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The Great UB Heist

The mission of the state university system shall be to provide to the people of New York educational services of the highest quality, with the broadest possible access, fully representative of all segments of the population in a complete range of academic, professional and vocational postsecondary programs...

—SUNY Mission Statement

What we are trying to do is to change the way the State University of New York system behaves and the way higher education behaves in the state, what I might call a change from socialism to social Darwinism…We are trying to force the state and SUNY to invest selectively in its universities.

—UB President John B. Simpson to the UB Faculty Senate, October 2007

If you love our public university, then take a close look at how the UB 2020 legislation takes the "public" out of it

Across the country, public universities are being targeted for reform by business leaders and by politicians who speak for business leaders. In Louisiana, a business group called the Flagship Coalition is pushing for more flexibility for that state’s “flagship” Louisiana State University. They also want less state oversight of LSU’s business dealings.

“These autonomies would allow LSU to manage its budget with more consistency and predictability, just like good businesses do,” the group’s website proclaims.

“Flexibility” is a buzzword in this movement. In Washington State, there are currently two higher education tuition flexibility bills in the legislature. Oregon, Ohio, and Wisconsin are all seeing their public universities pressing for more autonomy.

Writing on the website Inside Higher Ed, Doug Lederman observes: “Every few years, especially when the economy turns down, public universities—especially flagship and other research universities—crank up campaigns for more autonomy from their states. If you can’t (or won’t) give us more money, college leaders tell their states, at least free us from outdated or irrelevant state rules that drive up our costs or restrict our ability to spend the money we do have more efficiently. (We wouldn’t mind more freedom to raise tuition, by the way.)”

For the past three years in New York, this movement has been brought forward by administrators at the State University of New York at Buffalo in the form of UB 2020 legislation. Although the measures have died in the State Assembly in the past, this year’s version passed almost unanimously in the Republican-controlled Senate. It has not been put up for a vote in the Assembly this year, and provisions of the bill have not been included as part of the state budget thus far.

In broad terms, all the UB 2020 bills have focused on changing the rules of state oversight at UB to make it easier for the university to buy and sell state property and to enter into public-private-partnerships exempt from Freedom of Information Law and other state laws. Another major element of the plan is granting the university the freedom to raise tuition as it sees fit, without approval of the Legislature, and to keep this money for itself. Bill supporters argue that in years past, tuition money went into the overall state budget, even as state funding for SUNY was cut. So, in addition, the bill requires the state to continue funding UB at present levels in perpetuity.

Last year, the benefits of such a setup gained the enthusiastic support of the other large university centers in the SUNY system: Stony Brook, Albany, and Binghamton. The bill then became known as the Public Higher Education and Empowerment Act (PHEEIA). Again it failed in the Assembly.

This year, SUNY Chancellor Nancy Zimpher has been pursuing negotiations with Cuomo’s office and the Legislature to craft a plan that would call for “rational” and “predictable” tuition increases for New York State resident students for the next five years. The increased income to SUNY, advocates argue, would be an antidote to state funding cuts to the system.

The language of this year’s UB 2020 bill would allow undergraduate tuition to increase up to $750 a year. In five years, that could cause the current tuition rate ($4,970/year) to rise by $3,750 up to $8,720—not including on-campus room and board, books, transportation, fees, and other expenses that can add another $15,000/year to higher education cost for undergraduate students.

The change would be even starker for professional degree programs, which could increase by as much as 15 percent annually, according to the language of the bill.

Those are some reasons the bill is again meeting resistance from lawmakers who don’t feel the state should relinquish control of university properties and facilities that taxpayers have poured billions of dollars into over the years. There is also concern that allowing individual colleges and universities to raise tuition on their own could quickly compromise the mission of SUNY—“to provide to the people of New York educational services of the highest quality, with the broadest possible access…”

Bill proponents suggest that these legislators are bowing to unions like United University Professionals (UUP), and the Graduate Student Employees Union/CWA (Communications Workers of America) Local 1104. These groups raise red flags about privatization leading to outsourcing of university jobs, among other things.

Meanwhile, one of the bill’s biggest boosters is the Buffalo Building and Construction Trades Council, which represents 17 member unions like bricklayers, carpenters, cement masons, electricians, ironworkers, teamsters, and so on.

In February, I contacted, or attempted to contact, every member of the Western New York legislative delegation. Some never returned my numerous calls. They had all spoken in unison in favor of the bill at a press conference at the Center for Tomorrow on the UB Amherst campus on January 14. Each member I spoke to was behind UB 2020 as an “economic engine” and job creator for the region. Most also admitted that they had not yet read the bill, even though they had already gone on the record supporting it enthusiastically at the press conference. Some expressed surprise when I pointed out the potential tuition increases. Others simply said the tuition wouldn’t increase that much.

