New Criticisms of UVa Investment Fund

Slush

Slush?

by James A. Bacon

Lawmakers have raised new concerns about a $2.3 billion University of Virginia investment hoard that critics have characterized as a “slush fund.”

The controversial pot of cash was originally labeled as “University Operating Funds.” Then it was marked “Strategic Investment Fund” in a Jan. 31 document — two weeks before the Board of Visitors formally authorized the naming of it as an investment fund, reports the Daily Progress.

“It’s almost like the board is there to rubber-stamp [administrative decisions],” said Sen. William R. DeSteph, R-Virginia Beach.

“In light of this cash reserve, why are we raising student tuition and acting like we’re broke?” asked Sen. J. Chapman Peterson, D-Fairfax City.

The university has designated the fund to recruit new faculty, build new lab space, and provide financial aid to high-achieving students from low-income schools around Virginia in support of its “affordable excellence” program.

The magnitude of the controversy has grown in recent days. DeSteph, Peterson and other legislators also allege that the university gave conflicting reasons for opening up a $300 million line of credit. Summarizes the Daily Progress:

In November, the board gave the administration clearance to take out up to $300 million in operating lines of credit.

According to previous university statements, this cleared the way for the university to transfer $480 million in operating cash to the Strategic Investment Fund — providing it with a boost while keeping UVa’s bond rating strong.

But according to minutes from the November meeting, during which Chief Operating Officer Patrick D. Hogan addressed the board, the purpose of these new lines of credit was to meet different “stress scenarios” facing the university, such as an inability to fund operating expenses or convert assets into cash “without significant losses.”

“The operating lines of credit will be a new source of liquidity and are being considered only as back-up liquidity,” according to a summary of the action item provided to the board in November.

DeSteph said the administration acted inappropriately. It appears administrators told the board — and the public — it would use these lines of credit one way and then decided to use it another way, he said.

“What they told the public was they were going to set up lines of credit and only use them if needed,” DeSteph said. “It looks like they set up the lines of credit and maxed them out.”

The legislators also charged that the Board of Visitors went into closed executive session last month to talk about the fund. “I feel like they’re trying to do as much of their business beyond the public’s eye [as possible],” said Peterson. “A $2 billion cash reserve? How can that not be a public issue?”

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28 responses to “New Criticisms of UVa Investment Fund

  1. Good questions, glad they’re being asked, hoping for prompt & clear answers.

  2. When Megan Rhyne of the Virginia Coalition for Open Govt says this:

    ” …the personnel exemption should not apply to faculty members at a public institution competing for funding from university coffers. That should be open for public discussion”

    “The personnel exemption is not meant to cover anything and everything an employee does,” Rhyne said. “It is meant to protect that individual’s private details [and] his working conditions.”

    “Officials cited the personnel exemption under the Freedom of Information Act, according to the minutes from that meeting. The exemption allows officials to discuss the “assignment, appointment, promotion, performance, demotion, salaries, disciplining or resignation of specific public officers, appointees or employees of any public body. UVa spokesman Anthony de Bruyn said the board acted within the law.”

    it changed my opinion. These people are disgusting.

    If this is how UVA is acting – I’m sorry to say – they are every bit as corrupt as Dragas has been claiming and I stand corrected.

    A plague on UVA from Sullivan on down – and that includes the members of the BOV who certified the discussion in that closed meeting. All of them ought to be raked over the coals.

    No sympathy here – none. I hope each one of them gets their fanny scorched.

  3. Larry,

    I am glad that you are susceptible to persuasion with some facts. Still, in this case, we should be careful about jumping to too many conclusions, even though the matter is right in line with the way most of government operates. It would appear that we don’t know whether the conflicting statements were the result of someone less than competent jumping the gun or an attempt to cover up. The legislators are correct to ask hard questions.

    For me, though, it has never been a serious question that Sullivan was way in over her head and simply was not a wartime consigliere. Dragas was vilified but may yet be proven correct. Instinct, but not facts on the ground, tells me she had it right all along. She just got it wrong on the procedure to oust Sullivan. That is one aspect of board work that an investment banker may not have the background for: the necessity to build one’s coalition for action.

  4. Crazy – Oh I still think UVA should not be held to any different standard on operating funds, investments and tuition.

    And if the state gives operating funds without restricting on how they can be used – I suspect more than UVA might be tempted.

    and yes – government – and administration are people and people will try to hide things – although in this case it looks to be a pattern.

