U's $650,000 discretionary fund lets Kaler pay Maturi

Eric Kaler and other presidents have had access to little-known fund since 2000.

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University of Minnesota President Eric Kaler

Photo: Brian Peterson, Star Tribune

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The six-figure retirement package granted recently to Joel Maturi has thrown a spotlight on spending practices at the University of Minnesota, particularly a little-known discretionary fund that has placed millions of dollars at the disposal of the institution's presidents since 2000 to fund pet projects or spark change in the massive bureaucracy.

Documents reviewed by the Star Tribune show that former President Robert Bruininks spent almost $2 million during his last three years in office on projects such as a mentoring program, patronage of Gophers athletic boosters and a therapeutic horseback riding program for disabled children.

Such discretionary funds appear to be common at large universities. Bruininks occasionally turned to the fund, composed of University of Minnesota Foundation money, to avoid the controversy sometimes entailed by spending tuition funds or taxpayer dollars. Nevertheless, the Maturi episode illustrates the delicate perception problems that surround university finances at a time of shrinking state budgets and rising tuition.

President Eric Kaler's decision to spend more than half of his annual allotment from the Presidential Advised Fund on one personnel matter is a departure from the pattern set by Bruininks. He supported 12 to 20 initiatives a year at an average price of $40,000, records show.

"It's about trying to move the dial and create a culture of innovation and creativity," Bruininks said Wednesday in an interview. "They're the kinds of things that fall through the cracks of normal academic investments."

His own spending from the fund included:

• $99,712 in 2010 for the University Northside Partnership, an effort to boost wellness and prosperity in north Minneapolis

• $28,250 to entertain guests considered "boosters'' in a suite at six Gophers football games during TCF Bank Stadium's 2010 inaugural season

• $5,000 in fiscal year 2010 for production of "Troubled Waters," a documentary film about Mississippi River pollution.

Filling gaps, solving problems

The annual $650,000 fund is provided by the University of Minnesota Foundation, the U's private fundraising arm. The president's only obligation is to spend the money in the best interests of the university and report back to the foundation, a spokesman said.

The Advised Fund is separate from an even larger and older President's Discretionary Operations and Management Fund, which totaled $1 million in fiscal year 2011. Line-item spending records from that fund were not immediately available from university officials.

Bruininks said the Advised Fund let him get things done quickly and is modest in the context of a $3.7 billion institution. "Quite frankly, this fund is way too small to do the things that need to be done," he said.

In 2011, he tapped the fund for $100,000 to pay for a study used by the U's Capitol lobbyists to show the school's impact on the Minnesota economy. He also used the fund to support "new ideas" and early-stage projects in the hope that they would attract matching funds from elsewhere.

Bruininks called Kaler's decision to tap the fund for Maturi's final year "perfectly appropriate.''

One of the fund's uses is to "fill gaps" and "solve problems,'' he said.

When Maturi retires this summer as athletic director, he will start a one-year appointment as a special assistant to Kaler, for which he will earn the same salary he does now: $351,900, plus benefits and a retirement package that will push his compensation to more than $468,000. University spokesman Chuck Tombarge said Kaler wanted to retain Maturi for his fundraising abilities and connections while the new athletic director takes over the job. He didn't want the expense to fall on other budgets.

Such funds are common

Charles Schwartz, professor emeritus of physics at the University of California, Berkeley, said the existence of such a discretionary fund is typical for a large university. Schwartz has studied the use of such funds at Berkeley and pushed for greater disclosure.

"Accountability and transparency are buzzwords often used by executives who want to appear respectable; holding them to it is another matter,'' he said.

Howard Bunsis, a finance expert hired earlier this year by the U's chapter of the American Association of University Professors, said that such funds are "certainly not anything unusual."

Bunsis' review of the U's finances was highly critical of spending on administration, but it was based on data not deep enough to look into particular funds. He said that the Maturi episode illustrates that the U's "priorities are not appropriate."

"If they have a choice between spending [the fund] on an old athletic director or enhancing an academic program, in my view, the money should always go to enhancing the academic program," he said.

Documents from the last three years of Bruininks' tenure show outlays for projects including scholarships, a lecture series and $65,000 annually split among the coordinate campuses' chancellors to use for new initiatives. Bruininks' biggest one-time expense since 2009, the earliest year for which records were available, was $250,000 toward the U's "Driven to Discover" marketing campaign.

How Kaler uses the fund could illustrate his leadership style and personal passions. Under Bruininks, who rides horses, the fund paid for two equine initiatives, including "We Can Ride,'' a therapeutic riding program for disabled children in partnership with the U's College of Veterinary Medicine. Bruininks, who entered college as a music major, also funded jazz scholarships and a special anniversary of the jazz ensemble on the Morris campus.

jross@startribune.com • 612-673-7168 tonyk@startribune.com • 612-673-4213

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