Editor's note: This is the second in a two-part series examining the Ohio University Foundation.
Ohio University Foundation Board members adopted an aggressive spending policy during the stock market boom of the last decade. Spending at a rate that far surpassed national averages and conventional wisdom, the foundation paid for faculty-supported research and funded scholarships.
And as an added bonus, the foundation provided one vice president a $60,000 loan that later was forgiven and gave administrative officers automobile allowances.
And that approach worked well — for a while.
While the endowment was growing, Foundation Board members rejected warnings from OU President Robert Glidden and chief financial officer Dick Siemer. The board members wanted instant gratification, not a build-up in the endowment's principle.
The foundation was not increasing its principle. Instead of rolling the interest back into the principle, the foundation almost doubled its payout in six years.
"We made a lot of gains in the first six, seven years I was here," Glidden said. "Part of that was new money. Part of that was money that was realized from the past capital campaign."
OU's first significant fundraising drive came in 1989 with the public announcement of its Third Century Campaign, which raised $133 million, a total $33 million more than its goal by the time the program ended in 1993. OU came close to losing the development officer behind that campaign, Jack Ellis. Ellis almost left OU in 1984 when the University of North Carolina at Greensboro offered him a vice chancellorship. Ellis accepted the job, but was lured back to OU — and the Third Century Campaign that was still in its infancy — with an interest-free, $60,000 loan. "It's called golden handcuffs," said John Burns, OU's director of legal affairs who also serves as counsel for the foundation. "The idea is that you lose if you leave." The deal provided the $60,000 loan, of which $6,000 a year would be forgiven during each of 10 following years if Ellis met foundation-prescribed goals. The first payment would come five years after the note was signed, thus linking Ellis to OU for 15 more years.
"(Then-OU President Charles) Ping had a conversation with the executive committee of the OU Foundation, and they came back with an offer," Ellis said. "It was a means to make it attractive for me to stay here."
During the next decade, according to the IRS filings, the loan was forgiven. A raise was not an option because most raises fall between 2 and 4 percent. "Anything in excess would be skewitous," said Ellis, who retired in 1997 after 28 years as OU's chief development officer.
The last of the loan was forgiven in 1998, according to IRS documents. He remains a member of the administration as vice president emeritus and associate director of the Cutler Scholars Program. His salary this year was $22,784 for his part-time position, according to OU financial records.
Burns said Ellis is the only member of the administration to have received such a loan, but the foundation pays for perks to other officers, using alumni donations to support the institution.
Glidden, Burns, Siemer and Leonard Raley (vice president for University Advancement) all receive automobile allowances. Glidden and Burns drive near-identical black Lexuses.
"It's not the biggest Lexus you can get," Burns said.
Raley drives a blue Jeep Grand Cherokee. The Foundation Board urged him to get an SUV, he said.
"When you're going to be driving all over the state and out of state in the winter, you need a vehicle that can take you through the worst driving conditions," Raley said.
But unlike his coworkers, Siemer spends his $6,000 a year allowance to drive a pickup truck with vanity plates he bought to irk a former administrator.
Chief financial officer Siemer said his 'OU CFO' plate was his way to annoy former Provost Sharon Brehm.
"I got along so poorly with Sharon Brehm when she was provost here. I knew it would irritate her, so I got the license plate," he said. "And it worked. It irritated her a lot."
Their jobs forced Siemer and Brehm, the chief academic officer, to work closely. The two crafted the budget together and often butted heads.
"She had all the potential to be wonderful," Siemer said. "Yet her personality drove her to be so negative. I don't know how you change that."
Siemer pays his insurance and $485.84 lease out of the allowance, Burns said. He then keeps the $14.16 left after each month's payment.
While the car does represent part of the foundation's effort to reward the four top foundation administrators, it also reflects the departing chief financial officer as an outsider in the administration.
"He's a visionary guy, who probably puts ideas ahead of people. He can seem very dispassionate when making an objective argument about the way things should be," Glidden said. "When it comes to affecting people, he can really be quite compassionate."
Glidden, who hired Siemer early during his career as president, said his recruit's biggest dreams stem from OU's potential.
Yet that did not stop Siemer from looking elsewhere for employment during his years in Athens. Three years ago Siemer interviewed for — and accepted — a job at Rutgers University in New Jersey.
The day before he was supposed to have signed the Rutgers contract, he balked.
The University of Maryland, Siemer's alma mater and former employer, also approached him. He decided against taking that job.
When Siemer considered the University of Kentucky, however, he said he thought he had a match.
"It's simply a career move," said Siemer, who will make $187,000 at UK, an increase from his $161,200 at OU.
"I did tell Bob when I came I would only stay five years or so," Siemer said. "So this is about the right time."
Inheriting the buoyant budget will be longtime finance administrator Larry Corrigan, who will serve as interim treasurer of the foundation, Glidden announced last week.
Gary North, vice president for administration, will serve as a joint vice president for finance and vice president for administration.
"Under the current budgetary constraints, it just seems wise to reduce administrative positions," Glidden said. "That is actually a more typical structure anyway."
North, OU's current vice president for administration, earned $154,425, but Glidden said North would receive a raise for taking over the two offices, but the exact figure would be decided at a Board of Trustees summer meeting.
North said he does not anticipate any changes in the operation of the department.
"Everything I run has business and financial implications," North said.
17 Archives
Philip Elliott
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Robert Glidden, Leonard Raley, Dick Siemer, Jack Ellis