    For their endowment – they should be able to use it with far less restrictions. But operating funds – there is a problem if the did violate actual restrictions – people should be fired. If the money is truly wild wild west discretionary – then what would the GA expect and asking “hard questions” later is more posturing than serious reform.

    So my first question is – are state funds for operations restricted and I’d put that to Chap Peterson and others who say they want to “find out” what happened.

    I suspect there is more than enough blame here … and no I still do not like the way Dragas plays lone wolf but if some of the rest of the BOV are spineless rubber stamp types… ho boy… a pox on them all..

    oh – and if UVA is perverting the FOIA law – whose fault is that? The FOIA folks have been in front of the GA every year and every year the GA is feckless about it.

  5. I just don’t get the double-talk.

    Jim, you report, “In November, the board gave the administration clearance to take out up to $300 million in operating lines of credit. According to previous university statements, this cleared the way for the university to transfer $480 million in operating cash to the Strategic Investment Fund.” Sure; the lines of credit are there in case operating cash is needed; that eliminates the need to keep so much cash on hand for operations; that freed-up cash already on hand can now be invested or used for other things. But that doesn’t mean the lines of credit have been called on, yet. Where is Sen. DeSteph coming from when he said, “It looks like they set up the lines of credit and maxed them out.”

  6. Chap Petersen for Governor. He’s right 75% of the time which is 74 percentage points higher than The Imperial Clown Show in Richmond’s average.

  7. re: bad from verses illegal –

    yes. “bad form” is in the eyes of the beholder ….

    So we have a bunch of Armchair Administrators advocating what the actual folks in charge should be doing? 😉

    Now that the GA has decided to ‘get involved’ I full expect Peterson and others to submit actual legislation to either legally restrict operational funds to only specified uses and/or to require a certain percentage of operational funds to go only to buy down tuition costs – e.g. like the car tax…..perhaps.

    For me – I’d much rather see Peterson and company fix the swiss-cheese FOIA law so that the kind of games UVA is playing are stopped in their tracks. Evasion of FOIA is becoming rampant in Va and UVA is openly contemptuous of that law – “we are within the law”.

    • “I’d much rather see Peterson and company fix the swiss-cheese FOIA law …”

      False choice. No reason whatsoever why the GA can’t attend to controversies at UVA and fix the FOIA laws.

  8. Don,
    I’m glad that someone else is calling out the logical fallacies that so often permeate these postings.

  9. re: ” False choice. No reason whatsoever why the GA can’t attend to controversies at UVA and fix the FOIA laws.
    ….
    I’m glad that someone else is calling out the logical fallacies that so often permeate these postings.”

    I’m asking if the folks who want to investigate UVA – ALSO worked to fix FOIA?

    It’s not a false choice – it’s an obvious double standard of the legislators who want to posture about UVA and the very same ones – run and hide on FOIA – as well as real reforms to how operational money is given unrestricted so that it IS vulnerable to abuse.

    Leave it to politicos to get up and strut their stuff on the hot button stuff and then go have a beer on the stuff that really needs addressing.

    If Peterson and company had really done their job :

    1. – UVA could not have used taxpayer money for purposes they should not

    2. – a real FOIA Law would have allowed it to be exposed – easily.

    but instead they wait until things are at the attention-getting stage and step into their “hero” roles… cough cough… barf..

    • First you say:

      >>For me – I’d MUCH RATHER see Peterson and company fix the swiss-cheese FOIA law so that the kind of games UVA is playing are stopped in their tracks. Evasion of FOIA is becoming rampant in Va and UVA is openly contemptuous of that law – “we are within the law”. (Emphasis supplied)

      Then you say:
      >>I’m asking if the folks who want to investigate UVA – ALSO worked to fix FOIA? It’s not a false choice – >

      The second post clearly does not reflect what went on in the first. When you say “rather see [this than that]”, that is false choice, the word “rather” clearly implying that you would make the choice between one and the other.

      Larry, what is usually done when errors are pointed out in debate is to concede the point and move on. Something like “Maybe I shouldn’t have used the word ‘rather'”. If you want to see a good example of how to concede a point and how not to continue arguing a point which is pointless to continue arguing, watch Meghan Kelly’s dialogue with Malik Shabbaz, Black Lawyers for Justice. http://www.foxnews.com/transcript/2016/07/18/megyn-kelly-challenges-former-black-panther-leader/

      Their both lawyers, but one actually learned something in law school about how to make and concede points of argument.

