from the hit Broadway show, “Six” which chronicles the lives of the six wives of Henry the VIII. I went to see it, right before the pandemic shut down Broadway and as I worked on this episode I couldn’t stop thinking about it. This song, the attitude, it perfectly encapsulates the message these universities are sending.

Broadway show song: Lol, say oh well. 

Sara Ganim narration: Yeah. We’re supposed to be public.

Broadway show song: Or go to hell. 

Sara Ganim narration: But we’re gonna do what we want.

Broadway show song: Sorry not sorry ’bout what I said

Sara Ganim narration: Sorry, not sorry 

Broadway show song: Sorry not sorry ’bout what she said. 

Sara Ganim narration: Public, not public.

This episode was written and produced by me, Sara Ganim.

The associate producer is Tori Whidden.

This episode was edited and mixed by James Sullivan

Music for this episode was composed by Daniel Townsend.

You also heard the song, don’t lose your head, written by Lucy Moss and Toby Marlow and performed by Christina Modestou.

The executive producer of WDWK is Frank LoMonte.

‘Why Don’t We Know’ is a production of the Brechner Center for Freedom of Information at the University of Florida.

A special thanks to the Hearst family foundation for proving the grant money that supported this reporting.

For more information, please visit our website at www.whydontweknow.org