Can an attorney cite the law which states it would be illegal for MSU to pay civil suits from their general fund/endowment?

Submitted by MGoArchive on March 17th, 2018 at 10:10 AM

Sorry, this came up in another thread but it really pisses me off as a Michigan taxpayer to know that shit hole of a school is going to pay civil suits from contributions from Michigan taxpayers and not their general fund/endowment. More sunlight needs to be put on this issue.

This is in reference to this reply - http://mgoblog.com/mgoboard/engler-explains-his-decision-fight-legislation#comment-4970993

Can an attorney cite the  law that would demonstrate msu will only be paying civil suits from Michigan taxpayer's additional (beyond what they receive yearly from the state) funding to the school?

They need to pull the money from Klage's (and others) pensions, the general fund, or the endowment. Fuck giving that school a penny beyond what the state already gives it on a yearly basis.

Comments

Steeveebr

March 17th, 2018 at 10:40 AM ^

You are asking for a law that I do not think exists. 

Ultimately it would be on the school to determine how to pay the fees.  So in this case, many of the people who turned a blind eye would be the ones determining who pays the bill.  It's a highly broken system.  The victims are suing MSU and not naming culpable individuals.  MSU can pay out, while many of the players wouldn't be able to pay out anything to each individual.

It's possible a ruling could put specific restrictions on where the money comes from, but when MSU is sued it's different than when an individual board member or coach is sued.

Another way to look at it, is that the voters are responsible for this behavior.  The voters elected the board of trustees, right?

jbrandimore

March 17th, 2018 at 10:54 AM ^

It makes complete sense that large chunks of the endowment are off limits because the donors may have earmarked it for certain purposes.

If an actual lawyer reads this, I would like to ask a more targeted form of the OPs question.

Even if the principle of the endowment is off limits to lawsuits, does that limitation apply to investment returns on those assets?

I would think the answer to that question would be “no” and as the MSU endowment is around $3 billion, even a 3% annual return should net $90 million on an annual basis for the Nassar lawsuits.

That $90 million (and actual returns are likely mich higher) should easily cover the lawsuits when amortized over say a decade without ever touching the principle or a taxpayer dollar.

Is there any reason the legislature can not require the endowment be used in this way?

CalifExile

March 17th, 2018 at 2:16 PM ^

This isn't my area of expertise but I can tell you that one place you have to look is to federal tax law. A key factor in the growth of endowments is that they don't pay taxes on earnings. My guess (emphasis on guess) is that payment of penalties isn't a charitable purpose and therefore neither the principal nor the earnings of the endowment can be used for that purpose. A corollary of that is that state tax law could be changed to tax the earnings and the resultant funds could be dedicated to compensating victims, either directly or indirectly.

grumbler

March 17th, 2018 at 5:22 PM ^

MSU is a non-profit, so I don't think that they need to worry about whether or not the endownment procedes are spent on "charitable purposes."  Endowment are used to build buildings, for instance, and that isn't "charitable."  Besides, money is fungible:  put $90 million from the endowment into tuition support and redirect $90 million the general fund now spends on tuition support into paying compensation.

It all comes out of the taxpayers' pocket one way or another no matter how they decide to structure the compensation fund.  

Arb lover

March 17th, 2018 at 8:37 PM ^

Only thing I'd add to the above is that public universities in Michigan get a sizeable chunk from the State (and a very small portion of that from the Feds as pass through). The latest recommendations are here: as you can see from that, the State mandates SOME of the money it gives to the universities to specific functions. 

Endowments, donations, state funding, and grants can all have very specific purposes for the money. However, tuition is your major breadwinner for MSU with just at 50k students enrolled. Other than salary and benefits, and hard costs, which are assumed to be paid for or the university doesn't balance its books, the university can spend all that money however it sees fit. 