      • crazy – I think you might lack the thing you claim others lack.

        the argument about the “slush fund” centers on whether such a use of that money was allowed by law or not as much as it centers on those who disagree with priorities and choose to throw bombs instead of them conceding that the problem is one of law not differences of opinion on priorities.

        that’s a real false choice that apparently you choose to not see…

        the false choice was way before the “slush” fund…

        admit it… guy..(or gal)…

        oh an don’t be citing FAUX news to “prove” anything … other than your own biases… Miss Kelly is not a practicing lawyer for a very good reason – she prefers entertainment.. which is a perfect fit for FAUX.

        • Geez, Lar, you do go on with your obfuscations and deflections. In other words, I haven’t a clue what you said.

          The citation to Miss Kelly does not attempt to “prove” anything. It’s simply a good example of how to successfully concede a point in debate and move on, which if you bothered to watch it, or read the transcript, you would have seen and might have learned something. She, nor I, was trying to “prove” any factual item.

          >>the argument about the “slush fund” centers on whether such a use of that money was allowed by law or not as much as it centers on those who disagree with priorities and choose to throw bombs instead of them conceding that the problem is one of law not differences of opinion on priorities.>>

          What ARE you talking about? Your original false choice had nothing to do with slush funds, it was simply your method of deflecting attention from a point made by someone to something you wanted to talk about instead of answering their point directly.

          Larr, I don’t know whether you just like to argue for its own sake or what, but your points are all over the map and you are incapable of seeing and accepting someone else’s point of view, particularly when you screw it up. I could care less whether the GA had its own slush fund to get rid of Dragas while she was driving to Charlottesville, whether Sullivan posted a false resume on the Internet, or ‘ol Chappy bought a pig farm; I’d just like to see you make your arguments in straight line using sound logic.

  10. I think that in this case, the General Assembly has been alerted by a whistle blower that there is something about which they may wish to know more. I don’t think that GA has to rely on FOIA in this case, because UVA answers directly to it/them. They can ask for just about anything they want to see, right? I don’t know that it’s fair to expect a governing body to know what it doesn’t know–that’s why whistle blowers matter.

    • @LIFT – do you think the GA knows that the operational money is not restricted to prevent UVA from using it in ways they would disagree with?

      I think people like Chap Petersen DO know. Otherwise my opinion of him would drop down a couple of notches …. as I consider him to this point someone who is competent in law and legislation and more interested in what is right rather than playing to the political crowds.

      If the General Assembly and Mr. Petersen REALLY believe:

      1. – that higher ed money should be restricted – to only specific uses – then they need to do it – not “ask” about it later on as if they are “surprised”.

      2. – one step further – to what I think is a conflation. If the General Assembly and Mr. Petersen and others really agree with Ms. Dragas and that UVA should be held to a specific standard on the “affordability” – then they need to act not pontificate OR they need to make clear they do not agree with Ms. Dragas.

      3. Good legislation does not rely on whistle-blowers – it is specific and those that don’t follow it – are violating law. Someone like Ms. Dragas would be empowered to hold UVA folks directly accountable for their actions instead of making accusations that are so unclear that legislators have to “look into them”.

      4. the FOIA law is a joke. When folks at UVA invoke the law to prevent release of data because they say in essence it is private to an employee – and folks like Mr. Petersen stand by and do nothing – not even shame UVA in public – then what can we say? Not one legislator said squat about this obvious evasion of the law – that Megan Ryan of the Virginia Coalition for Open Government immediately pointed out. It’s pretty clear that the GA and Mr. Petersen could care less – it says reams and you can bet that this tactic will now be repeated by other State funded entities to refuse to provide FOIA data.

      Dragas motives are not pure. UVA is downright cynical about having to do anything at all and the GA folks who say they are “going to look into it” are all a bunch of …. do – nothings … a pox on them all..

      • I’m afraid you’re losing me as you’ve widened the discussion–no one is calling for legislation or standards of affordability, and the FOIA council will answer with its finding. It’s too soon to say, at least on this matter, that folks (legislators and FOIA) are not doing their jobs. The BOV at Virginia schools IS empowered to hold their school accountable, but the whistle-blower’s term just ended as this emerged. It’s is too soon to make pronouncements about what should be when the investigation hasn’t begun; we’re still trying to understand what has happened here.