The invisible money machine

It would have been impossible for UB 2020 legislation to have gone anywhere without the generous support of various UB foundations that bankrolled lobbying efforts in Albany in support of it over the last few years, outspending all other SUNY schools by far. The UB foundations control nearly half a billion dollars and operate beyond the reach of the press and public. There are at least seven and perhaps a dozen or more of these UB-affiliated entities.

In 2008, the New York State Commission of Public Integrity listed more than 40 university employees as UB 2020 lobbyists—compensated for that role by the foundation, in addition to their state salaries.

The law firm that represents the UB Foundation, Hodgson Russ, provided us a list that is 34 pages long, listing more than 1,400 names of people compensated by the foundation. It’s undated, and many of the job titles are cut off. Names and salaries do appear, and it’s relatively easy to see that more than 260 people are paid $30,000 or more by the foundation alone. Seventeen are paid over $100,000.

Who decided who got paid what? That decision was apparently weighed by the UB Foundation Compensation Committee, which is chaired by businessman Angelo Fatta, who is also chair of the UB Foundation board of trustees, and a member of its board of directors. The Compensation Committee’s goal is to “[c]ounsel the university President on matters of compensation.” It’s a committee of two—the other member is the UB president, currently John B. Simpson. So Simpson counseled with Fatta, for example, on the propriety of giving over a quarter of a million dollars a year from UB Foundation Activities to UB President John B. Simpson—on top of his state salary, which was roughly equal to that amount, plus other perks catalogued in the Chronicle of Higher Education.

When the University at Buffalo Foundation was granted its absolute charter by the state Board of Regents in 1962—the year the university joined the state system—the money it controlled was to be used for “library aid, classroom, laboratory and other equipment, scholarships, fellowships, and professorships and other financial aid for students and faculty, student and/or faculty activities, cultural and scientific studies, programs and publications, and alumni activities, all in such manner as best carries out these purposes.”

The 2008 990 tax form filed by UB Foundation Activities shows that it spent more than $28 million on various forms of employee compensation, including millions in salary top-ups to upper-level UB employees, and $18,923,891 on travel, advertising and promotions, conferences, and conventions, and payments to various affiliated corporations. The chart on the next page enumerates some of those salary top-ups.

Meanwhile, the foundation spent $3,348,300 on scholarships to UB students.

I’m my own grandpa

As sociologists of American corporate life will tell you, it’s not just how much individual CEOs make—it’s also who they lunch with. The UB foundations are tightly interwoven with the Western New York business community via interlocking memberships in countless clubs, boards, and corporations. And directors of the UB foundations frequently profit considerably from university-awarded contracts. No doubt, good citizenship is a significant motive in their willingness to serve on these boards and foundations, but it’s also possible that tens of millions of dollars in state contracts for the public’s money play a role. Among the most important roles of the UB affiliate foundations is providing for the orderly transfer of student tuition and fees and public funds from Albany into the pockets of local contractors and lawyers.

Let’s take a look at how public-private partnerships work today at UB, even before the passage of any “UB 2020 Flexibility and Economic Growth Act.”

The membership of the UB Council, the UB Foundation, and the various affiliate corporations reads like a Who’s Who of Western New York government, law firms, and corporations, many of them with substantial UB business. Their dealings with UB and the State of New York are overseen by themselves, their family members, and their friends and associates.

For example, Frank L. Ciminelli is an owner of Ciminelli Development and senior vice president of LP Ciminelli Inc., the largest construction group in Western New York. He is also an emeritus trustee of the UB Foundation and an active member of its Properties Committee. Frank and his three sons (Louis, Paul, and John) have had a long and profitable relationship with UB. In 2004, Louis and Paul formed non-union GPS Construction Services LLC. Louis named his cousin, Robert Savarino, as its president and CEO. UB named GPS the general contractor for the Alfiero Center at UB’s School of Management, on the North Campus. At the building’s dedication, UB’s Simpson said, “In important ways, the Alfiero Center is the visible manifestation of the dynamic partnerships that have contributed to its construction.”

Foit-Albert Associates was the building’s architect. Beverly Foit-Albert is also a director of the UB Foundation and a member of its Properties Committee. Her firm also drew up the plans for relocating over 150 families from McCarley Gardens, the moderate-income housing development that occupies a piece of land coveted for development in the downtown medical corridor. In 2010, the UB Foundation offered $15 million to buy the property, relocating the residents over several city blocks in new builds.

UB also picked GPS as the contractor for two off-campus UB housing projects. Frank’s son John became president and COO of GPS in 2008. The following year, LP Ciminelli Inc. reabsorbed GPS, and John planned to “come over to LPCiminelli as senior vice president in charge of the housing business,” according to an April 4, 2009 story in the Buffalo News.