CalifExile

March 17th, 2018 at 9:18 PM ^

This is wrong. Building a new lab is done for charitable and educational purposes and therefore is allowed. Giving money to someone to build a new 7-11 isn't. If more than a certain amount is spent on non-charitable purposes the endowment will lose its tax-exempt status and have to pay taxes on their earnings. You need to look not only at what the feds allow but also at the endowment's charter to determine what they can spend money on. What the state decides to do with appropriations that they make to MSU doesn't change the requirements of federal tax law.

Section 1.8

March 17th, 2018 at 11:07 AM ^

are such an embarassment to MGoBlog.  It isn't a matter of being a topic that must not and cannot be discussed, ever.  I'm a free speech guy.  It's just that the mix of football rivalries, millennial politics and social media are just so toxic.

 

Ramblin

March 17th, 2018 at 11:50 AM ^

Nope.  Scream it from the rooftops until the board of trustees/engler are forced out.  The new spin from MSU is "leave us alone and be nice."  I refuse to do that until the University stops victim blaming.  Engler just lobbied against sexual abuse legislation and used the "taxpayer pays" card to justify the slap in the face to the victims.  Sorry if talking about that makes people feel icky.  

One caveat, I did decide to make sure to point my finger at the leadership of MSU.  It is important not to lump everyone in with them.  However, a lot of people see Dantonio and Izzo as the "real victims."  I have no problem reminding them that they are wrong.  In fact, Ill use whatever medium is available to me to voice my oppinion in hopes that others will come around and figure out a way to put a stop to this travesty.

NOLABlue

March 17th, 2018 at 11:28 AM ^

Hate to say that I agree with you on this issue. I understand why people want to talk about it but I get the feeling that the slow bleeding-over of these topics into Michigan sports is slightly disconcerting. I just usually avoid these threads, but it's been a slow morning on the board so I regretfully took a quick peek.

Section 1.8

March 17th, 2018 at 3:53 PM ^

If you figure it out, let me know.

But just to keep everything on the up-and-up, well before you posted this, Ramblin', I wrote to Seth Fisher on the Moderation Action Sticky page, and I think I made myself reasonably clear.

Of course it isn't fair to you, to blame you for the dozen or more Engler-rage threads (I couldn't possibly count the number of individual political posts in each one) that preceded you over the past several weeks on the MGoBoard.  I don't want to do that, okay?

But I think your post today helped prove my point that I was making before you thought of writing this.

 

 

 

Ramblin

March 17th, 2018 at 5:30 PM ^

It's really hard to keep the politics out of this.  I think this is by design.  You can't talk about what is happening without talking about Engler.  So, in a way, our rule against political discussion is already a gag order on anything Nassar related.  I think this goes beyond MGoBlog and that it is part of MSU's plan.

It's more than a little bit suspect that MSU chose a divisive, political insider to "clear up this mess."  That is very interesting when you think about it. That way people are forced to pick a side and stay true to their political leanings rather than seeing things through a politically uncharged lens.  These "leaders" on the BOT aren't dumb (well, George Perles exluded...), they know how to take advantage of MSU alumni and their blind love for anything sparty.  They also know how to leverage partisan politics to their advantage.  The strategy is both sickening and brilliant.  The arguments on this board today are evidence that their plan is working.  Divide and conquer as they say...  

Last point.  My posts today and throughout this fiasco are in no way politically motivated.  Nor are they motivated by any rah rah football rivalry beef.  I don't hate Engler because he is a republican.  I hate how he is handling this particular situation.  I would hate it if he was a democrat or facist anarchist.  You disagree and think he is doing the right thing for the right reasons.  I don't buy that.  Case closed.  It's beer thirty.  Also, I enjoyed the debate and learned a few things.  
 

schreibee

March 17th, 2018 at 3:07 PM ^

Section, you're post was a bit too obtuse for this non-millennial, barely social media present Wolverine.

Why should we (or the mods) be embarrassed about this?

