[Vision2020] faculty staff payraises at UI

[Ron Force]

Here's what I remember off the top of my head-- I don't have time to fully
research it right now so please excuse me if I'm off a million here or
there.  The UI Foundation paid for the land acquisition and development
costs-- about $28 million.  When the project fell through due to the
recession and the decline of commercial real estate in Boise, the UI had to
turn to the state building authority to bond the project.  The bonds were
enough to pay for the first building, but not the development costs, so the
Foundation is on the hook for the $28 million.  Because of cash-flow
problems, members of the Hoover administration tapped the UI's cash reserves
for an operating loan to the Foundation.  I believe that money has been
repaid by the Foundation, or will be soon.

No dedicated endowment funds were lost from the Foundation, so all dedicated
scholarships, etc. are still being paid.  However, the Foundation donated
$1.5 million/yr. from the unrestricted funds to the University for operating
costs.  That's now being used to pay the interest on the $28 million loan
that the Foundation assumed to cover the development costs.

The Water Center in Boise will cost about $1 million in lease costs each
year, plus $636,500 to operate. The lease costs for UI current office space
in Boise is around $600K, so there's another million we have to come up
with. The problem is that the Water Center wasn't originally designed to
hold all UI programs, so some of them may have to stay in current office
space until enough money can be found to finish the new space. Normally, the
state increases the budget to cover Occupancy Costs, that is, the increased
costs for utilities and maintenance. The Legislature declined to appropriate
any funds for any new buildings, including all the new facilities being
built with bonds (including the Teaching-Learning Center).  This will cost
the UI another $ 1 million.

Drawing down the cash reserves lost $633,000 in interest earnings. In 2001,
the Kempthorne administration thought it would be foolish not to invest the
State's Land Grant Endowment in the Stock Market and got we citizens to
endorse a constitutional amendment to allow it. This year, the loss to the
UI's Land Grant Endowment Income is $600K.

So, the Boise problem has directly cost the UI about $4 million.  The
Foundation is on the hook for $28 million. The real problem is that the
University's reserves were systematically drawn down in the 90's to maintain
and promote all sorts of good things, so there's no cushion for the
shortfall in funds from the legislature. The UI will get about $2 million in
new Maintenacne of Current Operations funds from the state appropriation,
but has the following new and continuing obligations:

2% raises; $1.6 million
Fringe Benefit Increases: $1.3 million
Prior Years' Obligations (gap between spending and income): $4 million

There are the big things that are not optional. The rest of the millions are
in things like building maintenance, scholarships, and a bunch of other
programs that make a long list.

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Ron Force  	Moscow ID USA
rforce@moscow.com
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A month has gone by since I last asked this question, so I'll ask it
again: Where did the many millions of dollars go that the UI lost on its
Boise real estate speculation?

Don Coombs