Frank’s son Louis is a director of the Buffalo Niagara Partnership—which has once again made passage of UB 2020 its number one legislative priority this year—and chairman and CEO of LP Ciminelli, Inc., where his son Frank L. Ciminelli II is senior vice president. Frank’s brother Paul is president and CEO of Ciminelli Development Company, Inc., a director of the Empire State Development Corporation, a director of the UB Foundation, and a member of its Properties Committee.

The most significant constructions currently underway on the UB North Campus are the Greiner-Hadley projects, which include the $57 million William R. Greiner Residence Hall, named after the former UB president. Greiner’s son, Kevin T. Greiner, secured and managed over $45 million in new development projects when he worked for Ciminelli Development as senior development project manager.

The bond for the residence hall, dated May 20, 2010, is valued at $82,865,000, and lists LPCiminelli Inc. as the construction manager.

The UB entity that drew up and authorized the bond is the UB Faculty-Student Housing Corporation. Tax forms show that at least as far back as 2007, Frank Ciminelli and his son Paul have both been directors of this corporation, along with the UBF Corporation, FNUB, Inc., and the UBF Incubator, Inc. According to the UB website, they still hold these positions today. They were there when the construction contracts were okayed and remain on right through construction.

So when UB, through the UB Faculty-Student Housing Corporation, contracted for this enormous and lucrative project, there were Ciminellis on both sides of the table. The only person missing was a disinterested steward of the money’s true owner: the people of New York State.

This sort of thing goes on all the time in the corporate world, but the money-handlers are not usually helping themselves to public money quietly transferred to a private corporation. We call it “nepotism” when an ordinary person gives a job to a family member. What do we call it when a UB corporation director gives his company, or a family member, or himself a multi-million-dollar contract? Was there even a show of competitive bidding? Because the UB Faculty-Student Housing Corporation—along with the other myriad related organizations—claim to be private entities, the public and press can’t find out. If someone recused himself, then he may have been standing outside the door, but we can’t know this until we get access to meeting minutes. Already UB’s foundations argue that they are immune to Freedom of Information Law. If the UB2020 legislation ever passes, that immunity will be codified.

Why give up oversight?

In June 2010, I filed a FOIL request to the UB Foundation. After being given some information “as a courtesy” and then told the foundations are private, and therefore not subject to such requests, I sought a court’s judgment on the claim. While the case was being adjudicated, the foundation’s lawyers at Hodgson Russ received some heartening news: The New York State Board of Regents had quickly approved a requested change to the absolute charter of the UB Foundation. Whereas SUNY trustees had elected the foundation’s board members for the previous 49 years, going forward the UB Foundation would become a self-perpetuating body, electing members from within—with no state input.

I have repeatedly requested comment from the Board of Regents, the SUNY Trustees, the SUNY Chancellor, and Governor Andrew Cuomo’s office as to why this state oversight was so blithely given away. No one will offer a reply.

On the morning we were to arrive in court, a courier delivered a large box to the Artvoice office, containing incomprehensible computer printouts, along with incorporation certificates for a few of the foundations, and 990 tax filings that in some instances go back 20 years. A week before, I had received the cryptic 34-page list of individuals compensated by the foundation. These offerings were sent in an effort to show the court that they’d given me all I’d requested in my FOIL request. But aside from my initial requests that had been denied, the point of the legal action was to get a ruling that would allow a reporter or private citizen to gain access to records of a group that was set up to support a state institution—a group that would in fact have no reason to exist were it not for that state institution.

Judge Patrick NeMoyer agreed with the attorneys for Hodgson Russ. The foundations are not subject to FOIL, nor to the Open Meeting Law. Any information they relinquish to the public or press would be done strictly as a courtesy. No access to records.

Charity Navigator, a website that evaluates nonprofits, states that one of their core beliefs “is the importance of a charity’s transparency—that they maintain open communication about their operations, both good and bad, with the public. This transparency is critical for donors to maintain their trust in an organization. Without that trust, an organization cannot survive for the long haul.”

That’s something all prospective donors to UB through the UB Foundation should consider the next time they are approached for a donation.

It also raises interesting ethical questions, when you consider that many top officials at the State University of New York at Buffalo are compensated as much by this private corporation as they are by the state. These are individuals claiming, on tax forms, to work 40 hours per week for the foundation. The state is also paying them to work full-time. So whom do they serve?

Public and private

The secrecy doesn’t end with the UB Foundations. The Buffalo 2020 Development Corporation “is a private, not-for-profit corporation formed by the SUNY Research Foundation and the University at Buffalo Foundation to develop research facilities that will advance the academic mission of the University at Buffalo and promote economic development in and around Buffalo, New York.”

Who are the directors of the Buffalo 2020 Development Corporation? James Weyhenmeyer, the chairman, is also vice president and managing director of the Technology Accelerator Fund at the SUNY Research Foundation. Satish Tripathi, the vice chairman, is the newly-named officer-in-charge of UB and soon to be president.