If taxes paid by ppl unassociated with msu (a lifetime choice for many) are to be used to compensate ppl victimized by msu's systemic covering up of various assaults & misadventures, and they've actually got a LAW to ensure it comes from general funds, why wouldn't ANYONE scream about that?!

Even if it happened at EMU rather than msu it'd be wrong. 

 

 

Section 1.8

March 17th, 2018 at 3:40 PM ^

Point One:  The proposed legislation at issue is (I presume, since nobody else cited it or discussed it in any serious way is Senate Bill 52, which deals with statutes of limitation in such a dubious way (but such a politically expedient way that even in the Repubican-dominated Senate it passed nearly unanimously) that the ACLU opposed it.  That is the pending issue in Lansing.

Point Two:  There is the proposal, which I don't think has been committed to paper in a House Bill by Rep. Klint Kesto, which purports to prevent general fund/taxpayer/general fund money from being used in sexual misconduct settlements.  Anybody know if it is intruduced yet?  Is there an HB number?  Not that I am aware.

Point Three:  It is a collossal political play by Kesto, almost entirely withkout meaning.  Penn State settled its cases with victims, out of insurance funds and interest on held financial assets.  Penn State students didn't get an incereased tuition bill, earmarked for settlements.  Taxpayers didn't get a line-item in the state budget for PSU settlements.  So what Klint Kesto seems to be worried about in Michigan, didn't happen in Pennsylvania and doesn't appear likely to happen here at all.  The same hysterical people who think that Michigan taxpayers have to pay for Jim Harbaugh's salary (I guess this is where I have to point out that they don't), think that Michigan taxpayers will be on the hook for Nassar settlements.

Point Four:  One real, actual way to make it more expensive to operate a university in the state of Michigan is to open up the statute of limitations by, say, oh about 30 years (I am not kidding) after an alleged sex-assault victim turns 18.  Just watch what the universities' insurers say about that, and what that does to rates.  Multiply those costs times the 1001 other ways that the legal and regulatory environment makes it ever-more expensive to operate the institution.

karpodiem

March 17th, 2018 at 4:58 PM ^

May not have insurance. 

"The same hysterical people who think that Michigan taxpayers have to pay for Jim Harbaugh's salary (I guess this is where I have to point out that they don't), think that Michigan taxpayers will be on the hook for Nassar settlements."

Sorry, I'm not buying that they're not looking to hit up the state of Michigan for additional money. Hell - Engler himself said it. Granted, he was posturing. But when they rush a bill to a vote, now he can say - "I told you this might happen."

NRK

March 17th, 2018 at 6:38 PM ^

“Millennial politics” (eyeroll)

Come on man. I actually agree with a lot of the economic principles you often defend, but you go about it in such an obnoxious, aggressive, condescending way to anyone who dares to disagree with you that it makes anything even close to it become a toxic discussion.

Rational people can disagree.

Mr Miggle

March 17th, 2018 at 1:43 PM ^

If the state raised their direct support to MSU to cover their settlements, that money would come directly from the taxpayers..If MSU raises the money another way, it won't. They can solicit donors, tap their endowment, cut back on some costs, delay expansion/building projects. Some of those things would have some indirect costs to taxpayers. That's unavoidable, but it should be much less than the total.

University presidents are largely fundraisers. Let's see how well Engler performs that part of his job.

schreibee

March 17th, 2018 at 3:19 PM ^

Yes, here's the difference:

One set of funds are taxes paid by ALL Michigan taxpayers.

Another set are donations from msu boosters, alum & various philanthropists (the Koch bros for example donate to many schools they aren't affiliated with).

A Michigan taxpayer not affiliated with msu would have a strong interest in which fund any monies paid out came from.

Hell, even one who is affiliated with msu should want settlements & judgements paid not from their taxes I should think?!

Assuming they played no personal part...

