August 10, 2004
Contact: Editor, Mobile Press Register
USA given $10.5 million
(Reprinted from Editorial in Mobile Press Register dated August 10, 2004)
Money fulfills Moulton's request for cancer research institute and shows that tensions among university leadership are easing.
The University of South Alabama Foundation agreed Monday to give the university an additional $10.5 million to help finance the school's cancer research institute.
USA President Gordon Moulton had asked the foundation for a total of $12 million in May. At that point, the foundation board gave USA an additional $1.5 million for the cancer research institute. The board members pledged Monday to grant the additional $10.5 million to the university by mid-2009 at the latest.
The foundation holds $265.6 million for the benefit of USA and its 13,000 students. The university and the free-standing foundation board fought for a decade over how those assets should be invested and spent.
Relations have improved in the last year, though. USA and foundation leaders agreed that Monday's pledge was a milestone in cooperation.
"I am pleased that we seem to be getting a little way down the road on rebuilding the bridges," foundation board president Asa Green of Livingston said following the unanimous vote on the pledge.
"I think everybody's listening to each other more, sharing information more," Moulton said after the meeting. "This can only be a plus for the future."
USA plans to combine the foundation's money along with other sources to pay for the $40 million building to house the institute, as well as to underwrite operating expenses. USA is seeking a total of about $115 million from local, state and federal governments, as well as from the foundation and private sources.
USA could break ground on the building before the end of the year. The university's vision calls for a group of scientists and physicians doing top-level medical research and delivering treatments unavailable in typical hospital settings. Ultimately, the school hopes to be named a comprehensive cancer center by the National Cancer Institute.
The foundation's actions have the potential to ease two USA criticisms of the board.
First, university officials have complained that the foundation doesn't give enough of its assets to the school. The additional $1.5 million given in May bumped the share of foundation assets given to the university for the 2003-04 budget year to 2.86 percent. That's an increase from 2.27 percent given in 2002-03.
That giving level is still be low the rough 5 percent average cited by the National Association of College and University Business Officers. But Moulton and other USA leaders seem accepting of a lower giving level while the foundation keeps paying back a 1997 loan used to buy timber property.
Secondly, university and foundation leaders have argued over who should control how the foundation's money is spent. But in the past year, the foundation board has directed an increasingly large share of its money to the cancer institute, which is Moulton's signature initiative. Moulton and foundation leaders say better communication is partly to credit for aligning priorities.
"This was probably the first substantive opportunity we've had to demonstrate our support," Green said.
Money tied up:
Though the foundation has a large asset base, much of it is tied up in timber property and real estate -- assets that are difficult to sell quickly at a good price. Green said making the pledge was difficult.
"This is something that is a very real reach for us," Green said. "It takes us to the thin edge of our ability."
Efforts to sell one particular property could affect how quickly USA gets the pledge.
Right now, the foundation is trying to sell its former headquarters on University Boulevard. Leaders want $7.9 million for the 32-acre property, home to the Julius T. Wright School for Girls before the foundation bought it. The foundation paid $3.56 million for the land and buildings in June 1990.
The foundation promised to give the money to USA by mid-2008 if it can sell or lease the Wright property. If the foundation can't dispose of the parcel, it will need until mid-2009 to pay the pledge, the resolution approved by directors said.
Even if the endowment can't sell the Wright property, the foundation's cash flow should improve by mid-2007. That's when the remaining $16.5 million of the debt from a 1997 purchase of timberland should be paid off, foundation accountant Mark Thomson said. The foundation originally borrowed $70 million from Regions Bank to help pay for its acquisition of 56,500 acres of timber near Meridian, Miss., from Equitable Life Insurance.
In addition to the pledge, Green said the foundation will continue to give money as it has in the past for endowed teaching positions, scholarship programs, and other USA operations. In the budget year ended June 30, about $3.4 million in foundation money was spent on non-cancer institute related items.
However, Green said it was unlikely that the foundation would be able to pay out more money for anything else.
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