Robertson Foundation lawsuit Q&a updated December 18, 2008
Does the Robertson Foundation pay for University “overhead” and administrative costs related to the graduate program of the Woodrow Wilson School?
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- 43. Haven’t plaintiffs raised questions about the Foundation’s spending
42. Does the Robertson Foundation pay for University “overhead” and administrative costs related to the graduate program of the Woodrow Wilson School?Yes. From the beginning, the Foundation realized that calculating the actual cost of the School’s expanded graduate program on a dollar-for-dollar basis, year in and year out, would be impossible. As a result, the Foundation looked to a formula designed to approximate the portion of the Woodrow Wilson School’s total costs for which the Foundation should be responsible. The defining principle of this formula, which was in place for 40 years, was articulated by University President William Bowen: Because the School is an integral component of the University, sharing the time of faculty members with other departments and sharing facilities and supporting services with all of the other components of the University, a straightforward system of direct charges for all School activities is impossible; the need to allocate joint costs cannot be avoided, and any such allocation is inevitably somewhat arbitrary. Hence, what we are seeking is a fair approximation of the true costs involved in the expansion of the School’s graduate program. The so-called “Bowen Formula” operated through a series of annual charges and offsetting credits that, taken together, were designed to achieve a “fair approximation” of the cost of the expanded graduate program. This formula was vetted with the Foundation board at the time of its implementation and applied by the University and accepted by the Robertson family trustees for more than 40 years before this litigation began. Plaintiffs have focused on the Bowen Formula’s charges without acknowledging its many offsetting credits and have distorted the application of the formula in various ways. Princeton has worked hard to make sure that the Robertson Foundation is charged its fair share of the expenses of the Woodrow Wilson School’s graduate program, and no more. 43. Haven’t plaintiffs raised questions about the Foundation’s spending?The Robertson family members make a series of claims concerning alleged misspending by Princeton of Robertson Foundation assets over the past 45 years. They claim that Foundation support for Princeton’s expenditures on Woodrow Wilson School faculty summer salaries, faculty research, research centers, capital construction, administration, and overhead (to name a few) is improper. The Robertson family members’ view on spending is colored by their overly restrictive interpretation of the “mission” of the Foundation. [See: Question 25] For example:
In claiming that Princeton has “overcharged” the Foundation (for spending that the Robertson family admits went to Princeton and the Woodrow Wilson School), plaintiffs fail to take full account of a long-established series of annual charges and credits between the University and the Foundation which have been in place since the Bowen Formula was adopted 40 years ago. [See: Question 30] In addition, plaintiffs choose to ignore the fact that Princeton’s use of Foundation funds has been regularly reviewed by Robertson family representatives. Prior to the filing of the lawsuit, none of the family-designated Foundation trustees ever objected to these expenditures. Plaintiffs William Robertson and Robert Halligan, who have served on the Foundation’s board since 1974 and 1982, respectively, at no point ever objected to any of the financial statements or dean’s reports presented in the course of the Foundation’s annual meetings, or to any of the Foundation funding that they now attack in this litigation. By asking for legally unsupportable “present-valued damages” on expenditures that are in some cases four decades old, plaintiffs not only make claims that lack merit, but grossly overstate and misrepresent the true value of their claims. For example, the plaintiffs claim that the Foundation was charged both for the purchase of certain equipment and for equipment depreciation, and that this represented an improper “double-charge.” The total amount paid by the Foundation in direct equipment costs was $1.5 million, yet plaintiffs want to recover over $16 million for these charges—an amount they calculate by annually compounding supposed charges over 40 years, often using the Foundation’s exceptional rate of investment return to do so. Under plaintiffs’ arithmetic, an equipment depreciation charge of $10,763 in 1965 is extrapolated into a current day “overcharge” of $788,175, and a challenged charge of $23,315 in “building depreciation” in 1966 becomes a $1,708,598 claim in the litigation. Princeton takes its obligations to the Foundation seriously. Not surprisingly, when combing through 45 years of Foundation records to respond to plaintiffs’ scorched earth litigation campaign, Princeton identified a limited number of bookkeeping and related inconsistencies and has made corrective adjustments. Download 180.02 Kb. Share with your friends:
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