 

Section 1.8

March 17th, 2018 at 11:51 AM ^

Then, please; with all due respect, you ought to know that:

  1. MSU governance is a matter of state constitutional law, not statutory law;
  2. MSU, with an endowment in the billions, manages that endowment exactly the way that any professional would expect; they have insured it.  Through a combination of self-insurance funds, self-insuered retrentions, excess policies and re-insurance.
  3. The Penn State case (payments) turned significantly on the coverage issues, wherein PSU's insurers covered some claims, denied others, sent reservation of rights letters, and filed declaratory actions to determine coverage.
  4. The notion that there is a simple question of whether "donors" (wait, I didn't use the correct term; it's "wealthy donors") or "taxpayers" (although reading you, I am to believe that "taxpayers" make "contributions" so I am very confused) is simlipistic to the point of being useless.  Actually, it is just plain useless.
  5. You could argue that the $275m that is allocated by the State of Michigan to the MSU general fund (and even that statement is too simplistic) is in fact a matter of a legislative prerogative on the level of a statute, and so might be regarded as a "law" about funding... Of course it is the Trustees that have the final, independent, constitutionally-protected right to determine how MSU finds are spent... And it is peanuts compared to the endowment and the insurance coverage.
  6. MSU paid for the insurance and so to some extent all of this wailing about taxpayer money and donor money is just so much internet blather.  But what MSU paid for, was (to again over-simplify) an insurance contract.  There are limits.  The insurance companies will rightly protect their rights and their assets under those contracts.

When MSU and its insurers get treated like "defendants," guess what?  They are going to act like defendants.

My respectful suggestion to you when you want to start a post like this, is to do some research on you own, and you could very easily pick an article like this one from Crain's, which is very readable and not terribly technical:

   

 

 

Section 1.8

March 17th, 2018 at 12:05 PM ^

Your one-line, content-free trashtalk prevented me from editing my post to include the Crain's link:

http://www.crainsdetroit.com/article/20180128/news/651331/long-complex-…

You're welcome.

Oh, and Crain's reminds me that instead of talking about an amoprhous MSU endowment "in the billions," it is better and more precise to talk about MSU's actual liquidity, which is about $1.5 billion.  Again; much of it insured.

Ramblin

March 17th, 2018 at 12:21 PM ^

Dude hasn't had his first green beer apparently.  I'm also just responding, politely, to the OP's question.  Glad to help you get some of that anger out there though.

John Engler used the threat of taxpayer liability as an excuse to lobby against a law designed to help victims of sexual abuse.  That happened.  That is the issue. 

Rather than attacking me, please listen to some of the victims reacting to this latest slap in the face.  It's important.  

 

Ramblin

March 17th, 2018 at 1:47 PM ^

I'm also sure that the entities fighting against this legislation - UM included - were primarily motivated by their perceived need to limit possible future liability.  The point I'm trying to make is this.  Engler personally showed up to fight this legislation and he used the "taxpayers might have to pay" card to justify his actions.  He did this for a reason.  He is a slimeball, but he ain't dumb.

He could have chosen to rely on some other reason to avoid lengthening statutes of limitations, the need for "fresh" evidence for example, however, he chose to play the "taxpayers will get the bill card."  He could also have shown some respect for the victims and kept his fat ass out of the story...  He obviously must have known this wouldn't go over well with the victims or the media.  So why did he do this???

My gut tells me he chose this route in an attempt to generate public favor for the instituion he is representing and, worse yet, to portray the victims as ambulance chasing gold diggers out for Jon Taxpayer's hard earned money.

I'm actually wondering if he consulted Joel Fergusson prior to his appearance...  Remember this little gem from Mr. Fergusson?

Q:  But if Coach Klages was told as early as 1997 about this and didn't do anything, isn't the university at fault?"

A:  I wouldn't say that at all...  That's a bad decision that she made, and it has to be stretched to us by all the FOLKS CHASING AMBULANCES, because there is no payday by her.

MSU is in the middle of the worst sexual abuse scandal in the history of academia and the president of the university, along with the BOT, is actively fighting against legislation designed to help the very victims MSU callously ignored.  UM is in the wrong here.  MSU is much more in the wrong.

