UW Foundation intent on cashing-in gift of Y Cross ranch

— Essay by Donal O’Toole

UPDATE, June 9, 2015 — The University of Wyoming resumed marketing for the sale of the Y Cross Ranch.

Potential land donors: beware the University of Wyoming Foundation (UWF)! If the UW Foundation’s stewardship of the vast Y Cross ranch is indicative, have a lawyer by your elbow when giving land for instructional use to the University of Wyoming. Make sure she’s on the ball.

The UW Foundation won a Wyoming Supreme Court case earlier in 2014, allowing it to sell the Y-Cross ranch that it was gifted in 1997 by Ms. Amy Davis. The ranch, assembled by Davis’ father, is a large spread between Laramie and Cheyenne. Davis died in April, less than two months after the court’s decision. She spent her last years imploring UW Foundation and its Colorado State University counterpart not to sell the ranch. Instead she wanted it used for instruction and research as specified in her original agreement. A sale now seems likely unless a provision in her will, and more money from her estate, preempts it.

Some faculty members say the university never promoted use of the ranch for “instruction and research,” as Amy Davis directed in the original agreement. The purpose of this essay is to lay out why they might think that, and what it may signify if they are correct.

The Wyoming Supreme Court ruled unanimously against Davis and in favor of UW Foundation and CSU’s research foundation. The Supreme Court’s decision was based on the fact that only Wyoming’s attorney general has standing to enforce the terms under which charitable gifts are made. To date he has not elected to do so. The two foundations are therefore in a position to sell the ranch, which they were given 17 years earlier. Its estimated worth was north of $20 million in 2012, and it is probably worth more now.

The Y Cross is no ordinary property. At 60,000 acres (17 miles east-west and 6 miles north-south), it straddles the Albany-Laramie county line. Its western border is less than 10 miles east of Laramie with access from North 9th Street and the Rogers Canyon road. Most of it — 50,333 acres — is deeded land. From the time of donation, the ranch and its 750 cow herd have been overseen by a five-person management board. This comprises a representative of each foundation, the dean or a stand-in from both colleges of agriculture, and a person appointed by the Davis Foundation. Ms. Davis was a determined woman and in death her determination remained evident. Her will provides for a “large financial incentive” to both foundations if they abide by her final wishes. Her terminal conditions and the amount in play are not yet public.

On one level this is a familiar story. University foundations are independent nonprofit corporations that raise money from donors to support the universities with which they are associated. As state and federal support has contracted over the last four decades, public universities now depend increasingly on gifts to meet their goals. This enhances the influence of foundations and their donors with university presidents, bypassing internal planning processes. It lends considerable weight to the opinions of local movers and shakers, if they are donors. In this instance there is no indication that Ms. Davis sought to leverage her generosity in this way.

In most states, including Wyoming, university foundations operate outside open records and open meetings laws. Several recent legal cases involved allegations that university foundations failed to follow the written wishes of benefactors. Some involved donated land. They include the Belward farm case, involving Johns Hopkins University, and the Hannah Carter donation, involving the University of California in Los Angeles.

Public universities such as UW have several revenue streams. Least fungible is the block grant, which is provided by the Wyoming Legislature. Another comes from fee income and overhead from grants. A third is investment income managed by the the UW Foundation. In 2013 the foundation raised $56 million. It currently manages an endowment of $361 million. The bigger the endowment, the louder the voice of the foundation and its major donors in Old Main.

Ben Blalock is president and CEO of the UW Foundation. He answers directly to the president of the University of Wyoming. His official UW salary for fiscal year 2015 — apart from his compensation from the UW Foundation — is $120,000.

When asked, Blalock is unforthcoming about his full compensation, and how he may benefit when his unit meets fundraising targets set by the UW’s president and UW Foundation’s board of directors. Yet a bonus of $250,000 in addition to his UW salary of $199,000 was the source of public controversy in 2006, creating friction between UW’s then-president Phil Dubois and some of the university’s trustees. This suggests that, in some situations, there has been a personal incentive for growing the endowment. Blalock publicly denied this when I asked him about it at a meeting of UW’s faculty senate.

