Two economic professors fought once again for changes at the University Foundation, changes that could free up thousands of dollars for certain scholarships.
But this time, professors Marilyn Flowers and Gary Santoni were joined Monday at an open forum by several of their colleagues. Together, they tried to persuade administrators to change the 54-year-old stable value endowment policy.
Flowers and Santoni have charged that the policy unfairly takes money for specific scholarships and uses them for other purposes. This limits growth for those scholarships and discourages donors, they said in a report.
"The very term 'stable value endowment' is laughable," Flowers said.
But Tom Kinghorn, vice president of finance, President Blaine Brownell, and Don Park, vice president of university advancement, defended the foundation, a legally separate entity entitled to raise funds for the university.
Kinghorn said the policy helps fuel worthwhile initiatives -- initiatives with no other support.
Two years have passed since Santoni and Flowers first distributed copies of their reports to the administration and the foundation. Since then, a task force led by Kinghorn and a University Senate committee have both investigated the report. Neither committee met formally with the two professors.
Both groups essentially kept the endowment policy the same, though Kinghorn's task force introduced a new policy more in line with the professors' vision.
And while university president Blaine Brownell said he does not want to discourage debate, he questioned why discussion continued.
"After two years, the members of the foundation's board ... are, shall we say, growing impatient with the discourse," he said.
At one point during the forum, finance professor Terry Zivney asked why the foundation did not seek the expertise of professors trained in finance.
The administrators were either arrogant or considered their professors to be ignorant, Zivney said.
With this remark, Brownell stood up and said, "Hey, come on. That's a bunch of crap. Information is freely available."
Since its inception more than 50 years ago, the University Foundation has invested its endowments, a common way for donors to fund scholarships. Often these investments occur under the "Stable Value Endowment Policy."
According to the policy, some of the earnings on investments are-รก returned to the endowment but only enough to keep the initial donation at the same amount. This allows the foundation members to maintain the same level of scholarship money throughout the years.
The rest of the earnings, however, are parlayed into the foundation's general budget, where the board of directors can use it to fuel whatever programs they prefer.
If someone, for example, were to give $25,000 -- the minimum needed for a scholarship endowment -- the foundation would invest that money, and pay a certain percentage of principal in the form of a scholarship.
The earnings on that $25,000 are not rolled over and reinvested with the principal; instead, they are put into the foundation's general budget.
Yet, the policy does not account for the increasing costs of education or inflation, Flowers and Santoni reported.
The professors, using hypothetical amounts, showed that if someone were to have given an endowment of $10,000 in 1980 to Ball State, the amount distributed in scholarship in 2000 would still be $500, whether the market was up or down that year.
At a university that did not follow Ball State's policy, however, that initial $10,000 would yield almost $2,800 in scholarship money in 2000, though some students could have less when the market declines.
The numbers were hypothetical, but they paralleled an actual situation in the history department. History professor Fred Suppe said the policy has withered history scholarships so much that the department distributes only $50 to $80 in rewards.
"The amounts are so small that it almost makes us ashamed," Suppe said. "I know you're (the administrators) all sincere, but heed the plea from the trenches."
English professor Bruce Hozeski questioned why he should invest in the foundation when the policy "cannibalizes our students for the benefit of the community."
Brownell, however, said the university will never go forward if scholarship money could not be used to help other initiatives blossom.
Since 1989, the foundation has spent about $65 million in unrestricted funds, which are comprised of both endowment earnings and monetary gifts given for no specific cause.
Of the $65 million, about $14.3 million, or 22 percent, consisted of money that had come from investing donors' endowments -- including scholarships.
Scholarships that did not have a large donor earned 11 percent, or $17.5 million -- the fourth highest allotment of the unrestricted funds since 1989.
Faculty endowments were given about $1,300,000 -- or 2 percent -- of the pie.
Fund raising absorbed the largest chunk of unrestricted funding -- 28 percent.
These extra dollars have spawned the distinguished professorship, which Santoni has received, and the national merit scholarship. They have also helped subsidize several capital projects, including the Alumni Center.
Also, most of the donors are pleased with the stable value endowment policy, Park said. Neither side of the debate has taken an official survey to gauge donors' opinions, but Park said foundation staff has personal relationships with about 700 of the 900 donors.
The forum lasted about 30 minutes longer than scheduled, and though opinions were expressed, no one pledged any further formal action at its conclusion.
Instead, the debate lingers between the two philosophies: the professors' hands-off approach and the administrators' "mission building" strategy.
"You're robbing Peter to pay Paul," Flowers said.
"But Peter and Paul still get a scholarship," Kinghorn rebutted.
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