September 8, 2008

Senator Grassley Wants New 990 Tax Form Tailored to Colleges

Washington — Sen. Charles E. Grassley today called on officials at the Internal Revenue Service and the U.S. Treasury Department to develop a Form 990 tax schedule that is specifically geared to colleges and universities.

The new tax form, which he requested during a Capitol Hill briefing on college costs and endowment spending, would require institutions to report information about their student populations and costs, he said in his remarks.

The current Form 990, which applies to all nonprofit institutions, just received an overhaul that goes into effect for the 2008 tax year. But Mr. Grassley said colleges should receive an additional schedule of disclosure requirements, which he said would be similar to a form recently devised for nonprofit hospitals. This was his first major public request for the form, according to a Senate aide.

Watch for complete coverage of today’s endowment hearing in tomorrow’s Daily Report. —Paul Fain

Comments

1. I certainly think it is time for the Federal Government to look into the spending by colleges and universities.College presidents and their higher ups are being paid more and more while raising tuition and student fees. The parties for donors,the gifts to donors,the Foreign travel and first class accommodations,and justifying it all by saying it was a donor visit,donor appreciation party or gift. I can not get past the media in Dallas reporting that UT Southwestern Medical Center in Dallas had spent donor funds on $160,000 worth of wine in a two year period and expensive gifts ,far exceeding IRS rules, for donors. The travel, the meals,the “staff meetings” in a town 60 miles from the medical center on a Saturday? Still curious how their university hospital has charity care when they have no emergency room.

   — Jack    Sep 9, 10:00 AM    #

2. I think instances like those cited above are very much the exception, not the rule. Most public universities are doing everything they can to keep their doors open. Further, if parties or fundraising events are not funded with public money – and they generate a lot more in support than the parties cost – then I say go for it! You have to spend it to make it…and there are different rules for different sources of funding.

   — Al    Sep 9, 10:58 AM    #

3. I am with Jack. I just found out that the president of my kid’s ivy league college has a daily standing reservation at THE most expensive restaurant in the city.

   — Mary Ann    Sep 9, 11:21 AM    #

4. Why to you think these folks want to be college presidents? To be academic leaders? It’s been clear for some time that college presidencies are increasingly being corrupted by perks and money. It would be nice to see the IRS rein this kind of behavior in … I can only hope Congress will also attempt to take on the ludicrous executive compensation packages we also see in the private sector these days.

   — CW    Sep 9, 11:39 AM    #

5. Sen. Grassley and I may not share party affiliation, but his policy recommendations never fail to impress me. He is one of the most valuable members of Congress.

   — ozone    Sep 9, 12:13 PM    #

6. Who cares if an Ivy League president has a standing reservation at an expensive restaurant? Who do you think he/she dines with? These presidents wine and dine donors, corporate sponsors, politicians, you name it. Somehow, I doubt Pizza Hut or Wendy’s would make for a good outing with those people. And even ignoring that, the university’s operating budget is probably approaching the billion mark, which makes the president comparable to a CEO. How many CEOs run a billion dollar company and dine at McDonalds?

   The only way universities can seriously reduce tuition cost growth rates is if they start cutting programs. Universities have grown as new fields open up… like nanotech, quantum computing, green energy, genetics, etc… and these things cost real money. So, politicians need to make a choice. Either let their local universities grow with the sciences or let the trains go by. Growth is expensive, so States and the Feds either need to stop cutting support or quit complaining. There is no free ride.

   — gregS    Sep 9, 12:23 PM    #

7. Oh and about Jack’s comment, “Still curious how their university hospital has charity care when they have no emergency room.” University hospitals are where doctors are educated and trained. On top of that, these are the hospitals where new treatments are researched and developed. So, many patients receive top-notch care that no for-profit hospital could ever provide to the general public. Besides, should universities really be footing the bill for uninsured patients? Would you be happy if your son’s/daughter’s tuition were going to pay for non-student health care? Think about it… that would cause tuition to rise even faster than it already is.