In other words, he has two incomes: one from the university, which is public, and a second from the UW Foundation, which is not widely known.

The basis for Blalock’s supplement is pertinent to the sale of Davis’ donated land and its other assets. When Davis offered the land to the foundations in 1997, they accepted it only on the universitys’ condition it could be sold after 14 years (not before 2011). Presumably a sale would hinge on the two institutions being unable to make full educational and research use of the gift as specified by Davis. It is also possible that 14 years was a reasonable estimate of the time it would take for Davis to pass from this vale of tears. The donation was made under a signed memorandum of agreement.

The UW Foundation stated that there were just two purposes for the gift. One was to “generate scholarships and internships for CSU and UW students through net revenues generated from ranching operations’” The other was to “provide a ‘real-world’ working laboratory by CSU and UW students in western ranching and resource management.” But as summarized in a flyer put out by CSU, the gift had a wider, more imaginative and educationally more challenging goal: to 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. The UWF refuses to release the text of its agreement with Davis. This is an odd decision given that this was a large gift given to two public universities. Publication of the full text would clarify whether Davis’ original intent was simply to train the next generation of ranchers how to dig post holes and make cattle turn a profit, or if it embraced something bigger.

A strange thing happened after the Davis land was donated. It disappeared. In normal circumstances, a concerted administrative effort is made to promote newly donated resources to instructors and researchers. But in this case it didn’t happen. Even the promotion of internships on the ranch to undergraduates was minimal and informal. Some UW instructors got the impression from the administration that they were to stay off the ranch. A survey I conducted in 2012 found that 91.4 percent of the 112 UW employees who responded could not remember ever receiving promotional material about the land or its assets.

The survey was undertaken because I was puzzled by an announcement that the Davis land would be sold. At that time I had been a member of the College of Agriculture and Natural Resources for 22 years. I, too, could not remember being encouraged to use the Davis land, its cow herd or wildlife, apart from a popular piece noting the ranch’s growing profitability. Until 2012, when I took a veterinary student extern to the Y Cross to help cattle being processed, I did not even know where it was. Yet as a working academic veterinarian I had received diagnostic samples from this mysterious ranch, owned by my college. I still remember the student’s awed impression at the scale of the operation.

Below are comments from nine individuals I received in 2012. They were received through SurveyMonkey, to assure respondents of anonymity:

— “I first became aware of the Y Cross by listening to a discussion among UW College of Agriculture administrators in 1997 about how quickly it could be sold. I’ve never seen any point in pursuing activities on the Y-Cross because it was going to be gone as quickly as legally possible.”

— “I can only tell you that my memory of the time of the acceptance of the ranch was that I talked to someone about prospects for doing research or teaching there and that person, the identity of whom I do not recall, told me that the ranch would be operated for profit by a private manager and that usage for research or teaching was not welcomed or expected.”

— “I do not believe this university made a good faith effort to promote it. I drive students farther to field trips on public land than this property is from campus, I suspect. I say that, not even knowing where it is exactly.”

— “Since I’ve been at UW (2002) I haven’t heard a word about it. Although I’m not in agriculture I do conduct field classes…..Had I known about it, this would have been an ideal place to conduct field work….. Anyway, my point is I never heard a thing about this ranch but, if I had, I would probably have tried to use it for academic purposes.”

— “It appears to have had no on-campus champion, certainly not in UW administration.”

— “There were no effective efforts to alert faculty to the availability of Y Cross. In fact there appeared to be an effort to discourage use of this facility.”

— “I am a faculty member in the College of Agriculture and Natural Resources and have been so over the past 14 years. I recall hearing that the land was donated, but I don’t even know how to get there, or how to gain access.”

— “Often discouraged from working there when I asked about the ranch. Explanation given to me was that the donor did not want research conducted on the ranch.”

