Murky, not illicit
by James A. Bacon
A few more details have emerged about the University of Virginia’s supposed “slush fund,” but not enough to really help outsiders judge whether the university’s financial arrangements amount to a scandal or not. Helen Dragas, the former Board of Visitors member who leveled the accusation in a Washington Post op-ed, talked to Richmond Times-Dispatch reporter Karin Kapsedelis for an article published Saturday Here is Kapsedelis’s summary of Dragas’s allegations:
The board voted in February to create a “strategic investment fund” to support proposals that align with goals adopted for the university as part of The Cornerstone Plan.
But Helen Dragas, … whose term expired June 30, said Friday that members were not informed that the new investment fund would be financed by existing revenue for operations when the resolution was adopted.
She points to a change in labeling after the February vote to support her allegation that the university created a “slush fund” to use on programs that burnish U.Va.’s reputation rather than cut costs for students.
Dragas cited a report from the U.Va. Investment Management Co., UVIMCO, from Dec. 31, 2014, that includes a line item for $1.63 billion in University Operating Funds; in the March report, the line item is labeled University Strategic Funds and valued at $1.83 billion. A third-quarter summary report to the board lists the value of the Strategic Investment Fund as having grown to $2.29 billion with supplementation from other sources.
According to minutes from the February board meeting, the newly established investment fund will support proposals that “clearly align with the university’s strategic plan objectives.”
But the funds will not be used “in lieu of normal ongoing operating costs,” the resolution states.
From this description, it appears: (1) that the same fund has been given a variety of different names, (2) that the mission of the fund has changed from funding operations to funding strategic initiatives, (3) that the fund grew from $1.63 billion to $2.29 billion over nine months, an increase of $660 million, and (4) that the increase can be attributed to both investment returns and “supplementation from other sources.”
It is not clear from this account, however, whether those “other sources” were comprised of donations from friends and alumni of the university or moneys diverted from ongoing operations. Also not clear is whether university administrators reallocated new money to strategic objectives such as buildings, faculty pay and research, or just relabeled existing funds already used for the same purpose.
Certainly the matter bears looking into. But I have seen no indication yet that the Strategic Investment Fund amounts to a “slush fund,” which university officials can dip into for illicit purposes. It may in fact be a slush fund, but Dragas did not present evidence for such a conclusion in Kapsedelis’s article. The real scandal, I suspect, is the one that we have continuously hammered home on Bacon’s Rebellion: the university leadership’s prioritization of the university’s growth and prestige over its founding mission of providing affordable, quality higher education to Virginians.
