Colleges in Dire Financial Straits

[Langue_doc]

People who say they're going to make massive donations like this that they can't back up must be unhinged in some way.

On the other hand, there are administrators who inflate donation amounts resulting in the predictable closing of the institution as in the case of Burlington College.

Jane Sanders and the Messy Demise of a Vermont College

There is little question that the college's 2016 demise can be traced to Ms. Sanders's decision to champion an aggressive — critics say reckless — plan to buy the land. But with potential students put off by the lack of a campus, and with many such colleges struggling at the time, her move was the academic equivalent of a Hail Mary. Her allies said she never had a chance to fulfill her vision.

After a few years on the job, Ms. Sanders pounced on an opportunity to buy a 33-acre property owned by the local diocese, which was struggling amid the clergy sex abuse scandal. The college was then cramped in a small building tantalizingly close to the diocese's land.

Ms. Sanders did not make the decision alone. The 2010 purchase for $10 million was backed by the college's board. A local bank, People's United, approved a loan. And a state board, the Vermont Educational and Health Buildings Financing Agency, provided financial support, based on the recommendation of the consulting firm PFM.

Charly Dickerson, a member of the finance agency at the time, voted against the deal.

"It was too massive a piece of property for a small school to undertake," he said.

[Ms. Sanders] courted donors whose pledges could help secure the loan. David Dunn, a college trustee at the time, said the board had concerns by 2011 that contributions were not materializing. He said that trustees began a review after learning that a major donor, Corinne Bove Maietta, who was supposed to donate $1 million over time, actually committed to give the funds when she died.

"That was the catalyst that started a more thorough analysis," said Mr. Dunn, who later learned that his own initials were listed among trustees having pledged donations, which he said he had not done.

Ms. Maietta did not respond to requests for comment, but her longtime accountant, Richard Moss, said that "as I remember it, she didn't commit to give anything before death."

Mr. Dunn said additional factors also led to Ms. Sanders's dismissal, including concerns that she had lost faculty support, and a heated argument she had with a student. (The student played down the argument in a letter to the board that was reviewed by The Times.)

See also the article and the letter in CHE.

[dismalist]

People who say they're going to make massive donations like this that they can't back up must be unhinged in some way.

On the other hand, there are administrators who inflate donation amounts resulting in the predictable closing of the institution as in the case of Burlington College.

Jane Sanders and the Messy Demise of a Vermont College

There is little question that the college's 2016 demise can be traced to Ms. Sanders's decision to champion an aggressive — critics say reckless — plan to buy the land. But with potential students put off by the lack of a campus, and with many such colleges struggling at the time, her move was the academic equivalent of a Hail Mary. Her allies said she never had a chance to fulfill her vision.

After a few years on the job, Ms. Sanders pounced on an opportunity to buy a 33-acre property owned by the local diocese, which was struggling amid the clergy sex abuse scandal. The college was then cramped in a small building tantalizingly close to the diocese's land.

Ms. Sanders did not make the decision alone. The 2010 purchase for $10 million was backed by the college's board. A local bank, People's United, approved a loan. And a state board, the Vermont Educational and Health Buildings Financing Agency, provided financial support, based on the recommendation of the consulting firm PFM.

Charly Dickerson, a member of the finance agency at the time, voted against the deal.

"It was too massive a piece of property for a small school to undertake," he said.

[Ms. Sanders] courted donors whose pledges could help secure the loan. David Dunn, a college trustee at the time, said the board had concerns by 2011 that contributions were not materializing. He said that trustees began a review after learning that a major donor, Corinne Bove Maietta, who was supposed to donate $1 million over time, actually committed to give the funds when she died.

"That was the catalyst that started a more thorough analysis," said Mr. Dunn, who later learned that his own initials were listed among trustees having pledged donations, which he said he had not done.

Ms. Maietta did not respond to requests for comment, but her longtime accountant, Richard Moss, said that "as I remember it, she didn't commit to give anything before death."

Mr. Dunn said additional factors also led to Ms. Sanders's dismissal, including concerns that she had lost faculty support, and a heated argument she had with a student. (The student played down the argument in a letter to the board that was reviewed by The Times.)

See also the article and the letter in CHE.

I read the cited letter. The college had 185 students! There is no way a college of that size can survive. If the decisions with bad outcomes had not been made, the college would still have gone under. As it should. Money doesn't grow on trees.