— “My conclusion is that they always wanted to sell it, but there is no doubt in my mind that they are being pushed by a large donor who wants to buy it.”

The foundations and deans offered various reasons why the land should be sold. One explanation was distance. They said it was too far from the UW Laramie campus to be used readily. Yet the ranch headquarters on Horse Creek on the eastern slope of the Laramie range is only 28 miles from UW’s Laramie campus. Ms. Davis and the ranch manager were said to be “difficult.” Ms. Davis served on the management board until 2004, but was out of the picture thereafter. The management committee could have replaced the ranch manager at any time if it judged he was obstructing access by instructors and researchers.

The memorandum of agreement supposedly specified that the ranch was to be self-supporting, which it is. Indeed the ranch’s profitability and value increased steadily over the past few years, due to reinvested earnings, hard work and smart management of the herd by the married couple now running the operation. In spite of statements by the UW Foundation that annual income from the ranch is inadequate to justify continued institutional ownership, it would not release summary profit and loss data, including depreciation, to UW faculty. There is no evidence it was ever Davis’ intention that the ranch provide a large revenue stream for the foundations. That is not a practical expectation for any upland Wyoming ranch, even one as large as the Y Cross.

As stated in the current draft plan for UW’s College of Agriculture (p. 9-10), the college prefers to sell the ranch and use the invested income for student scholarships, internships, and graduate fellowships, support for a ranch management course, and applied research. Yet many instructors would find it useful to have access to the ranch’s wildlife, habitat, geology and commercial beef herd, all of which are more likely if the property is retained by the universities. The UW faculty senate voted in 2012 in favor of retaining the land for five years to establish its educational use, premised on a good faith effort by the foundations and the management board to make it available to instructors. The resolution was ignored by upper administration at both universities. While the UW’s faculty senate is a hybrid suggestion box with attached steam vent, it is odd that the resolution was never responded to formally.

It is also ironic that the UW Foundation proved so determined to sell the ranch at this point in UW’s development. The university committed to an interdisciplinary biodiversity initiative and the creation of a bachelor’s degree in biodiversity. This is by virtue of the university’s proximity to Wyoming’s array of pristine, managed and trashed ecosystems. The initiative cited the need for “outdoor laboratories” for research, education, and outreach. Its primary geographic focus is biodiversity with an emphasis on short-grass prairie and sagebrush steppe in southeastern Wyoming. This is where the Davis land is located. The initiative would advance UW in disciplines where UW wishes to impact, particularly in the life sciences, and in environment and natural resources. Sale of the land raises the question: is UW serious about biodiversity instruction and research? Perhaps the purpose of the biodiversity initiative is to give a public appearance of balanced institutional priorities. This would be useful cover as UW acquiesces in legislative directives and the wishes of corporate donors to the UWF, such as Halliburton, to service the region’s energy sector. Leaving aside unease at the recent capture of UW by the energy industry, there is no reason it cannot address both: to study biodiversity, while addressing issues of energy extraction and use.

An interesting aspect of the Davis saga is the effort by a wealthy neighbor, Doug Samuelson, to acquire the land. Samuelson is a former representative for House District 7 who served in the Wyoming Legislature for eight years (1999 – 2007). He is a client of state Sen. Phil Nicholas (R-Laramie). Samuelson served on the UWF board (2001 – 2009), and represented it on the Y Cross management committee (2005 – 2009). As such he was privy to information about the ranch’s operation and profitability.

In 2012 Sen. Nicholas backed a proposed land swap whereby the state would buy 11,000 acres of Samuelson’s land east of Laramie. The purchased land was to be used as a state park. In the process it would help protect the aquifer that provides much of Laramie’s municipal water. The deal coincided with Samuelson’s intention to buy the Y Cross from the foundations and with Sen. Nicholas’ action. At the time Sen. Nicholas was chairman of the Senate Appropriations Committee. The plan died after Sen. Nicholas’s conflict of interest surfaced. The senator stated he would not profit from a land deal involving his client Samuelson.

