April 25, 2018
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Blodgett’s $110K buyout funded by little-known discretionary fund

By Judy Harrison, BDN Staff

ORONO, Maine — When University of Maine President Robert Kennedy dipped into one of his two discretionary funds to buy out Cindy Blodgett’s contract, it deja vu for some longtime Black Bears fans.

Former UMaine President Dale Lick used $36,000 from one of his discretionary funds in 1988 to pay for a negotiated settlement with women’s basketball coach Peter Gavett.

While Yogi Berra’s quip does not exactly apply because Blodgett was fired for her poor win-loss record and Gavett was forced to resign, the use of a president’s discretionary fund to escort another women’s basketball coach off campus does raise questions about how and for what purposes university presidents use their discretionary, also called contingency, funds.

Kennedy’s decision to pay $109,772 — or one year’s salary — to Blodgett has not caused the outrage his predecessor’s use of the money did at a time when there were no written systemwide guidelines on how money from the fund could be spent.

Lick, who was president from 1986 to 1991 and now lives in Georgia, was credited with increasing spending for athletics and academics. He was criticized roundly and loudly, however, for using money from his discretionary fund not only to pay Gavett but for spending $12,655 to buy rings for the football players who won a conference championship in late 1987.

Gavett resigned suddenly in June 1988 shortly after he had signed a three-year coaching contract with the university. His reasons for resigning went unexplained until a court ruling revealed an agreement between Gavett and the university over allegations that he had “physical contact of a personal nature” with an unidentified student.

About six months after Blodgett signed a two-year extension of her contract, she was fired due to her 24-94 win-loss record during her time at UMaine, according to previously published reports. While Gavett’s settlement was negotiated between what is now the Maine Education Association and the university, Blodgett’s contract required that she receive a year’s salary if she was let go before it expired.

The controversy over Lick’s use of his discretionary fund apparently led then-Chancellor Robert L. Woodbury to implement guidelines, which are still in place, across the University of Maine System.

“All decisions for use of funds are made within limits imposed by statute, by board policy, or by common sense and are subject to university procurement practices, salary policy, and tax regulations, etc.,” Woodbury said in guidelines dated April 3, 1989.

“Because the funds arise from private, rather than public, sources, presidents are allowed greater discretion in the use of the funds than in expenditure of [Educational and General Funds] monies,” the policy states. “All uses must be for official university purposes.”

There are prohibitions on how presidents’ discretionary funds can be used. They can’t be expended for personal use, for partisan political campaigns or to circumvent salary schedules.

There are two funds available to the UMaine president — the Presidents Gift Account and the UMaine Priorities Account. The money to pay off Blodgett’s contract will come from the priorities account, with a portion withdrawn monthly, according to Joe Carr, spokesman for UMaine.

“In addition to allowing flexibility to address unforeseen needs, these funds give us the opportunity to make investments that we believe will have a positive impact,” Kennedy said in an emailed statement. “For example, I have chosen to invest in private fundraising initiatives because the ongoing development of donors is critical to the University of Maine’s present and future ability to optimally serve our students and state.”

As of March 31, there was nearly $687,000 and about $581,000 in the accounts, respectively. The account balances on July 1, 2010, were nearly $716,000 in the gift account and about $351,000 in the priorities account.

Money in the gift account comes from endowment income and the University of Maine Foundation. Funds in the priorities account come from businesses and individuals but are not designated for a specific purpose.

For example, if a UMaine alumnus responded to a solicitation for a donation to the Annual Fund with a check for $100 but did not check a box for a particular school or program, the money could go into the priorities fund, Carr said recently.

More than $234,000 was spent from the priorities fund between July 1, 2010, and March 31 to pay costs for direct mail solicitations and a phoneathon to raise money for the Annual Fund.

Hundreds of expenditures have been made from the gift account since July 1, 2010, according to information provided by UMaine. They range from $10 purchases at Dollar Tree in the “supplies and materials” category to $4,648 for the construction of a new podium by Maine furniture maker Thomas Moser to nearly $10,000 spent on board of visitors activities to $23,000 to the University of Maine Foundation in rent for the Canada-America Center.

A list provided by Carr broke down the expenditures since July 1, 2010, from the gift fund into the following broad categories:

  1. Donor stewardship                         $58,000
  2. Commencement                              $17,000
  3. On-campus program support        $276,000
  4. Research and development             $4,500
  5. President’s house                               $800
  6. Faculty, staff, student recognition $16,600
  7. Graduate student support              $12,000
  8. Business partnerships                     $9,000
  9. Miscellaneous                                   $862

The category in which the most money has been spent includes the expenditure of funds to: support the installation of climate control equipment at the Hudson Museum to protect artifacts; making areas of campus such as the Littlefield Gardens handicapped-accessible; and pay for professional development and travel.

“Funds in the donor stewardship, alumni relations and fundraising category are used for travel, support and events promoting effective fundraising” to reach potential donors, including 98,000 UMaine alumni, many whom live out of state, according to Carr..

