UM memo details strategy for testimony on fund use

November 16, 1990|By Patricia Meisol

Hoping to mollify lawmakers looking into the abuse of funds from college foundations, the University of Maryland is mapping out a plan for donors and presidents who are to testify Tuesday in Annapolis:

Establish the "high moral ground" by recognizing that political contributions are barred by law; characterize violations as unwitting; assert that enough rules are in place to prevent abuses; and have donors testify that they are "uncomfortable" with state "intrusion" into private foundations.

Those pointers are included in a four-page draft prepared by the chancellor's staff and circulated to college presidents last week.

John Lippincott, a University of Maryland System spokesman, said the draft would be revised significantly and is not likely to bear any resemblance to actual testimony Tuesday.

"These are guidelines. People will testify as they see fit," he said, adding that the goal is to ensure that lawmakers hear a variety of perspectives.

A copy of the draft strategy was obtained by The Sun yesterday.

Sen. Julian L. Lapides, D-Baltimore, co-chairman of the General Assembly's Joint Budget and Audit Committee, scheduled Tuesday's hearing to find out why university presidents want campus fund-raising organizations off-limits to auditors.

Mr. Lapides said yesterday that his "only strategy is to try to get the truth and to determine why they were so adamant in fighting public scrutiny of their books, especially by legislative auditors."

The hearing was prompted in part by revelations that at least four campuses had dipped into funds from their private tax-exempt foundations to purchase tickets to political fund-raisers.

The day before his re-election Nov. 6, Gov. William Donald Schaefer returned more than $2,200 in checks from non-profit university foundations.

State university officials say private foundations are an important tool allowing schools to compete for financial support that historically has gone to private colleges and universities. All 13 public university campuses in Maryland have affiliated foundations, which hold anywhere from several hundred thousand dollars to $40 million. They are regularly audited and governed by boards of directors.

As part of the University of Maryland's proposed strategy to manage the controversy, which began when Frostburg State University admitted purchasing tickets to political events, University Chancellor Donald N. Langenberg would ask foundation directors to audit presidential entertainment accounts.

The script described in the memo has Dr. Langenberg telling lawmakers that he has asked internal auditors to pay special attention to presidential discretionary and entertainment accounts in the universities' own budgets.

The memo also suggests that university Presidents Herb F. Reinhard Jr. of Frostburg State and Thomas E. Bellavance of Salisbury State should express "contrition and regret" for using discretionary funds for political events. Their campus foundations spent $1,240 and $650 respectively on political events in recent years.

The memo has Dr. Reinhard, who continued to buy tickets to fund-raisers after being warned that federal tax law prohibited it, assuring lawmakers that other steps, possibly including the separation of university employees from the private non-profit foundation on his campus, are being taken to safeguard money donated to Frostburg.

Several university foundation directors said yesterday that donors to public universities frequently express concern that gifts would be mixed in with public funds and, in some cases, be made public when they preferred anonymity.

Robert Gearhart, executive director of the Salisbury State Foundation, said the "biggest thing donors have against giving directly to a state institution is [the fear] that that money could be taken by the state at the end of the year or used to offset the state budget.

"To make [foundations] something other than private means taking away our ability to raise money to provide that margin of excellence."

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