        But I’m most puzzled by your shading Dragas’s motives. I”ve seen posts in WaPo and elsewhere in which comment is that she is acting in self-interest. Someone please explain to me what possible gain she has had personally or professionally through any of her service to UVA? If anything, I’d say she’s rather selflessly adhered to a consistent philosophy, at enormous personal cost. Not many would be so brave.

        • let me address some points:

          the first is the affordability issue – which you say I brought up and “widened” the discussion. Au Contraire. It is part and parcel of whole Dragas mantra about what unrestricted operational and other funds should be devoted towards. It’s a two-pronged attack. She disagrees with priorities and she has her own priorities for what money should be spent for.

          and I say that’s a matter of priorities of the administration (and a unified BOV) if the state chooses to not restrict and/or earmark funds for that purpose.

          2. Dragas – as an individual has chosen to argue that UVA priorities should be to lower the costs of college – but she was not content with just that advocacy – she then chose to amp it up and “scandalize” it by very publicly claiming that UVA was inappropriately spending money for purposes not authorized – i.e. strategic rather than operational – continuing a pattern of open warfare with UVA on disagreements.

          her words: ” Dragas said. “Still, it leads on excellence and lags on affordability, succumbing to the temptation to become a high-priced, private institution. That’s not in our DNA.”

          It’s an opinion not shared by others. In fact, analyses done outside of UVA and the BOV, the most recent to wit: ” MONEY MAGAZINE NAMES UVA AMONG BEST VALUE COLLEGES AND UNIVERSITIES”

          ” The University of Virginia has been named a top-three Best Value College among the nation’s public universities in a ranking released today by MONEY magazine.

          “The 2016 Best Colleges for Your Money rankings listed UVA at No. 3 among public institutions and No. 9 among all U.S. colleges and universities, citing a top-notch education delivered at one of the country’s lowest total college costs.”

          So Dragas is full of it on this issue… it’s clearly her view …and that’s fine but it does not justify her jihad against the administration ..

          Dragas has a demonstrated pattern of confrontation and hostile acts of aggression as opposed to TRYING to work collaboratively to gain consensus from the BOV and others including the GA to get UVA to evolve to a better place – of which it’s still not clear there is any real consensus beyond her own views.

          She has a “my way or I’ll cause you extreme pain” bomb-throwing approach becoming so common today in politics.

          At UVA – it created a poisonous atmosphere of hate and discontent… at the very time when patience and persuasion by people who really care enough about UVA to actually be a leader who others will follow and change will happen. She’s just not that person. She has no credibility as a change agent but rather a trouble-maker.

          I think she’s wrong on the issues and wrong on leadership style.

          she’s a my way or the highway type who promises trouble if she does not get her way. we have enough of those folks already.

  11. well – here goes Dragas core argument:

    ” Known as a “public Ivy,” the University of Virginia offers in-staters a top-notch education with one of the country’s lowest total college costs.”

    from The Best College in Every State – UVA ranked 9th nationally on value

    http://new.time.com/money/best-colleges/profile/university-of-virginia-main-campus/

  12. >>So Dragas is full of it on this issue… it’s clearly her view …and that’s fine but it does not justify her jihad against the administration ..

    Dragas has a demonstrated pattern of confrontation and hostile acts of aggression as opposed to TRYING to work collaboratively to gain consensus from the BOV and others including the GA to get UVA to evolve to a better place – of which it’s still not clear there is any real consensus beyond her own views.

    She has a “my way or I’ll cause you extreme pain” bomb-throwing approach becoming so common today in politics.>>

    Anyone for a microaggression? 😉 Gee, Larry, doesn’t this sound like Hilary Clinton and particularly, Barack Obama? Now don’t I sound like you: “Yeh, but your side does it, too” You see why turnabout is called fair play but is mostly useless as argument?

    Then there are the various adjectives: “hostile”…”bomb-throwing” “aggression”…”jihad” With respect to the latter, why does she need “justification” for her “jihad”, as you call it? You admit that it’s her opinion. What?…she can have the opinion, but she just can’t act on it? Please Larr, get a grip.

  13. >>So Dragas is full of it on this issue… it’s clearly her view …and that’s fine but it does not justify her jihad against the administration ..

