Did the University of Virginia’s Board of Visitors hold a closed session to avoid discussing in public what to do with a $2.3 billion pot of money?by James A. Bacon

This past June 10, the University of Virginia Board of Visitors held its regular quarterly board meeting. With its preferred meeting place in the Rotunda undergoing renovations, the board assembled in the auditorium of the special collections library near Alderman Library.

The meeting started pleasantly enough. The board recognized the contributions of E. Darracott Vaughn, Jr., a graduate of UVa medical school and a prominent urologist who had recently passed away; Robert D. Sweeney, a vice president of development who had headed the effort to raise $3 billion, one of the Top 10 university fund-raising campaigns of all time; and Joe Garafalo, a prominent faculty member and retiring board member.

Then Rector William H. Goodwin Jr. rose to thank Helen Dragas, whose second term on the board expired that day. Her tenure had been a stormy one at times. A previous rector, she had led the controversial ouster of UVa President Teresa Sullivan, endured considerable scorn during the blacklash, and witnessed Sullivan’s re-induction. Although Dragas had mended fences with the president and was appointed to a second term, she continued to question the board’s priorities as it aggressively increased tuition to pay for prestige-enhancing initiatives. Giving a voice to a voiceless constituency — middle-class Virginia parents paying ever-bigger tuition checks — she often found herself voting alone.

Emphasizing the positive, however, the resolution commended Dragas for her service. “Mrs. Dragas is an ardent proponent of academic excellence in, and affordability of, higher education in Virginia. … The Board thanks [her] for her eight years of service and her leadership as Rector … and considers her a friend and colleague. … The Board wishes Ms. Dragas and her husband, Lewis Webb, continued success and happiness in all their endeavors.”

According to the June board minutes, Dragas followed with some comments in kind, saying that “she respected everyone at the table.”

The bonhomie would not last long.

Before the meeting concluded that day, there were a few final items of business to attend to. At 3:30 p.m. the board withdrew into a closed session to discuss personnel issues and legal matters, say the minutes. The board resolution cited Sections 2.2-3711 (A)(1) and (7) of the Code of Virginia.

At 4:50 p.m., the board left the executive session. According to the minutes, 13 board members certified that the meeting had been conducted in accordance with the exemptions permitted by the Virginia Freedom of Information Act (FOIA). Only one board member refused to vote in favor of the certification: Helen Dragas.

Eighteen days later at Dragas’ behest, Kevin E. Martingayle, a Virginia Beach attorney, wrote to Maria J.K. Everett, executive director of the Virginia Freedom of Information Advisory Council, asking for a ruling regarding that executive session. That letter described, from Dragas’s perspective, what had happened June 10. Eight days before the meeting, board members received documents outlining guiding principles for spending income generated by a $2.3 billion Strategic Investment Fund, and a list of grant requests submitted for funding.

The correspondence indicated that the fund and plans for spending it were intended to be topics discussed in an executive session of the BOV and, in fact, were a major part of the discussion during the closed meeting.

Although the motion to go into a closed session referenced personnel matters and legal advice, there was very little substantive discussion of either topic related to the funds during the closed meeting.

The only personnel referenced during that portion of the closed meeting were two former employees cited for having done a good job of accumulating and managing such a large sum of funds over time (though neither individual has been employed by this university for several years). … There was no discussion that related to pending, threatened or possible litigation regarding the fund.

Instead, the closed discussion focused on principles for spending the money that now comprise the fund. By way of example, members were asked to deny granting funds to proposals that would support university operations and to elevate those that would enhance its reputation. Concerns relating to premature revelation and publicity, given the fund’s substantial size, were conveyed, and it was requested that members refrain from discussing the fund with legislators and the media.

Regarding the certification that was read and approved after the conclusion of the closed meeting, “aye” votes were solicited and seemed to be voiced by a majority in attendance. No “nay” or negative votes were requested, nor was any role call taken or recorded. At least one BOV member subsequently notified the secretary of the BOV that the minutes should reflect that this particular Board member did not vote on the closed meeting certification due to questions and concerns regarding whether the discussion in the closed meeting exceeded and strayed outside of what was legally permitted.

If the closed session was illegal, Martingayle asked what remedial action, if any, BOV members might take individually or collectively.

On July 6, the Washington Post published a column by Dragas criticizing the university for its runaway tuition (a 74% increase since 2009), questionable spending priorities, and the recent revelation after the board voted on a double-digit tuition increase for incoming students that the university possessed a $2.3 billion “pot of reserves, surpluses and earnings” that had previously been classified as operating funds. Administrators, she charged, did not explain the purpose behind the “financial maneuvering” — liberating funds to be spent on initiatives that would enhance the university’s prestige.

A few days later, twelve state delegates including House Majority Caucus Leader Tim Hugo and 11 other delegates sent a letter addressed to Rector Goodwin and President Sullivan. Calling for “full transparency” in the university’s decision-making process, the letter focused mainly on the $2.3 billion fund. But toward the end, it said:

It appears that the university’s Strategic Investment Fund was the topic of an executive session held during your June Board of Visitor’s meeting. Why did the conversation about the use of these funds occur behind closed doors? What exemption to the public records law was pertinent and how was it appropriately applied?

On July 20, UVa’s Chief Operating Officer Patrick D. Hogan shared records from a Board of Visitors subcommittee meeting with the media. The records showed that members had discussed what would come to be named the Strategic Investment Fund. “We have absolutely nothing to hide,” he said. “We’re looking forward to answering questions from the legislators.We believe we’ve been transparent.”

The story published by the Daily Progress made no mention of any defense that Hogan might have offered for discussing the fund during closed session.

Bacon’s Rebellion submitted a draft of this article to the University of Virginia public affairs office on late Friday for comment. I have received no response, but I will post it if I do.

Bacon’s bottom line: Those are the facts as I have been able to ascertain them from the UVa board minutes, press reports and documents supplied to Bacon’s Rebellion. The substantive question is how UVa managed to scrape together a $2.3 billion fund capable of throwing off $100 million a year in discretionary spending, and how the administration moved it through the approval process so quietly that the public never knew of the fund’s existence until Dragas revealed its in the Washington Post.

Hogan’s claims of transparency do not meet the smell test. While the disposal of a $2.3 billion fund may have been discussed in meetings of a particular subcommittee, it was never fully aired in an open meeting of the entire board. Not only that, the board retired into closed session to discuss the fund — possibly illegally. Even more extraordinarily, senior officers asked board members to refrain from talking to the media or legislators. In other words, the administration actively tried to hide the existence of a $2.3 billion fund — almost one-third the size of the university’s $7.5 billion endowment — which, if known to the public and legislators, would raise uncomfortable questions.

If Dragas’s account in the Martingayle letter holds up, the June 10 board meeting could prove to be one of the most blatant violations of the Freedom of Information Act in recent years. Indeed, this could be the biggest state scandal since the U.S. 460 fiasco, and heads should roll.

For the record… Here are the names of board members who verbally assented to the certification that the closed session was conducted in accordance with the Freedom of Information Act:

Frank B. Atkinson
Mark T. Bowles
L.D. Britt
Frank M. Conner III, vice rector
Kevin J. Fay
Barbara J. Fried
Frank E. Genovese
William H. Goodwin Jr., rector
Victoria D. Harker
John A. Griffin
John G. Macfarlane III
James V. Reyes
Jeffrey C. Walker