I think the case illustrates well the idiocy of the incentives in governance. The Board hires somebody who takes risks to grow, here buying a 33 acre lot. The Board has no clue whether this risk is going to pay off or not. If it doesn't, the Board pays no price. So, do it. A bank gives a $ 10 million loan. The letter suggests this was due to political pressure, but provides no evidence. Such failing loans are not uncommon in higher ed. See West Virginia. My take is that there is some presumption that "the gummint will bail us out". Of course, the bailouts won't be 100% sure, but the banks know that. They're gambling, something you don't want banks to do.

[spork]

Alverno College

[RatGuy]

Also not dire, but truly embarrassing for Florida A+M and their fly by night mega-donor.

Florida A&M, a dubious donor and $237M: The transformative HBCU gift that wasn't what it seemed

From AL.com:

Kim Abbott — you more likely remember her as Kim Rafferty, two-term Birmingham City Councilor between 2009 and 2017 — confesses the only place she's served as CEO is her household. As caretaker of two children, two grandmothers, an ailing first husband (the grandmothers and husband have passed; Abbott has remarried), and "a chocolate lab puppy that's eating me out of house and home. "

"I'm a stay-at-home mom. I would have never been able to be a CEO of anything," she is saying recently, vehemently. "And those were my words to him."

Him is Gregory Gerami, a Texas entrepreneur who once did business (and owned a residence) in Birmingham. Or Brice Gerami. Or Jeremy Gerami. He's noted as each on various media platforms.

Until recently, Abbott was listed as co-CEO of Gerami's Batterson Farms, Corp., a hemp company, on its website, along with an ancient photo from her council days, though she says she "never did any work" for it.

"I didn't give him permission to put my picture on the website," she said. "I didn't give him permission to put my name on the website. [My name] was just a placeholder. I never conducted business. All he did was call me and ask for advice. That's not a CEO."

Apparently Gerami first contacted Abbott a long time ago with a proposal to do something with an abandoned shopping mall in her Alabama district. Those plans never materialized, probably because Gerami seems to be a scam artist or delusional. The fact that FAMU is only one of 15 colleges he contacted about donations means that something hilariously weird is going on.

[lightning]

Also not dire, but truly embarrassing for Florida A+M and their fly by night mega-donor.

Florida A&M, a dubious donor and $237M: The transformative HBCU gift that wasn't what it seemed

From AL.com:

Kim Abbott — you more likely remember her as Kim Rafferty, two-term Birmingham City Councilor between 2009 and 2017 — confesses the only place she's served as CEO is her household. As caretaker of two children, two grandmothers, an ailing first husband (the grandmothers and husband have passed; Abbott has remarried), and "a chocolate lab puppy that's eating me out of house and home. "

"I'm a stay-at-home mom. I would have never been able to be a CEO of anything," she is saying recently, vehemently. "And those were my words to him."

Him is Gregory Gerami, a Texas entrepreneur who once did business (and owned a residence) in Birmingham. Or Brice Gerami. Or Jeremy Gerami. He's noted as each on various media platforms.

Until recently, Abbott was listed as co-CEO of Gerami's Batterson Farms, Corp., a hemp company, on its website, along with an ancient photo from her council days, though she says she "never did any work" for it.

"I didn't give him permission to put my picture on the website," she said. "I didn't give him permission to put my name on the website. [My name] was just a placeholder. I never conducted business. All he did was call me and ask for advice. That's not a CEO."

Apparently Gerami first contacted Abbott a long time ago with a proposal to do something with an abandoned shopping mall in her Alabama district. Those plans never materialized, probably because Gerami seems to be a scam artist or delusional. The fact that FAMU is only one of 15 colleges he contacted about donations means that something hilariously weird is going on.

Gerami is probably more delusional than anything else. "Fake-it-'til-you-make-it" is what his ilk will always say. Gerami sounds like a flake ("Flake-out-'til-you-make-it?"), so people like this generally don't do much damage because they are too clueless and lazy to even over-leverage themselves and whatever company they purport to own & run. He probably couldn't even secure VC funding, and I doubt that he has a business plan. Most of the time, these delusional business types, who run businesses out of their imagination, are harmless, because they don't get far enough beyond a vague web site, to do any kind of real damage to others, but calling up an HBCU to promise donations is very harmful. But, it's also the job of administrators at universities to sniff out these posers, so that there will be no egg on the university's face.

[Langue_doc]

I think the case illustrates well the idiocy of the incentives in governance. The Board hires somebody who takes risks to grow, here buying a 33 acre lot. The Board has no clue whether this risk is going to pay off or not. If it doesn't, the Board pays no price. So, do it. A bank gives a $ 10 million loan. The letter suggests this was due to political pressure, but provides no evidence. Such failing loans are not uncommon in higher ed. See West Virginia. My take is that there is some presumption that "the gummint will bail us out". Of course, the bailouts won't be 100% sure, but the banks know that. They're gambling, something you don't want banks to do.

