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Faculty group’s report criticizes UB Foundation over spending on salaries

The University at Buffalo Foundation spent $104.5 million in 2013-14, nearly 40 percent of which went toward paying university and foundation employees, including “top ups” to the salaries of some unnamed faculty members and administrators.

That was one of the findings of a new document by a UB faculty organization renewing calls for the foundation to open its books and provide a more transparent accounting of how it receives and spends money. The UB chapter of the American Association of University Professors on Tuesday began circulating a petition urging the university and foundation administration to reveal a more detailed accounting of revenues, expenditures and investments – from the current year and past years.

In its report, the group characterized the $1 billion in foundation assets as “the other Buffalo Billion” – a reference to the Buffalo Billion pledged by Gov. Andrew M. Cuomo for Western New York development projects aimed at turning around the economic fortunes of the region. The foundation’s total assets, including investments, properties and fine art collection, grew to more than $1 billion for the first time in 2013-14.

“Western New Yorkers are familiar with the Buffalo Billion, which has brought new state support and excitement to the region. But few know much about this other Buffalo Billion,” the report states. “Where does UBF’s money come from? Where does it go? Who decides? What interests and metrics determine how these funds are spent and managed? What oversight is there of the vast sums the UBF owns and spends? In the difficult financial times in which UB finds itself, these questions deserve answers.”

The report crunched numbers from the foundation’s annual audited financial statements and IRS Form 990 tax returns from 1997 to 2013 and concluded that its spending on salaries grew by 174 percent over a 13-year period. Salary spending also increased to 40 percent, from 30 percent, of overall spending during that time.

About 7 percent of foundation expenditures in 2013 were for student scholarships.

Audited financial statements and Form 990s reveal some information about a nonprofit’s finances, but in the case of the UB Foundation, they do not provide details about spending on university programs, nor do they explain where the money comes from.

Faculty members have pushed administrators for years to reveal more information about finances of the foundation, which is considered a private entity not subject to the state Freedom of Information Law that governs the public university. In 2013, the Faculty Senate approved a resolution requesting that UB President Satish K. Tripathi make available the foundation budget, “as if it were subject to FOIL.” Tripathi declined the request, saying he did not have the authority to release those records.

But several faculty members said they have no intention of dropping the matter. James R. Holstun, a professor of English, described the foundation’s influence as “a kind of privatization of the university from the inside.” The shielding of finances from public scrutiny, he added, threatens to destroy public higher education.

With its total assets growing year after year, the foundation spent more than $1.2 billion between 1997 and 2013.

Edward P. Schneider, executive director of the foundation, said the growth and the spending were positives for the university. Requests for more transparency from the foundation were misguided, since it is the university that determines how all of the foundation funds are spent, he said.

“There isn’t anything that’s getting processed without the proper approvals of the university leadership,” Schneider said.

Schneider also said that top ups represented just a small part of the money that the foundation paid in salaries.

“The bulk of that is regular compensation paid through the university foundation, as opposed to the (SUNY) Research Foundation,” he said.

The report also raises concerns about the people who control the foundation as trustees and directors on its board and the boards of seven affiliated nonprofit entities. Many of those board members have direct, indirect or potential private business interests in the foundation’s spending and investment, according to the report.

As examples, the report cited developer Michael L. Joseph, a former trustee whose company bought a vacant parcel in downtown Buffalo for $410,000 in 2005 and then sold the lot to the foundation in 2012 for $1.26 million, and Frank and Paul Ciminelli, both of whom had been directors of foundation affiliates prior to LPCiminelli, their family firm, receiving a construction contract valued at $48 million.