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The Politics of Money: U of M Endowment Among Top 10 In Nation

John Hieftje, to get his Fuller Road Parking Garage for the University of Michigan studied, designed, then hooked up to water and sewer, has already diverted millions from Ann Arbor’s General Fund and citizen services. It was the generosity of Hieftje and all of the Council members who have consistently voted in support of Hieftje’s Fuller Road Parking Garage for the University of Michigan (Smith, Briere, Derezinski, Taylor, Higgins, Teall and Hohnke) that brought us the immensely popular “Bag Your Own Leaves” and “Fish Tail Around Town Until It Snows EXACTLY 4 Inches & The Streets Are Plowed” Programs.

Thanks to the inaction, conflicts of interest and horrid negotiating skills of many of our elected officials, the University of Michigan has stiffed the city when asked to make payments for police and fire protection. The University is also getting a better deal on the fees it pays for sewer and water services than city residents. Now, we’re going to lease the University prime river front land for a pittance for its new parking garage. Meanwhile, according to a piece today in the Huffington Post about the 13 largest university endowments in the U.S., the University of Michigan is sitting pretty at number seven on the list:

A recently released report (PDF) from Commonfund and the National Association of College and University Business Officers showed that university endowment investments yielded an average 11.9 percent return this fiscal year, a healthy increase from last year’s dismal average of -18.7 percent.”

Commonfund CEO and President Verne Sedlacek told On Wall Street that although things appear to be looking up for colleges and universities, the return to pre-recession levels will take “three or four years of good markets.”

In 2010, U of M earned a whopping 9.4 percent return on its $6,564,144,000 dollar endowment. 

Pay for fire protection? Make a payment in lieu of taxes to the city? Not the University of Michigan. Why should they? U of M officials have our mayor in their back pocket. They hired him after he was elected, pay him a ridiculously inflated salary ($96,000 pro rated), then gave a part-time job to his wife, as well. 

Several of the universities on the top ten list of largest university endowments do make payments in lieu of taxes, including Harvard, Yale and MIT. According to information gathered by the Council of Nonprofits, here a sample of what some motivated city officials around the country are doing to help relieve their burdened taxpayers and increase revenues: 

  • Palo Alto (California): City officials are seeking an exchange with Stanford University over approval of zoning permits to allow the university to rebuild Stanford Hospital and renovate and expand Lucile Packard Children’s Hospital. The city is seeking $30 million dollars for infrastructure improvements in addition to the $124 million in community benefits already provided by the university.
  • Boston (Massachusetts): A mayoral task force has recommended that major tax-exempt landowners voluntarily contribute to the city of up to 25% of their estimated tax liability.
  • The Scranton, PA School Board is seeking voluntary financial contributions from colleges, churches, and hospitals. The decision follows action by the City Council last year to pursue PILOTs that netted $27,000 more from nonprofits.
  • St. Louis (Missouri): The city is seeking voluntary payments from some of the city’s larger nonprofit institutions.
  • Albany (New York): The City Council unanimously approved an ordinance to create a Commission on Public-Private Budgetary Cooperation. The new Commission is charged with reviewing the “fiscal impact of tax-exempt entities on the city’s tax base,” and with making recommendations “regarding financial contributions to be made by tax-exempt entities in support of essential city services.”

As a note, in none of the cities listed above did any of the mayors accept employment with the universities in question after they were elected, as did John Hieftje. A look at the bios of the Mayor and City Council members in Palo Alto, California and one sees right away why the city’s politicos are pushing to get $30 million from Stanford University. Not one of the nine Council members works for Stanford. Sid Espinosa, the mayor of the city of 63,000, works for Microsoft.

Check out this piece in the Palo Alto Press about Espinosa’s candidacy when he was running for City Council in 2007. At the end of the piece there is a very important question:

Affiliation with Stanford University or other major conflicts: No.

Since July of 2009, the editorial board at AnnArbor.com hasn’t uttered a peep, nor has AnnArbor.com’s Kontent King Tony Dearing brought a single major feature to the site or to print concerning the ongoing and serious conflicts of interest that exist for several of our City Council members, as well as our mayor in their work on Council while employed by U of M. After that, maybe they could investigate the conflicts involved in steering city contracts to the businesses/companies of members of city boards and commissions. I’m just sayin’.

Then again, considering the serious conflicts of interest involved in having AnnArbor.com VP (in charge of rubbing elbows with advertisers) Laurel Champion on the Board of Ann Arbor SPARK as well as other community organizations, it would be somewhat hypocritical of AnnArbor.com to launch a major investigation of conflicts that exist between city officials and the University of Michigan. First, they’d need to investigate their own employees and decide whether their reporters should be tossing back beers and partying on a regular basis with the politicos they cover. 

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Short URL: http://www.a2politico.com/?p=5660

3 Comments for “The Politics of Money: U of M Endowment Among Top 10 In Nation”

  1. A2P,

    Here is an idea, get a Charter Amendment to limit the council/mayor pay to $1/year for anybody employed/contracted by UofM. Also, boost council pay to the median Ann Arbor household income for anybody not employed/contracted by UofM. Thanks for pointing out the nexus between university employment and the lack of an annual PILOT grant to the city.

  2. @1 That’s exactly what the mayor and other members of Council who work full-time for the University have said. On the other hand, Palo Alto is a smaller city, and none of the politicos are employed by Stanford, the city’s largest employer. Of course donors, political pals and movers & shakers might sit on boards. It’s just when city staff give those same folks contracts for city work without mentioning the conflict.

    Hieftje was hired because he was Mayor. He’s had no academic credentials to teach, His wife was hired because her husband is the mayor. Marcia Higgins was hired after she was on Council, as was Derezinski. It’s that blatant. In the Palo Alto press, it’s considered a conflict, a SERIOUS conflict.

    Here in Ann Arbor, we’ve come to think it’s business as usual and unavoidable. That’s called ingrained corruption.

  3. Ann Arbor and the University are intimately intertwined. They are not separate institutions that interact frequently, they are locked in a mutualism like the fungus and algae that form lichens. The university employees so many people in the city that it would be unrealistic to expect none of them to serve in elected positions. Similarly in a small city, we would expect prominent movers and shakers to serve on important boards and what not. That being said, conflicts of interest can creep up on you while you have your back turned.

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