At any rate, you are making good points and we are now discussing them respectfully.  The "marketplace of ideas" is a good thing.  Let's not put a gag order this topic.

 

 

Section 1.8

March 17th, 2018 at 1:56 PM ^

...because he was asked to appear before the State Senate Higher Education Committee, and he readily agreed to do so.  They asked him questions, and he answered them.

Pretty suspicious, eh?

And I don't really don't need your trashtalk about any gag orders.  I never suggested any gag orders. 

 

Ramblin

March 17th, 2018 at 3:31 PM ^

Yes, he talked to the senate, then he talked to reporters and anyone else that would listen...  He also had closed door conversations with senate republicans in which he asked them to block the bill.

It doesn't matter.  Your mind is clearly made up.  You are right.  Bang up job by Mr. Engler, Ferguson, and the rest of the board.  Pure class since day one.  Say hi to Mr. Engler for me when you see him next.

Also, I admit you didn't ask for an outright gag order.  You just said that posts on this topic are an embarrasment to MGoBlog and suggested the mods remove them.  You then proceeded to attack the intelligence/character of anyone that disagreed with your stance on the topic.

Enjoy your day.
 

Mods, these MSU/Engler/jailhouse lawyer/primal scream posts
 

3

 
Vote down!

-21

are such an embarassment to MGoBlog.  It isn't a matter of being a topic that must not and cannot be discussed, ever.  I'm a free speech guy.  It's just that the mix of football rivalries, millennial politics and social media are just so toxic.

Ramblin

March 17th, 2018 at 4:23 PM ^

You sarcastically stated "Wait you are an attorney!?!?"  Then you went on a rant in an effort to make me look dumb.  You also referred to the original poster, albeit indirectly, as a Jail House lawyer while somehow simultaneously referring to his relevant, important, now popular, post as a primal scream. 

I could probably find more direct examples, but your overall tone is very condescending and somewhat mean spirited.  This is evidenced by the responses to most of your comments.  

For what it's worth though, I would remove that part of my last post but it is too late now.  You really do have a right to speak your mind and you didn't outright attack anybody or break any rules.  If you read further, I'm supporting your right to speak out.  Apologies.  Now go drink a beer for crying out loud.

karpodiem

March 17th, 2018 at 12:39 PM ^

So if what you said is true and they have insurance (against what? catastrophic financial market losses or internal fraud? Then it’s just a financial product hedge and not an insurance policy), then why does Engler care about the statute of limitations for claims? And if they have insurance for the endowment for circumstances I’ve cited above, surely there’s an insurance company out there who will take the premiums and write a contract against the gross incompetence that led to Nasser not being prosecuted sooner. Oh wait, they didn’t buy an insurance product for that? Too bad.

Answer - because Engler is human swine/disgusting.

Steeveebr

March 17th, 2018 at 6:12 PM ^

I certainly am not joining the let's not talk about this camp, but this post kind of outlines the emotional nature of this discussion rather than the logical nature of this discussion.  Let me explain:

Question 1 - If MSU has an insurance policy that will protect them in cases like this, then why does Engler care about the statute of limitations?

Emotional Answer 1 - Because he is human swine/disgusting.

Logical Answer 1 - If the laws are about to change for any insurance holder that could dramatically impact their liability and in turn, their required principal wouldn't any wise policy holder care about that?

 

Question 2 - Oh wait, they didn't buy an insurance policy for that?

Emotional Answer 2 - Certainly no insurance company would cover such negligence and administrative failure.  Too bad.

Logical Answer 2 - I don't think any of us know what insurance the University has, but Penn St. was most assuredly covered for such negligent behavior.  It's logical and natural to assume that other universities are.

Kevin14

March 17th, 2018 at 11:44 AM ^

Money is fungible.  At the end of the day, it's going to cost what's it's going to cost and that money comes from Total Money MSU Owns