I vaguely recall reading about the controversy in 2016, a few months before the elections. The college was able to get the loans without the usual background checks because of the senator's popularity in Vermont. The 2017 article "The unraveling of Jane Sanders' Burlington College legacy" provides more details about the discrepancies between what was presented to the banks as committments from potential donors and the actual committments.

The $2 million question mark
At the heart of the property deal was a list of donations, including $2.6 million in confirmed money and another $2.5 million in unconfirmed pledges.

The list included $2 million that never materialized.

"At this time, we have a firm commitment of $1 million from one donor and a verbal commitment for an additional $1 million from another donor," Sanders and Plunkett wrote in the financing application.

In a report this year, VTDigger.org identified the confirmed $1 million donor, listed on college documents as "CBM," as Corinne Bove Maietta.

In the 2010 financing application, Sanders and Plunkett said Maietta pledged to give $1 million over the next seven years.

Maietta said in an interview with VTDigger.org, however, that it was a bequest upon her death and not a donation. Maietta said she gave less than $100,000 in donations.

"You can't borrow money on the future," Maietta said, according to the report. "That doesn't exist."

The college's financial audit on June 30, 2011 appears to confirm that the pledge was an estate gift.

The second $1 million "verbal commitment," listed in the bond application under the initials "TP," was a matching donation from Tony Pomerleau. His gift was contingent on the college receiving $1 million from another donor.

"I said, 'When you get that million dollars, I'll match it,'" Pomerleau, the 99-year-old Burlington real estate magnate and philanthropist, said in a phone interview this week. The Pomerleau promise was a handshake deal with Sanders. Pomerleau said he never signed a written commitment.

The first million dollars never materialized, Pomerleau supposed, because neither Sanders nor anyone else from the college approached him to complete the matching donation.

[spork]

Burlington College's demise was not solely due to non-existent donors. Sanders was hired by stupid trustees who thought "wife of a famous Senator" would make all of Burlington's problems go away. They signed off on her fantastical plan of doubling enrollment within five years to help meet the debt service obligations that originated with a complicated real estate financing scheme. The real estate in question was 30+ acres of lakefront property in the middle of Burlington. Managers of the local bank were probably happy to acquire the debt because of the probability that Burlington College would default and the bank could foreclose and then sell the land off in chunks to developers.   

[dismalist]

Burlington College's demise was not solely due to non-existent donors. Sanders was hired by stupid trustees who thought "wife of a famous Senator" would make all of Burlington's problems go away. They signed off on her fantastical plan of doubling enrollment within five years to help meet the debt service obligations that originated with a complicated real estate financing scheme. The real estate in question was 30+ acres of lakefront property in the middle of Burlington. Managers of the local bank were probably happy to acquire the debt because of the probability that Burlington College would default and the bank could foreclose and then sell the land off in chunks to developers.   

Bingo!

[Wahoo Redux]

UNCA Plans to Remove Several Programs

Specifically, I've [Chancellor Kimberly van Noort] recommended that the University phase out four of its 27 academic departments — Ancient Mediterranean Studies, Drama, Philosophy, and Religious Studies — and curtail a fifth: Languages and Literatures.

[apl68]

Apparently Gerami first contacted Abbott a long time ago with a proposal to do something with an abandoned shopping mall in her Alabama district. Those plans never materialized, probably because Gerami seems to be a scam artist or delusional. The fact that FAMU is only one of 15 colleges he contacted about donations means that something hilariously weird is going on.

Sounds like 14 colleges did their due diligence on the fellow.  Which makes it even more embarrassing for FAMU.

[apl68]

Burlington College's demise was not solely due to non-existent donors. Sanders was hired by stupid trustees who thought "wife of a famous Senator" would make all of Burlington's problems go away. They signed off on her fantastical plan of doubling enrollment within five years to help meet the debt service obligations that originated with a complicated real estate financing scheme. The real estate in question was 30+ acres of lakefront property in the middle of Burlington. Managers of the local bank were probably happy to acquire the debt because of the probability that Burlington College would default and the bank could foreclose and then sell the land off in chunks to developers.   

So, a kind of sub-prime mortgage deal, huh?

The trustees may have hoped that somehow the Sanders name would bring in big donors.  And she tried to make it look like she had delivered.

[apl68]

Alverno College

Well, not a tiny school, but it's a women's college in a world where those have long since fallen out of fashion.