Nine senators seek state oversight of public university fund raising

School officials oppose increased scrutiny

February 18, 1999|By IVAN PENN AND TOM PELTON | IVAN PENN AND TOM PELTON,SUN STAFF

To prevent fund-raising abuses at the state's public universities, nine state senators are proposing a law that would give the state oversight over private organizations that raise money for state schools.

The legislation is a response to fund-raising scandals that led to the resignation of Bowie State University's president in December and Salisbury State University's top fund-raiser in June 1997.

University officials oppose the increased scrutiny, saying they don't need government meddling with private organizations that have proven themselves successful at raising tens of millions of dollars for public education.

But the lawmakers, led by state Sen. Ulysses Currie of Prince George's County, argue that donors would feel more confident giving money to state schools if they knew that a state auditor was acting as a watchdog to prevent the misspending of scholarship money.

Currie's bill, introduced Feb. 5, would allow Legislative Auditor Bruce Myers to scrutinize the records of the university foundations with the same freedom he examines the books of the state's public colleges.

Current law prohibits him from examining the records of foundations affiliated with the state's public colleges, even though state officials in state buildings run the foundations.

"Basically, we are trying to reassure the people who make the contributions that the money is going to where it is earmarked to go," said Currie, a Democrat who chairs the Senate's joint audit committee.

The Senate passed similar legislation by a 27-17 vote in April 1994, but it died in the House Appropriations Committee. That was the fourth time in as many years that the bill failed, according to state records.

The earlier attempts at increased oversight were driven in part by a scandal at Frostburg State University, in which President Herb F. Reinhard Jr. resigned in 1990 after newspapers reported that he had spent thousands of foundation dollars on campaign contributions.

A spokeswoman for University System Chancellor Donald N. Langenberg said this week it is premature to comment on the new bill because lawmakers have not reviewed a recent report by the University System of Maryland's Board of Regents.

It says that more oversight by the Board of Regents would be the best way to prevent the kinds of problems that surfaced last spring at the Bowie State University Foundation.

The report also says that university administrators should stop running university foundations and instead keep a healthy distance from the fund-raising organizations.

After an investigation by The Sun, University System auditors last year concluded that the Bowie foundation, under the leadership of university President Nathanael Pollard Jr., misspent $182,000 restricted for scholarships and campus activities on extravagances such as a boat cruise and banquets.

The top fund-raiser for Salisbury State University, Robert Gearhart, resigned from his duties with the university in June 1997 after auditors discovered he had forced state employees on state time to perform work for his home-based consulting company.

Despite these problems, university officials are arguing against increased oversight.

Megan Rock, executive vice president of Towson University Foundation, said university fund-raisers worry that donors who demand confidentiality could be frightened away if they knew that the legislative auditor and perhaps the media might discover their identities.

"In the past, the foundations as a whole have not been in favor [of more legislative oversight] based on concerns over donor confidentiality," Rock said.

Currie said his bill would not violate donors' confidentiality because it prohibits the auditor from revealing their names. His legislation does not allow the media or public to look at foundation records.

Sheldon Caplis, chief fund-raiser for the University of Maryland, Baltimore County, said he opposes Currie's bill because it would be unfair to hold private foundations to the strict spending restrictions of the state government.

For example, Caplis said, the state prohibits the use of tax dollars to buy alcohol. But university foundations often find it productive to wine and dine donors using private donations.

Caplis noted that state law requires foundations to receive annual audits from private accounting firms. The law also allows the University System's auditor to examine foundation records when the chancellor orders an investigation.

"We have no problem with the legislative auditor reviewing the audits of the foundation or the internal audits of the university [system]," Caplis said. "What we're opposed to is the legislative auditor reviewing the financial transactions."

Sen. Barbara A. Hoffman, chairwoman of the Budget and Taxation Committee and a co-sponsor of the bill, said that Caplis' fear is misplaced. The proposed bill gives foundations more freedom to spend money on alcohol and dinners than state agencies, Hoffman said.

Democratic Prince George's Sen. Gloria G. Lawlah, a co-sponsor of the bill, said: "Donors always like more oversight. It's the managers who like to have a free hand with the money."

The proposal might have more support now than in 1994. The Senate bill has nine co-sponsors this year, compared with one sponsor five years ago.

In the House, an Appropriations Committee member who voted against the measure four years ago has switched sides.

Del. Samuel I. Rosenburg, house chairman of the joint audit committee, said the recent problems at Bowie and Salisbury state universities are evidence that university foundations need more scrutiny.

In Annapolis

Highlights in Annapolis today:

Senate meets. 10 a.m. Senate chamber.

House of Delegates meets. 10 a.m. House chamber.

Senate Economic and Environmental Affairs Committee hearing on SB 170, to create a state Department of Veterans Affairs. 1 p.m. Room 200, Senate office building.

Pub Date: 2/18/99

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