Selling The Ranch: UW Foundation short-changed students by selling Y Cross ranch

Guest column by Donal O’Toole

“Trust is never taken. Only you can give it away. And you did. In biblical terms, you sold it for a mess of pottage.” — former Wyoming Gov. Jim Geringer, commenting on UW and CSU sale of Y Cross Ranch

Jim Geringer said it best. The recent sale of the Y Cross ranch by foundations of the University of Wyoming and Colorado State University reveals current priorities at both institutions.

The 60,000-acre ranch east of Laramie was donated in 1997 by the late Ms. Amy Davis. Her goals, according to CSU language, were that her family ranch be “dedicated to educating students and developing skills required to efficiently and profitably manage Western ranches; research efficient methods of resource use and allocation, and develop management strategies for integrated resource use, as well as to develop holistic approaches to management of domestic and wild animal enterprises, plant and other resources.” Her goals were more ambitious than teaching aspiring ranch managers how to dig post holes, although the latter view is the one spun by the universities.

The foundations accepted the ranch and its seed-stock cattle, horses, equipment and working capital, but on one condition: that they could not sell it until after 14 years of attempting to meet her intended use. This loophole allowed a sale only if UW and CSU faculty did not make good teaching and research use of the property. And so it came to pass — with a little help from the foundations and both universities.

The existence of the ranch was never promoted to faculty. Many never knew of its location or, if they did, how to request access. Typically, when universities acquire a new teaching or research facility, a website is established to encourage its use. Faculty are sent emails and flyers, to promote it so that teachers know what’s available.

That did not happen with the Y Cross. This suggests that the intention from the get go was to sit on the ranch for the requisite 14 years, then sell it. Unfortunately for the foundations, the donor, Ms. Davis, lived a long life. Once she realized the universities would not promote the ranch to their faculty, she tried several maneuvers to hold the foundations to her original agreement and intent. In the end she brought a legal suit against the foundations. Her case was dismissed last year by the Wyoming Supreme Court on the grounds that she had no standing to enforce her intent — specified in the agreement — about how her gift should be used.

The late Ms. Davis had made two mistakes in making her generous gift. First, she agreed the ranch could be sold after 14 years. The discretion for a sale was mostly left with the foundations and universities. Second, she trusted the foundations to abide by her primary goals, as specified in the agreement — a document which, by the way, the universities are not sharing with the public.

The foundations were secretive throughout the period of university ownership. Profit-and-loss statements of the ranch were not released to faculty, in spite of repeated requests. An effort to get CSU faculty onto the property to see the land was grudgingly agreed to, but only for a day, and under specific conditions. The one that made me smile was an injunction to close all gates and never spook the cattle — as a veterinarian, I am now a wiser man.

True to form, even the amount of the recent sale is undisclosed, although it is estimated at more than $20 million. The buyer’s name was secret.

One of the few pluses of the recent sale is that it prompted Gov. Geringer’s comment on a recent article in the Wyoming Business Report. That in turn triggered — for the first time — a public statement by the chairman of UW Foundation’s investment committee, Frank Mendicino.

In a piece that combines indignation with what may be a basic misunderstanding about the gift agreement, Mendicino laid out UW Foundation’s reasons for the sale. At the heart of his argument is a claim that revenue generated from the ranch was supposed to support all educational activities on the ranch. It is not possible to assess that claim, since the text of donation agreement was never released, and the ranch’s annual income is not publicly available. But a ranch — even a 60,000 acre ranch with 800 pairs — is unlikely to generate gobs of money each year. My impression was the donor’s goal was for the ranch to — at a minimum — break even. It did, even according to Mendicino. It also generated scholarship money and support for student interns on the ranch. But any research and academic programs done on the ranch would have to be funded independently. The resource was there, just like a confocal microscope: if researchers and teachers wish to use it, they would need to come up with the money to do so, typically from grants. Wyoming cows are generous, but it is not their job to be a granting agency.

Mendicino makes a second, and telling, argument that underscores current priorities of the UW Foundation. Like any ranch, its value is its land. And that, from the UW Foundation’s standpoint, was a wasted asset. From the standpoint of a money manager, it is better to sell land lock, stock and barrel, get the cash and roll it into an investment vehicle.

As of June 2014, UW Foundation’s endowment was worth $410.8 million, with $50 million to $55 million in gifts coming in each year. What Mendicino did not mention is that bonuses at the foundation, including that of chief executive officer Ben Blalock, are paid from proceeds out of the endowment. In 2014, in addition to his $120,000 salary, Blalock received an additional annual income of approximately $500,000 from the endowment. This number fluctuates, depending on how much money he — but, more correctly, the large team — brings in each year. It would be interesting to know whether Blalock disclosed to Amy Davis he was the beneficiary of an incentive scheme when the foundations insisted that a provision be added for selling the ranch after 14 years if it did not meet expectations as a teaching tool. Bringing home $10 million to the foundation gets Blalock a lot closer to maximizing his annual bonus.

All in all, the Y Cross ranch experience is a sad and instructive tale of how university foundations operate. The UW Foundation increasingly drives priorities at the university on behalf of corporations and wealthy donors, which explains in part the recent lurch toward servicing the energy industry. How much of university foundations’ endowment income goes to money managers versus students was the subject of a recent New York Times op-ed. UW Foundation’s increasing heft at Old Main, and its culture of secrecy, is part of a wider problem.  

The next chapter now unfolds: will UW and CSU use the money from sale of the ranch in accordance with the donation agreement? We may never know. That document remains off limits.(WyoFile obtained the document and published on Sept. 18). There are people who have a copy of the original gift agreement, and I strongly encourage them to share it with WyoFile and its readership.

— For more on this topic, read UW Foundation intent on cashing-in gift of Y Cross ranch, December 2014.

— Columns are the signed perspective of the author, and do not necessarily reflect the views of WyoFile’s staff, board of directors or its supporters. WyoFile welcomes guest columns and op-ed pieces from all points of view. If you’d like to write a guest column for WyoFile, please contact WyoFile editor-in-chief Dustin Bleizeffer at dustin@wyofile.com.

— Donal O’Toole is a veterinarian who works as a professor at the University of Wyoming in the Department of Veterinary Sciences.