appropriations and student tuition. But in recent years, enrollment pressures and infrastructure costs have skyrocketed, while state funding has remained static or declined. “Even within the public sector with its government funding, revenues from tuition and fees increased 318 percent from 1980 to 1996 while revenues from government appropriations during that time only increased 125 percent. Little evidence exists that this trend will change between now and 2010,” the National Center for Education Statistics presciently observed in a summary on higher education accounting for the online Education Encyclopedia at StateUniversity.com. In fact, by 2008, most major public universities seemed to be receiving less than half of their annual budgets from their respective states’ taxes. The implications for the nation’s public universities are profound.
The University of Georgia, for example, now gets less than a third of its budget from state tax dollars, down from 45 percent just a decade ago. Other states have seen even more dramatic change. The Colorado legislature cut state support for its higher education institutions to less than 10 percent of their annual revenues and began issuing “vouchers” to students who attend both public and private universities. South Carolina’s governor suggested privatizing some of his state’s public universities. The University of Virginia, among others, has bargained decreased state funding in return for greater autonomy in dealing with private financial sources.
This dramatic shift in funding has given rise not only to huge tuition increases but also to increased reliance on private gifts to supplement public university budgets. In 2007, colleges and universities collected $29.75 billion in charitable contributions, according to the Council for Aid to Education. Many universities, both private and public, have built up huge endowments through capital campaigns tapping alumni, corporations, and charitable foundations for gifts. As of 2007, endowments to higher education institutions nationwide totaled a staggering $411 billion. Even the richest public school endowment is peanuts compared to Harvard’s $34.6 billion and Yale’s $22.5 billion, but the public institutions are working hard. However, the 2008 stock market crash has hammered all college endowments. Nearly every public university in America seems to have a major fundraising campaign underway or in the planning stage. Like their private sisters, public universities now rely on private donations to attract top academics, pay for construction projects, and often to keep the lights burning. Without private dollars and the volunteers who raise the money for them, America’s great public universities would cease to function or at least would be forced to operate on a greatly reduced scale.
Not surprisingly, this shift has enormously increased the prestige and power of the affiliated private foundations that have emerged to raise money for public schools. As we shall see, a large pot of privately controlled money earmarked for a public institution was at the heart of the trouble between the University of Georgia Foundation and the University System of Georgia Board of Regents from 2000 to 2003.
In Georgia—the southeast’s fastest growing state—demand for higher education has soared. The University System of thirty-five public colleges and universities expects to expand student capacity by 40 percent by 2020, with enrollment increasing from the current 260,000 to more than 360,000. The system is adding about 10,000 students every year. Ironically, an innovative step by state government to make college education more affordable to average students had the unintended consequence of exacerbating the conflict between the UGA Foundation and UGA President Michael Adams and his supporters among the Regents.
The University of Georgia is not just any school. Chartered in 1785 as the nation’s first state-supported university, it has grown from a place “where young men, primarily sons of the privileged, came to receive a classical education that included Greek and Latin” and a place that “turned out the future political leaders of the state—a tradition that continues to this day” into a major public research institution. It is an NCAA Division 1 athletic powerhouse, the home of generations of the nation’s most famous bulldog, an incubator for both science and rock music, a place known for partying and studying, and, not incidentally, was the employer of an institution named Vince Dooley.
For many years, generations of Georgia families had followed one another to Athens, creating not only a legacy of loyalty but a sense of entitlement. That began changing after the Georgia General Assembly passed the HOPE Scholarship program in 1993 and the voters approved a lottery to fund it. The HOPE Scholarship offers free college tuition to in-state students who maintain a “B” average in high school and college. Many of these high-achieving Georgia students decided they wanted to get their free educations at the University of Georgia. Applications increased, SAT averages rose correspondingly, and soon a school known more for tailgating parties and football was beginning to gain national attention for academics.
Meanwhile, some children and grandchildren of UGA graduates whose families had attended the school for generations found themselves turned away because of the rising standards. Their resentment naturally found its symbolic target in the UGA president’s office, which by 1997 was occupied by one Michael Adams, whose rather interesting personality, leadership style, and behavior we will explore further in this book.
President Adams was one flash point of the 2003 explosion. The University of Georgia Foundation was another.
Publicly funded institutions like the University of Georgia and Georgia Tech are relative Johnnies-come-lately in the business of private educational fundraising. Nevertheless, the Georgia Tech Foundation has amassed more than $1 billion in endowments and the UGA Foundation has just more than $500 million.
A private arm of the university, the UGA Foundation had for years acted as a club whose mission was simply to raise money for the university. The Foundation members—mainly wealthy, conservative business leaders who are passionately committed to the university—met annually at Sea Island to choose officers, play golf, and talk about the glory that was “Old Georgia.” But the growing reliance on private fundraising meant that the Foundation was increasingly important and powerful. The UGA Foundation had not been a big player in fundraising efforts, but now it was embarking on the largest capital campaign in the university’s history. And in addition to its fundraising role, the Foundation had begun paying nearly half of Adams’s annual salary as well as a stipend to his wife. Many on the Foundation had opposed and deeply resented putting Mrs. Adams on the payroll. There was a sense among Foundation members that it ought to have some say in who was spending their money.
University foundations are private corporations and are registered by the IRS as public charities. They receive tax-deductible gifts and pledges, manage investments of assets, and distribute endowment gifts for scholarships and other purposes. They exist to support their schools and have no role in the hiring and firing of university personnel. Yet because of the importance of private financial support, foundations hold enormous sway with university governing bodies. Sometimes that leads to conflict and at Georgia, the stage was set for a clash.
Tremendous growth coupled with cutbacks in state funding had put the university on shaky financial footing. Programs were being cut back, tuition increased, and professors’ wages frozen while Adams’s own income was increasing substantially. Meanwhile, UGA had fallen well behind comparable institutions in raising private cash to supplement dwindling state support. School officials had identified $1 billion of critical needs but were jittery about a fundraising effort that large. The Foundation ultimately undertook a more modest $500 million campaign, with plans to launch a second fundraising campaign once they met the first goal. Foundation leaders were predictably anxious that spending construed as unnecessary could turn off potential contributors. Reports that Adams was spending lavishly on various pet projects did not endear him to the Foundation officers.
Nothing is more harmful to private fundraising efforts than the appearance of abuse by a college president. In his handbook on university foundations, Joseph F. Phelan, founding president of the University of New Hampshire Foundation, warns against presidents using foundation discretionary accounts for questionable purposes. Specifically, Phelan cautioned against using foundation funding to augment a president’s salary or to underwrite exclusive