An equally odd episode occurred in 2009. This was two years before the universities publicly announced their joint decision to sell the land. It coincided oddly with Davis’ private offer to buy out UW’s share and give it to CSU. She did this because she had grown increasingly concerned about the educational use — more correctly, its non-use — of her gift. She was coming to the conclusion that both institutions were failing to uphold their end of the deal. The foundations were approached by an unnamed individual who offered to purchase the land. (WyoFile has confirmed the potential buyer was Dave Berry, whose ranch borders the northern portion of the Y Cross — click here for more details). When asked about this later, UW Foundation’s Blalock said he could not remember the name of the buyer or the amount offered.

It is difficult to believe that Blalock would forget an offer of $18 million. Someone with inside information may have known Ms. Davis was about to buy UW’s share in the ranch, and wished to put an offer on the table.

Woodrow Wilson, a former university president and later president of the United States, once remarked that “everybody knows that corruption thrives in secret places, and avoids public places, and we believe it a fair presumption that secrecy means impropriety.”

Davis lost her lawsuit. Yet some courts outside Wyoming see public university foundations for what they are: public bodies with the shellac of privacy. The full story of the foundations’ handling of Davis’ property may never be known, including the central question: when was a decision made to sell the property? Inability to address that question is due to unhealthy secretiveness in the UW Foundation.

It is my opinion that the UW Foundation should be audited with regard to how it handles gifts-in-kind, with specific attention paid to the Davis gift. This could be done by examining internal documents and emails and, not least, human memories. Unlike animal trails, in Wyoming paper trails have a habit of becoming vanishingly faint. For that reason, past and present employees at the UWF should be examined under oath, supplemented by interviews with people in the dean’s office, Old Main and the Research Office. The paper audit should be done by accountants who are familiar with abuses that are possible within university foundations and, specifically, the use of privacy laws to evade acting as they should. The auditing entity should be unconnected with Wyoming’s Good Ol’ Boy network. By this I mean UW Foundation’s directors, university’s trustees, Gov. Matt Mead, and past and present politicians who carry such clout in guiding president Dr. McGinity.

It is time the UWF was subject to the state’s Open Records Act and oversight by the state auditor. Absent that, a repeat of the Davis episode seems inevitable. From my perspective, the big picture is this: A generous landowner donated a valuable property for instruction and research to two public universities. She slowly realized the foundations serving the universities appeared to be on another page. Her goals of furthering education were undermined by deft legal footwork, and consistent stonewalling. The foundations pursued the idea of flipping the property. I presume that growing the endowment trumps all other considerations, possibly including ethical ones.

I met Ms. Amy Davis just once. I cannot claim to have known her. I try not to imagine what compound of pain, outrage and frustration she experienced at the hands of the UWF in response to her kindness. No pockets in a shroud, as we say in Ireland, and no way Ms. Davis could take her patrimony with her. But I wonder if it struck her as ironic that the generosity she displayed was counterbalanced by the foundations’ self interest in seeking to cash in such a valuable gift, to swell the endowment. A bigger endowment means more annual investment income, from which the foundation takes a cut thought to be about one quarter of the dividend generated (i.e., 1.25 percent on a return of 5 percent). The public dissembling and damage to the university’s reputation could have been avoided if the gift was handled like the River Bend ranch. Ms. Davis could have been told up front that the best use of the land would be to sell it, but she wasn’t.

Lucius Cassius was said to have probed the powerful with his recurrent question of ‘Cui bono’? That can be applied here. Who might have stood to gain in the alchemy of converting a public gift of land, cattle and landscape into green crinkly stuff with which you buy pigs?

For now, until greater transparency exists at the UW Foundation, I have advice for generous donors wishing to gift land to the university to promote deeper knowledge of this state’s astounding landscape.

Don’t.

Y Cross ranch timeline:

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