In light of a recent increase in his compensation, a few eyebrows went up when New Mexico State Aggies’ basketball coach Reggie Theus showed up at a Las Cruces City Council meeting last week to speak in favor of a controversial development.
The university announced three weeks ago a $100,000 increase in Theus’ annual compensation, bringing it to $446,000. The raise is contributed entirely by the private sector and, because the donations are funneled through the NMSU Foundation, the university won’t release the names of the donors.
The Board of Regents also approved three weeks ago a restructuring of President Michael Martin’s contract that includes deferred compensation and an optional housing allowance paid by private donors. I wrote at the time that both moves were controversial because the secrecy has the potential to hide impropriety.
Ten days later, Theus surprised many by waiting more than four hours during the council’s meeting for the chance to endorse The Vistas at Presidio, a 6,000-acre development proposed by Philip Philippou.
“I’m here in support of Philip Philippou in the sense that I think he’s become a friend of mine,” Theus told councilors. “I think he’s a man of integrity and he’s someone that I know has the best interest of this city at hand.”
Before leaving the meeting, Theus,
Since then, several people have called and e-mailed me to ask me whether Philippou is helping pay Theus. It’s a question I can’t answer. As long as the information remains secret, however, such actions by Theus will be viewed by many with skepticism.
Widespread practice has been controversial
Though most state university foundations try to keep their donor lists secret, it’s not uncommon for courts to order the release of records. In a 2005 article published in the Journal of Law and Education, Scott Reinardy and Charles Davis examined a number of court cases and attorney general opinions from around the nation and concluded that “courts in most states would find such foundations public agencies for purposes of freedom of information laws” and would require them to release donor lists and other financial records.
In recent years, courts in at least six states have opened the books of university foundations in response to lawsuits. The question has often come down to whether foundations that are non-profits set up to benefit public institutions are truly operating as separate entities or are acting as de facto state agencies that are subject to public records laws. It’s an important distinction because the federal government allows non-profits to keep donor lists secret.
Since university foundations exist solely for the benefit of the schools to which they are tied, there’s a fine line between operating as a non-profit and a state agency.
According to the Council for Advancement and Support of Education, issues critical to the distinction include “independent governance, use of university office space that is not rented at fair market rates, service of university employees that is not covered by quid pro quo agreements, handling of state funds, and the specific terms of the operating agreement between the foundation and institution.”
In denying my request for the names of the contributors to the compensation for Theus and Martin, Rebecca Dukes, who is both the university vice president for advancement and director of the NMSU Foundation, said “donor records are private and those gifts are given to New Mexico State University Foundation, Inc.,” which she wrote is a “separately incorporated” non-profit, “not a governmental agency.”
She did provide me with the foundation’s agreement with the university and its 2005-2006 audit. She also directed me to the university’s 2005 annual tax form, which is public record and contains a lot of information about how the foundation operates.
Foundation gets free services and facilities use
In the 2005 fiscal year, the foundation had assets of almost $70 million, a figure that increased to more than $82 million in 2006.
The foundation has no employees. University staffers do the foundation’s work, and the foundation reimburses the university for salary expenses – more than $859,000 in 2005 and $1.1 million in 2006. Some NMSU employees work exclusively for the foundation; others split their time between foundation and NMSU.
The university provides a number of services to the foundation for free or at discounted rates. According to the foundation’s agreement with the university, utilities, maintenance and repairs and property insurance are provided by NMSU, as are data processing, telephone service, “some consumable office supplies,” and “routine business and financial services.”
The estimated value of services and use of facilities NMSU donated to the foundation during the 2005 fiscal year was $107,762, according to the public documents. In 2006, it was $151,412. The university also paid administrative fees to the foundation in 2005 totaling $374,304 and in 2006 totaling $396,731.
Such financial assistance isn’t a one-way street, according to Martin. He said the foundation owns an office in
In addition, the university president has some direct control over the foundation. Major fundraising campaigns have to have his approval. Martin is also Dukes’ boss.
Martin said the foundation’s relationship with NMSU isn’t unique.
“This is the way all universities do it,” he said.
Is foundation operating as a public body?
The New Mexico Inspection of Public Records Act defines “public body” as “the executive, legislative and judicial branches of state and local governments and all advisory boards, commissions, committees, agencies or entities created by the constitution or any branch of government that receives any public funding, including political subdivisions, special taxing districts, school districts and institutions of higher education.”
It would be up to a judge to decide whether that includes the NMSU Foundation. Do the contract fees paid by NMSU and the donated services and use of facilities amount to “public funding?”
Despite what courts in other states have determined, Phil Sisneros, spokesman for the state Attorney General’s Office, didn’t seem to think aspects of the foundation’s relationship with the university would matter.
“The foundation is not subject to the Inspection of Public Records Act, which means that they’re not required to disclose donor lists,” he said.
Bob Johnson, director of the New Mexico Foundation for Open Government, said changing that “would require a lawsuit and a ruling by the Supreme Court, or some legislation.” He said state university foundations should have to open their books.
“I think that they’re skirting the law, and I think without legal action or legislative action they’re able to do it,” he said.
Why does it matter?
Some argue that if donors lose their anonymity, a number of potential contributors will refuse to give. According to the article by Reinardy and Davis, when the
The article also cited examples of three university foundations whose fund-raising efforts were not deterred by court rulings that opened their books.
The universities of
A number of abuses have been revealed by the opening of records. For example, according to Reinardy and Davis, opening the books of the
Audits have revealed other problems. At
What happens next?
The current agreement between NMSU and its foundation was approved by the regents in 1991, and Dukes called it “outdated.” The university is in the early stages of constructing a new agreement that will address services the university provides the foundation and other matters.
The new agreement probably won’t open donor lists to the public. Not only do university officials believe they have a right to keep such information secret, but the foundation also promises donors, in its Donor Bill of Rights, “confidentiality to the extent provided by law.”
Without a lawsuit or legislation, or an attorney general opinion that would have to be requested by a lawmaker, the public isn’t likely going to learn who is helping the university pay Theus and Martin.
A prior version of this posting incorrectly stated that