This year, $4,500 was spent from the gift fund to pay for a membership at the University of Massachusetts Club in Boston. Having the facility available has made it possible to “actively recruit students [from southern New England] and conduct stewardship events for the many alums and supporters in the Boston area,” Carr said.

Traditionally, UMaine retirees have been given free access to campus events. The cost of purchasing tickets and passes totaled nearly $34,000 as of March 31. About $1,400 has been spent from the fund on tickets for events the president has or will attend.

The largest expense under the business partnership category was an $8,000 membership fee to the Maine Campus Compact, an organization made up of college campuses, private and public, around the state that promotes the importance of higher education. Other items paid for from this category included the annual campus tour by legislators, a table at the Maine Chamber of Commerce dinner and the annual legislative banquet.

UMS Chancellor Richard Pattenaude has his own discretionary fund, which had a balance of nearly $71,000 as of March 21, 2010. Revenue for the fund comes from investment and endowment income and the UMaine Foundation.

Almost all of the nearly $8,500 he has spent this year was for memberships at the Portland Country Club in Falmouth and the Cumberland Club in downtown Portland and events held there.

Pattenaude, who served as president of the University of Southern Maine for 15 years before stepping into his current position in 2007, recently explained why discretionary funds are useful to college and university presidents.

“Presidents’ contingency accounts serve a number of purposes which vary by campus and president,” he said in an emailed statement. “Most importantly, these accounts provide a source of unbudgeted funds available to address unexpected expenditures. Also, because these funds are not derived from public sources or tuition, they can be a more appropriate source for certain expenditures such as donor development, or meals and receptions at which official university business is conducted.”

While president of USM, Pattenaude used money from his discretionary fund for maintenance and renovations of the historic president’s home on the Gorham campus, according to Peggy Markson, spokeswoman for the UM System. Those renovations included making a first-floor bathroom handicapped-accessible, the installation of an outside ramp and emergency lighting fixtures.

The presidents of the seven campuses in the system and the chancellor each have at least one discretionary fund and are subject to the guidelines, according to Markson.

In the recent past, Markson said, presidents have primarily used the funds for:

  1. Donor stewardship and development.
  2. Professional, service and social memberships.
  3. Official university meals, receptions and events.
  4. Official student and-or employee programs and recognition events.
  5. Maintenance and upkeep for presidents’ official residences.
  6. Unanticipated or emergency expenses not budgeted.

Spreadsheets provided by the UMaine and the UMS office detailing expenditures from the chancellor’s and the seven presidents’ discretionary funds support Markson’s explanation.

Systemwide, the total amount of money in presidents’ discretionary accounts at the beginning of the current fiscal year on July 1, 2010, was about $1.3 million, or two-tenths of 1 percent of UMS’ $647.9 million annual budget. The amount of money in the accounts ranged from a low of zero at the University of Maine at Machias to a high of $1.067 million at UMaine.

The money comes from two primary sources: unrestricted gifts designated for a specific campus but not for a specific purpose and other unbudgeted funds not appropriated by the Legislature or raised from tuition, such as vending machine proceeds, according to Markson.

Comparing the revenue and expenditures from the discretionary funds available to the president of UMaine — the system’s flagship campus, which had an annual budget of $321.7 million and the $1 million available in presidential discretionary funds as of July 1, 2010 — to the revenue and expenditures by presidents at other campuses in the system is a bit like comparing apples and oranges, she said.

Money in the funds on smaller campuses, including the University of Maine at Augusta, the University of Maine at Fort Kent and UMM, primarily comes from vending machine sales and, in some cases, interest earned on investments.

From July 1, 2010, to March 31, the only revenue transferred into the UMM president’s fund was $811 from vending machine sales, according to information provided by Markson. By contrast, gifts to the University of Maine at Farmington that went into the president’s discretionary fund totaled nearly $33,000 and income from vending machine sales was about $1,500 for the same time period.

Presidents of both campuses have been frugal this fiscal year. Expenditures from the UMM fund totaled about $250 for meals for an event on campus. Just $13 has been spent by the UMF president for a meal.

While the guidelines instituted by Woodbury are expected to remain in place, an administrative practice letter, or APL, on the use of funds in general on the seven campuses and the chancellor’s office is being drafted, according to Markson. It is expected to be implemented May 1.

“The APL is intended to provide guidance to university administrators, faculty and staff on the use of all university funds, regardless of source,” Markson said in an email. “[It] has been under development since the fall of last year. The impetus was to develop a comprehensive policy which placed all relevant guidance in one place for administrators, faculty and staff.”

The draft letter includes a list of prohibited and questionable expenditures. The prohibited items include personal toll phone calls, except in the case of emergencies, on office and cell phones; personal purchases; social and recreational functions; and meal tips exceeding 15 percent. The questionable list includes public money spent for flowers, greeting cards and candy, space decoration, membership dues, and meals and snacks for staff development programs, official meetings and travel. The disciplinary actions proposed include immediate reimbursement, additional training, notifying the system office of major infractions and disciplinary action up to and including termination.

“The public’s expectation of accountability and transparency is appropriate,” Pattenaude said. “This is why we are in the process of reviewing and updating guidance for university administrators, faculty and staff on the use of all university funds.”

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