Alumni gift to Edinboro University: What was it worth? The Bubas' gift to Edinboro University: What was it worth?
By Bill Scheckner and Eleanor Chute
Pittsburgh Post-Gazette
Edinboro University wasn't shy about telling the world it had landed the largest gift in its 152-year history and that it would rename its Meadville branch and a main campus computer lab for the donors.
The state university lauded alumnus Joseph Buba and his wife, Eleonora, in a news release and in a council of trustees resolution. Pictures were snapped as the couple visited campus, and their faces were placed on the cover of the university's magazine.
The fanfare surrounding the renaming begged a simple question:
Just how much money did the state-owned university -- and by extension Pennsylvania taxpayers -- receive in return?
That question -- posed to Edinboro in December 2009 -- began a 14-month odyssey that illustrates not only how universities use foundations to keep information out of the public eye, but also how difficult it can be to obtain a public document using Pennsylvania's Right to Know Law, even when the document belongs to a state agency. It ended when Edinboro said that it "admits to making a mistake" and agreed to pay a voluntary civil penalty and legal fees to the Pittsburgh Post-Gazette earlier this month.
Higher education foundations
Foundations play an important role in higher education across the nation, including the State System of Higher Education, of which Edinboro as well as Slippery Rock, California, Clarion, Indiana and nine other universities are members.
All 14 of those State System schools -- and the system itself -- have foundations, some dating to the 1960s and many of them dating before the system itself was formed in 1982.
Along with raising money for scholarships and accepting other gifts, the foundations and other nonprofit organizations oversee tasks like dormitory construction, floating hundreds of millions of dollars in privatized debt the State System could be called upon to back.
Yet foundations' actions are largely taken out of public view because the universities insist those foundations -- generally 501(c)(3) charities -- are legally separate organizations and thus exempt from open records laws.
Edinboro used that argument to stay mum on the size of the gift it secured from the Bubas in exchange for renaming the taxpayer-supported facilities.
It told the Post-Gazette on Dec. 10, 2009, the day of the gift announcement, that the Bubas' donation -- described in a news release as a "multi-million dollar estate gift" and the "largest gift" in the university's history -- went to the Edinboro University Foundation, which does not release its donor records, and thus the amount would not be made public.
It stuck to that argument even though the school's news release issued that day and a university trustees resolution two months earlier said the gift was made to the university.
As it turns out -- based on university and foundation documents ultimately released as a result of a legal challenge by the Post-Gazette -- there were no foundation records after all. The only document matching a gift that size belonged to the university.
That means the dollar amount was required to be public all along. The Right to Know Law does not require the university to release the name of a donor, but Edinboro already had done that voluntarily.
How Right to Know is involved
In Pennsylvania, the question of whether the foundation of a state-owned university is a public agency and thus subject to the Right to Know Law may be resolved in a case involving East Stroudsburg University and its foundation.
The Pocono Record challenged the university and its foundation for donor records. In May, the newspaper won its case in Commonwealth Court where the majority opinion said the foundation carried out a "governmental function."
In June, the university and foundation petitioned the state Supreme Court to hear an appeal. The court has not announced whether it will do so.
The outcome is of keen interest for a system in which universities and their foundations are closely aligned.
On its website, the Edinboro University Foundation says it "exists to support the mission" of the university.
"Like most colleges and universities throughout the United States, the university recognized the need to create a separate legal unit for the purpose of receiving and managing private gifts, and in turn, investing those gifts for the university," the foundation states.
Indeed, the foundations and universities are so close that the credit rating agency Moody's considered foundation debt when rating a $137.8 million bond issue by the State System last year.
Likewise, in rating Edinboro University Foundations's $63 million bond issue for student housing last year, Moody's stated as one of its strengths "very strong implied obligation of the university and the system, despite the absence of any legal commitment," noting the foundation and university had a "cooperation agreement" on the housing.
Moody's gave both entities stable outlooks, but the system's bonds had a higher rating.
How foundations have evolved
The first public university foundation started in the 1890s at the University of Kansas, and now the vast majority of public colleges and universities have them, according to the Council for Advancement and Support of Education in Washington, D.C.
Traditionally, the foundations provided the "margin of excellence," such as attracting top-notch faculty or a special program and providing scholarships, according to Brian Flahaven, director of institutionally related foundations for the council.
In recent decades, the scope and importance of these organizations have grown as public universities have seen state appropriations erode.
Pennsylvania used to pay for 100 percent of capital construction costs, but a major change took place in the early 1990s during the Casey and Ridge administrations. Capital construction funding used to be unpredictable, making long-range planning difficult, State System spokesman Kenn Marshall said.
In exchange for a more predictable stream of funding, the system agreed to raise 25 percent of projected costs of academic buildings. Now the system puts up 50 percent of most such projects. The universities or foundations must raise the rest of the money.
The state does not contribute to the cost of building housing, dining halls, student unions and other auxiliary buildings. They usually are paid for by student fees.
The foundations do not always need to follow the same rules as the universities and system.