    Dragas has a demonstrated pattern of confrontation and hostile acts of aggression as opposed to TRYING to work collaboratively to gain consensus from the BOV and others including the GA to get UVA to evolve to a better place – of which it’s still not clear there is any real consensus beyond her own views.

    She has a “my way or I’ll cause you extreme pain” bomb-throwing approach becoming so common today in politics.>>

    Anyone for a microaggression? 😉 Gee, Larry, doesn’t this sound like Hilary Clinton and particularly, Barack Obama? Now don’t I sound like you: “Yeh, but your side does it, too” You see why turnabout is called fair play but is mostly useless as argument?

    Then there are the various adjectives: “hostile”…”bomb-throwing” “aggression”…”jihad” With respect to the latter, why does she need “justification” for her “jihad”, as you call it? You admit that it’s her opinion. What?…she can have the opinion, but she just can’t act on it? Please Larr, get a grip.

    By the way, you never answered another poster’s question why you thought Dragas had some sort of self interest agenda. Care to respond? No, I didn’t think so.

  14. “You admit that it’s her opinion. What?…she can have the opinion, but she just can’t act on it? ”

    sure you can – but there are consequences to your actions that go back to what your claimed purpose is…

    anyone can have an opinion and raise holy hell – we’ve got lots of those folks around these days -but if you’re acting in a role then there is accountability as to what you are accomplishing in pursuit of your role.

    in her case – she just seems to want to raise hell – and engage in blame and recrimination … and little else.

    she’s not even right on the affordability issue – the facts contradict her claims – which she uses to justify her behavior which is not constructive and has accomplished virtually nothing other than to roil the issue.

    re: “self-interest” ??? what? how about you capture the dialogue and put it here and let me respond so we both know what it is … okay?

    • How quickly you forget.

      >>re: “self-interest” ??? what? how about you capture the dialogue and put it here and let me respond so we both know what it is … okay?>>

      So:

      >>But I’m most puzzled by your shading Dragas’s motives. I”ve seen posts in WaPo and elsewhere in which comment is that she is acting in self-interest. Someone please explain to me what possible gain she has had personally or professionally through any of her service to UVA? >>

  15. My biggest problem with Dragas and those that emulate her behavior with respect to identifying “problems” is what remedies is she advocating and is she attracting support for them and from who?

    We have here in BR – a never-ending litany of things that are wrong – and no shortage of ” the whole system is corrupt and broken, burn it all down” views and part of the reason why is that the folks who complain won’t spend the time in really understanding the issue itself.

    there is no question that UVA administration has a cynical attitude towards those outside of the administration, to included the BOV.

    You have to fix that. What is Dragas doing other than setting fire to things?

    I’d be the very first to admit we have no end of issues but our job is to fix them – not destroy because we give up. That means there are two parts 1. -identify the problem 2 advocate for how to fix.

    we have way too many of the Number 1 only folks these days.

  16. >You have to fix that. What is Dragas doing other than setting fire to things?>

    Your post reflects a fundamental misunderstanding of what a board does. A board does not go in and “fix it”. It has no power to do so. Without a line by line review of the powers granted to the BOV, I’m guessing that it has the power to hire and fire the chief executive. It cannot, and should not, go in and talk to teachers, lower level administrators etc. It cannot, and should not, fire the people who handle the money. All of that comes to the Board through the chief executive. The Board can only hire and fire the chief executive. Board members also have oversight and can raise public or private Cain. In this case, the normal private Cain has had no impact.

    Now what was it that you wanted Dragas to do other than those two? She failed at the first; she seems to be making some headway on the second. As usual, Larr, you’re just plain wrong about this one.

  17. Crazy – a board has a duty to recommend what they think are remedies to the problems they identify.

    and they have a responsibility to promote those changes administratively and legislatively .

    if you’re not going to do that – then all you’re doing is tearing down what you don’t agree with.

    we don’t need more vandals… which is what people are who tear down but offer no remedies.

    the BOV at UVA needs to produce a bill of particulars – list of what they see as issues as well as what they see as ways to address them and go forward.

    If they think UVA is wrongly allocating operational monies – they need to lay it out as a consensus of the board – not a laundry list of individual opinions and they need to address – as a board – what they see as remedies.

    that’s the role of a board – as opposed to a bunch of individual rabble rousers following their own individual complaints.

    their job is – as a board – not as a group of individuals.

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