Fight Night: Stevens vs. Milgram
Here’s a pleasant surprise for you all today!
Stevens Institute of Technology Sophomore Ann DeStefano contacted me yesterday because she wrote an article about the big news that Stevens was under investigation for fiscal impropriety. She said her newspaper turned her down and refused to publish the piece. Upset that the school paper won’t publish its’ own students work – she turned to Hoboken411!
Note: Since she submitted the piece prior to the actual lawsuit being issued by the State Attorney General – she prefaces her article with this more current update:
Stevens Lawsuit Update
As of Thursday, September 17th Attorney General Milgram has officially filed her complaint against Stevens Institute of Technology calling for the removal of the two top officials and for the reimbursement to the school of an unspecified amount for the financial damage supposedly done to endowment funds.
Milgram claims she is well within her bounds by filing this complaint because of the New Jersey Nonprofit Corporation Act and the Uniform Management of Institutional Funds Act. Along with having the two leaders pay the unspecified amount, she is calling for internal accounting and governance reforms.
Below is her original piece. What do you think of her article? Would you have turned her down?
Fight Night: Stevens Tech vs. Attorney General Milgram
State looks into Stevens’ financials while university strikes back
By Ann DeStefano
State Attorney General Anne Milgram has threatened to sue Stevens Institute of Technology for fiscal impropriety asserting the removal of its’ two main leaders and officers, President Harold Raveche and Lawrence Babbio.
The two year ongoing investigation has looked into the financial records of the University, honing in on Raveche’s 2008 salary topping the $1 million mark. Other points of investigation include misappropriating endowment funds and issuing $1.5 million in low-interest loans to Raveche for home renovations.
The Trustees of Stevens Institute of Technology have pre-empted Milgram’s actions by filing an official complaint against Milgram in Hudson County Superior Court. The complaint, available online for public use, asserts how Milgram has the “absence of legal authority or a factual basis to do so” in suing the school for the aforementioned complaints – among other points. The complaint goes onto to claim Milgram is displaying an “abuse of power” asserting a position she claims as potentially “devastating to Stevens,” regarding its’ reputation, student recruitment and enrollment or overall expansion.
Furthermore according to the complaint filed by Stevens, a September 2nd 2009 meeting between Milgram and the Board of Trustees was held where Milgram explained her position and plans to file a suit against the university.
CONTINUE READING ANN’S STORY AFTER THE JUMP!
(Stevens vs. Milgram – by Ann DeStefano, continued…)
The Taylor Gift
One point of major discussion, involved a hefty part of the Stevens endowment fund called “The Taylor Gift.” Milgram involved this fund as part of the misappropriation of expending assets. The Attorney General claims Stevens has pooled the assets of this “gift” which Stevens argues is expressly outlined by the wording of the gift itself. Pooling assets involves collectively managing assets in order to maximize benefits to the users of said assets.
The background of The Taylor Gift dates back to 1953, when Robert P.A. Taylor created a trust. Roughly 20 years later, he created a second trust with an approximate combined value of 11 million. The original benefactor, wife Vera Taylor, died in 1991. Upon her death, the trusts written to be devoted to Stevens purposes, were awarded to the school. By June of 2008, the trusts had risen to a value of 47 million, now about 30% of the Stevens’ endowment pool.
The official Stevens complaint cites that “the Taylor Gift instruments have no language that would preclude pooling,” and how most higher education institutions manage assets through pooling for “broad diversification of investments.”
Besides the complaint, Stevens has also responded with the formation of a sub-committee within the Board of Trustees. The “Special Committee” is composed of Chairman Steve Shulman of The Hampton Group, Richard Roscitt former President of MCI Communications and Philip Crowley Assistant General Counsel for Johnson and Johnson Corp among other notable members.
The committee is working directly with retired New Jersey Supreme Court Chief and former Attorney General, Justice James R. Zazzali to build up a fact base in support of the Stevens cause.
The accusations come at a time where Stevens has planned to begin expansion projects on campus while hoping to increase alumni donations and gifts. The institute asserts a lawsuit by the Attorney General would be “particularly devastating” at this time, as said in the official complaint. Other areas that could be affected negatively within the Institute are government grant applications, contracts with the United States Department of Defense, and current students looking to find employment in tough economic times.
This is not the first time Stevens administrators find themselves under fire for financial misguidance. A 2005 newspaper article entitled “The High Cost of Education: Growing Pains at Stevens” investigated documents reporting Stevens’ financial losses, poor bond ratings by Standard & Poor’s and Moody’s as well as the school operating in the red six of the last eight fiscal years at the time of print.
However, the university asserts its’ position that since Raveche’s arrival in 1988, the school has dramatically increased in enrollment, applications and overall academic and physical expansion. Under his leadership, the school has come to agreements with the United States’ government at a total of 35 million. The U.S. Department of Homeland Security granted Stevens a Center of Excellence in Port Security valued at 10 million and a research center in Systems Engineering valued at 25 million.
School is succeeding; defends compensation
Forbes.com named Stevens on the “Universities that Turn Research into Revenue” 2008 list showing the school garnered $28 million in research revenue demonstrating at 16% yield comparatively to Stanford’s 8.7% return on investment.
The school defends Raveche’s compensation as their CEO of sorts, in his integral role pulling Stevens’ out of depression in the late 1980s. Statistics involving freshman enrollment show an increase from enrollment of 400 in 1988 to over 600 in 2008. Selectivity also rose 13% in relation to the proportion of students in the top 10% of their high school classes.
The largest figure quoted in the official Stevens complaint, cites a 171% increase in endowment during a 10 year span from 1998-2008.
Internet commenters have said that state universities should be investigated for their own financial woes. Specifically cited was Rutgers’ football coach Greg Schiano receiving nearly 2 million a year in compensation.
In his Chairman’s Letter for 2009, Lawrence Babbio writes “2008 was one of great progress for Stevens.” Time will only tell if this will propel Stevens in its’ quest as an educational giant or slay it in its path.