When building student housing, Mr. Marshall said the universities must follow the Separations Act, which usually results in four separate contracts.
If they wish, foundations can hire one company that specializes in student housing to do the whole job and reduce the time needed from start to finish from five years to two years, he said.
However, the foundations still must pay prevailing wage.
Mr. Marshall said donors sometimes are more willing to give to a foundation than to a public university. Foundations often have funds designated for specific goals that may match a contributor's interest.
An issue nationwide
Whether public university foundations serve a governmental function and thus should be required to disclose records has become a hot issue in some states, including Iowa, where the state Supreme Court in 2005 ordered the Iowa State University Foundation to release records.
In Kentucky, the University of Louisville Foundation received a similar court order in 2008.
In California, state Sen. Leland Yee has twice introduced legislation to open up public university foundations, but both times it was vetoed by then Gov. Arnold Schwarzenegger.
Supporters of the legislation are hoping for a different outcome with the state's new governor, Jerry Brown. To make their case for disclosure, some have cited matters including a state finding that a nonprofit affiliated with California State University, Sacramento, should not have spent $27,615 to install a commercial grade range and hood in the private residence of the school's president, even though it was used to host university-related events.
They also recall how students went Dumpster diving to try to find out how much Sarah Palin was paid to speak at California State University at Stanislaus, a $75,000 figure a university foundation originally refused to release.
Barry Kaufman, executive director of Common Cause Pennsylvania, said taxpayers have a legitimate interest in knowing the basis for renaming any portion of a state university for private individuals or corporations, including the amount the school receives in return.
"These are public institutions. They get public dollars," he said. "I think the public has a right to know what the complete arrangement is."
What it was worth
So, what exactly did Edinboro get in return for renaming "in perpetuity" a 20,000-square foot building in Meadville the "Edinboro University in Meadville -- The Joseph T. Buba Center" and the largest computer lab in Ross Hall on the main campus to become the "Eleonora C. Navari Buba Computer Laboratory"?
Is it, as the school suggests, a multimillion dollar boost for the university?
It depends.
The gift could be worth $7.5 million or greater in the best case, although Edinboro might have to wait 25 years or longer to receive the full amount.
Or, the gift could be closer to $2 million if the donors, or a survivor, make the donation within five years.
Edinboro must honor the agreement with the Bubas, even if the university ultimately gets no more than $1.5 million from the couple or a survivor.
Edinboro has stated that the Bubas did not want the amount to be publicly revealed and that they did not want to comment for this article.
"Edinboro is very proud that the Bubas wanted to include the university in their estate plan, thereby giving back to the Meadville community," Edinboro spokeswoman Amy Neil said.
Pittsburgh Post-Gazette
Edinboro University wasn't shy about telling the world it had landed the largest gift in its 152-year history and that it would rename its Meadville branch and a main campus computer lab for the donors.
The state university lauded alumnus Joseph Buba and his wife, Eleonora, in a news release and in a council of trustees resolution. Pictures were snapped as the couple visited campus, and their faces were placed on the cover of the university's magazine.
The fanfare surrounding the renaming begged a simple question:
Just how much money did the state-owned university -- and by extension Pennsylvania taxpayers -- receive in return?
That question -- posed to Edinboro in December 2009 -- began a 14-month odyssey that illustrates not only how universities use foundations to keep information out of the public eye, but also how difficult it can be to obtain a public document using Pennsylvania's Right to Know Law, even when the document belongs to a state agency. It ended when Edinboro said that it "admits to making a mistake" and agreed to pay a voluntary civil penalty and legal fees to the Pittsburgh Post-Gazette earlier this month.
Higher education foundations
Foundations play an important role in higher education across the nation, including the State System of Higher Education, of which Edinboro as well as Slippery Rock, California, Clarion, Indiana and nine other universities are members.
All 14 of those State System schools -- and the system itself -- have foundations, some dating to the 1960s and many of them dating before the system itself was formed in 1982.
Along with raising money for scholarships and accepting other gifts, the foundations and other nonprofit organizations oversee tasks like dormitory construction, floating hundreds of millions of dollars in privatized debt the State System could be called upon to back.
Yet foundations' actions are largely taken out of public view because the universities insist those foundations -- generally 501(c)(3) charities -- are legally separate organizations and thus exempt from open records laws.
Edinboro used that argument to stay mum on the size of the gift it secured from the Bubas in exchange for renaming the taxpayer-supported facilities.
It told the Post-Gazette on Dec. 10, 2009, the day of the gift announcement, that the Bubas' donation -- described in a news release as a "multi-million dollar estate gift" and the "largest gift" in the university's history -- went to the Edinboro University Foundation, which does not release its donor records, and thus the amount would not be made public.
It stuck to that argument even though the school's news release issued that day and a university trustees resolution two months earlier said the gift was made to the university.
As it turns out -- based on university and foundation documents ultimately released as a result of a legal challenge by the Post-Gazette -- there were no foundation records after all. The only document matching a gift that size belonged to the university.
That means the dollar amount was required to be public all along. The Right to Know Law does not require the university to release the name of a donor, but Edinboro already had done that voluntarily.