   I know it is asking a lot, but seriously think about these issues. Things are never as simple as they appear.

   — gregS    Sep 9, 12:33 PM    #

8. I wonder how many colleges go to the trouble to zero-base budget, and simply allow expenditures to be whatever they were previously plus additions for inflation, with no new justification for spending levels?

   I wonder if all the entertainment money spent by faculties and administrators is necessary?

   As far as big ticket items go, is there a watchdog over IT spending? Are IT services duplicated?

   On the other side of the ledger, to the U.S. Government—are you paying your fair share of overhead for research? To the same extent you reimburse private industry? Do you look beyond the gold-plated toilets to what it really costs universities to provide a plant worthy of world-class research?

   And on the same topic—Universities, are you allocating sufficient amounts of overhead recovery to the cost centers where the overhead was spent in the first place? No? I thought so.

   — Green Eyeshade    Sep 9, 12:46 PM    #

9. I used to be an ardent proponent of voluntary monitoring and accountability by institutions. And while individual examples do not suggest a pattern, my awareness of at least one truly egregious example of misuse and abuse has brought me to believe that closer scrutiny, especially of elite private colleges and universities is more necessary now than ever before.

   Each year, the institution in question sets its tuition increase thus: it aims to be at the median of a standard list of its identified peers and raises tuition with the goal of not falling below the mean of this group. One year, after determining to raise tuition by 6.5%, when the government announced a watchdog list of those who raise it above 6%, the institution promptly lowered the raise to 5.9%.

   Likewise, restricted endowments are used at the whim of the president.One restricted fund that came in for an endowed faculty chair was redirected, without the knowledge of faculty, to pay the existing salary of an administrator, thus providing central budget relief. A host of restricted funds are used thus.

   Of course, such relief is needed to support the vastly increased expenses of an extravagant president’s office. With immaculate wisdom, the president ensures that own salary appears modest in public accounting. What others do not see is that the total presidential compensation includes an undisclosed “honorarium” for a spouse who carries no title or responsibilities. Presidential extravagance includes a nearly 4 million renovation of the presidential house, an executive coach who assists with every action, and even a wardrobe coach who helps the president with wardrobe purchases and decisions so that an appearance of approachabilitiy can be conveyed to faculty and staff!

   In the meantime, faculty salaries and support are certainly not at the median of the institution’s identified peer group. Ultimately, the people who pay for such excesses are gullible students and uninformed faculty who are kept out of the information loop. Greater accountability from colleges is needed most on finance NOT teaching and learning!

   While the above may not represent the norm among institutions, I doubt that it constitutes an exception either. Greater scrutiny is the only thing that will prevent such behaviors by maverick leaders (I hope they are the exception) whose ethical compass is clearly broken.

   — Greyer    Sep 9, 02:05 PM    #

10. I ask for someone to define “accountability” in a meaningful way. And what constitutes “scrutiny”? More paperwork? (costs money) More frequent audits? (costs money) Create watchdog? (costs money) And if we require more paperwork who is going to read all of it? Why not use the time-tested method of sunshine? If it is a public institution, let the press save the taxpayers money by filing FOI requests and digging up dirt. If it is a private institution, read the IRS paperwork and live with the fact that it is a private, non-profit institution.

    But ultimately, this is another political fad that distracts from the truth… the States and Feds don’t want to invest money in schools, so they beat them and then say, “Look what you made me do!”.

    This is exactly what is happening with K-12… let’s fire the teachers and principals because the school is underfunded, serves the poor, or teaches kids whose parents have never worked to educate their own children. How many well-funded schools yield failing test scores? How many schools with middle- and higher income students yield failing test scores? It’s a lot cheaper to blame the teachers/schools/universities than it is to DO something about it.

    — gregS    Sep 9, 02:44 PM    #

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