Buffalo 2020 Development Corporation board members are: David Dunn, vice president for Health Sciences at SUNY Buffalo; Scott Nostaja, who abruptly resigned as senior vice president and chief operations officer at SUNY Buffalo on March 23; John J. O’Connor, senior vice chancellor for Research and Innovation, secretary of SUNY, and president of the Research Foundation of SUNY; Edward P. Schneider, executive director of the UB Foundation; and former UB President John B. Simpson.

Last year, it appears the State University Construction Fund transferred $132,000,000 in public SUNY capital construction funds to the Buffalo 2020 Development Corporation “for the purpose of constructing, acquiring, or creating a Clinical/Translational Research facility on the downtown campus, and incubator facility on the downtown campus, the UB Gateway project, and reimbursing the University at Buffalo Foundation for property acquisition for the Educational Opportunity Center and the UB Gateway project.”

The State University Construction Fund can’t be seen as money from private donors, so I decided to file a FOIL request asking to look at records. Another lawyer from Hodgson Russ (tax forms show the firm makes hundreds of thousands of dollars annually from the foundation) replied that Buffalo 2020 Development Corporation is not subject to the Public Officers Law and beyond the reach of FOIL.

After appealing that denial, I received this response from their attorney, on March 21:

“…even though Buffalo 2020 Development Corporation is not subject to the Public Officers Law, the corporation has agreed as a courtesy to provide you with copies of the requested information which exists. We have estimated at this point that the requested information is in excess of 28,000 pages. At a cost of $.25 per page, the photocopy charges for the requested information will exceed the sum of the (sic) $7,000. If you are interested in proceeding with the request, kindly forward a check payable to Buffalo 2020 Development Corporation for this amount and we will get started on preparing the documentation for transmittal to you. Please note, though, that, in addition to this estimate, there may be additional charges for photocopying of certain of the documents, which are not on standard paper.”

I replied, asking if the documents were available in electronic form. “Unfortunately, no,” I was told. I then asked if I could inspect the documents before requesting specific copies—which is what the FOIL allows—and the lawyer at Hodgson Russ replied that he would check with his client.

I then received, free of charge, a 31-page PDF including the Buffalo 2020 Development Corporation certificate of incorporation, along with liberally redacted meeting minutes. I was also told I could begin inspecting documents at the Hodgson Russ office in one week’s time, by appointment, and then request specific—presumably redacted—copies at 25 cents apiece. Again, this is being done as a “corporate courtesy,” not because they agree they are subject to FOIL.

In light of the way public-private-partnerships already function at UB, coupled with the fact that the UB Foundations recently won a court case ruling them to be separate, private groups, immune to FOIL requests and Open Meetings Law requirements, a reasonable taxpayer should wonder what could possibly be gained by granting the UB and SUNY even less state oversight, as provided in the UB 2020 legislation. The bill’s supporters point to the thousands or tens of thousands of jobs they say will be created, but there are no guarantees. No milestones. No way to measure the plan’s success over time. No responsibility if the whole thing flops.

The case could easily be made that, in fact, more state oversight is needed if SUNY—often called the largest comprehensive system of universities, colleges, and community colleges in the world—is to maintain its original educational mission and not be stolen wholesale by the local business community under the guise of turning it into an “economic engine” built to revitalize the Western New York economy.

Legislators on both sides of the issue publicly agree that SUNY has gone through periods when it’s been under-funded since it was created in 1948. This has been true in recent years, as it is true now. With the state facing an enormous budget deficit, and middle-class families financially squeezed on every front, some argue that rather than raising tuition, a fairer way to fund SUNY would be through higher taxes on the wealthy—the way the wealthy used to pay more taxes in New York, back when SUNY was growing and thriving under Governor Nelson Rockefeller. Governor Andrew Cuomo has rejected that idea.

If supporters of UB 2020 really want to move toward privatization of the university, here’s a modest proposal: Why not simply buy the university back from the people of New York State? How much do you think the three campuses, with all the infrastructure, buildings, and land are worth? The state’s been pouring billions into the institution since it took over the private, financially troubled Universtity of Buffalo in 1962. Let’s call it $50 billion, and the new owners can charge whatever they want for tuition. However, there will also be much less public support from the state going forward—how does that sound? It might be a quick way to close New York’s staggering budget deficit.

We can reasonably guess that’s never going to happen. As it is, the State University of New York at Buffalo is controlled by a handful of powerful, wealthy Western New Yorkers. Through legitimate board appointments, they enjoy a stranglehold on the various UB foundations, which are now self-perpetuating bodies, electing members from within, operating completely beyond state and public oversight. Why buy the cow when they’re already getting the milk for free?

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