How Right to Know is involved
In Pennsylvania, the question of whether the foundation of a state-owned university is a public agency and thus subject to the Right to Know Law may be resolved in a case involving East Stroudsburg University and its foundation.
The Pocono Record challenged the university and its foundation for donor records. In May, the newspaper won its case in Commonwealth Court where the majority opinion said the foundation carried out a "governmental function."
In June, the university and foundation petitioned the state Supreme Court to hear an appeal. The court has not announced whether it will do so.
The outcome is of keen interest for a system in which universities and their foundations are closely aligned.
On its website, the Edinboro University Foundation says it "exists to support the mission" of the university.
"Like most colleges and universities throughout the United States, the university recognized the need to create a separate legal unit for the purpose of receiving and managing private gifts, and in turn, investing those gifts for the university," the foundation states.
Indeed, the foundations and universities are so close that the credit rating agency Moody's considered foundation debt when rating a $137.8 million bond issue by the State System last year.
Likewise, in rating Edinboro University Foundations's $63 million bond issue for student housing last year, Moody's stated as one of its strengths "very strong implied obligation of the university and the system, despite the absence of any legal commitment," noting the foundation and university had a "cooperation agreement" on the housing.
Moody's gave both entities stable outlooks, but the system's bonds had a higher rating.
How foundations have evolved
The first public university foundation started in the 1890s at the University of Kansas, and now the vast majority of public colleges and universities have them, according to the Council for Advancement and Support of Education in Washington, D.C.
Traditionally, the foundations provided the "margin of excellence," such as attracting top-notch faculty or a special program and providing scholarships, according to Brian Flahaven, director of institutionally related foundations for the council.
In recent decades, the scope and importance of these organizations have grown as public universities have seen state appropriations erode.
Pennsylvania used to pay for 100 percent of capital construction costs, but a major change took place in the early 1990s during the Casey and Ridge administrations. Capital construction funding used to be unpredictable, making long-range planning difficult, State System spokesman Kenn Marshall said.
In exchange for a more predictable stream of funding, the system agreed to raise 25 percent of projected costs of academic buildings. Now the system puts up 50 percent of most such projects. The universities or foundations must raise the rest of the money.
The state does not contribute to the cost of building housing, dining halls, student unions and other auxiliary buildings. They usually are paid for by student fees.
The foundations do not always need to follow the same rules as the universities and system.
When building student housing, Mr. Marshall said the universities must follow the Separations Act, which usually results in four separate contracts.
If they wish, foundations can hire one company that specializes in student housing to do the whole job and reduce the time needed from start to finish from five years to two years, he said.
However, the foundations still must pay prevailing wage.
Mr. Marshall said donors sometimes are more willing to give to a foundation than to a public university. Foundations often have funds designated for specific goals that may match a contributor's interest.
An issue nationwide
Whether public university foundations serve a governmental function and thus should be required to disclose records has become a hot issue in some states, including Iowa, where the state Supreme Court in 2005 ordered the Iowa State University Foundation to release records.
In Kentucky, the University of Louisville Foundation received a similar court order in 2008.
In California, state Sen. Leland Yee has twice introduced legislation to open up public university foundations, but both times it was vetoed by then Gov. Arnold Schwarzenegger.
Supporters of the legislation are hoping for a different outcome with the state's new governor, Jerry Brown. To make their case for disclosure, some have cited matters including a state finding that a nonprofit affiliated with California State University, Sacramento, should not have spent $27,615 to install a commercial grade range and hood in the private residence of the school's president, even though it was used to host university-related events.
They also recall how students went Dumpster diving to try to find out how much Sarah Palin was paid to speak at California State University at Stanislaus, a $75,000 figure a university foundation originally refused to release.
Barry Kaufman, executive director of Common Cause Pennsylvania, said taxpayers have a legitimate interest in knowing the basis for renaming any portion of a state university for private individuals or corporations, including the amount the school receives in return.
"These are public institutions. They get public dollars," he said. "I think the public has a right to know what the complete arrangement is."
What it was worth
So, what exactly did Edinboro get in return for renaming "in perpetuity" a 20,000-square foot building in Meadville the "Edinboro University in Meadville -- The Joseph T. Buba Center" and the largest computer lab in Ross Hall on the main campus to become the "Eleonora C. Navari Buba Computer Laboratory"?
Is it, as the school suggests, a multimillion dollar boost for the university?
It depends.
The gift could be worth $7.5 million or greater in the best case, although Edinboro might have to wait 25 years or longer to receive the full amount.
Or, the gift could be closer to $2 million if the donors, or a survivor, make the donation within five years.
Edinboro must honor the agreement with the Bubas, even if the university ultimately gets no more than $1.5 million from the couple or a survivor.
Edinboro has stated that the Bubas did not want the amount to be publicly revealed and that they did not want to comment for this article.
"Edinboro is very proud that the Bubas wanted to include the university in their estate plan, thereby giving back to the Meadville community," Edinboro spokeswoman Amy Neil said.