Exclusive: WSU failed to get required approval for Mike Ilitch School of Business

Wayne State University under President M. Roy Wilson signed off on a controversial gift agreement with billionaire Mike Ilitch to build a new business school without getting the required approval from the school’s elected Board of Governors.

The Mike Ilitch School of Business agreement, which has numerous strings attached that could be perilous to students and taxpayers, was intended to be confidential until Motor City Muckraker received a copy under the Freedom of Information Act. Public universities are subject to open-record laws.

Turns out, top university officials appeared to have signed off on the agreement without board approval, as required by the university’s own gift giving policy. There is nothing in the university’s public records that shows the board voted for the gift. That’s worrisome because the Board of Governors is an elected body with a fiduciary responsibility to students and taxpayers.

Last October, the board amidst fanfare voted for the construction and naming rights for the Mike Ilitch School of Business, but not the gift agreement, which puts the financial obligation on the university.

“The Board of Governors must approve all gifts that will or may require expenditure of University funds either now or at some future date, except for charitable gift annuities with a face value of 200,000 dollars or less,” the university’s policy states.

It’s unclear whether the violation puts the gift agreement at risk.

Under the agreement, taxpayers and students could be on the hook for some or all of the Ilitch family’s $35 million donation to build the school next to the publicly funded Red Wings arena near downtown. The university is already chipping in $24 million, even after two rating agencies downgraded the university’s outlook to “negative” because of declining enrollment and cash reserves.

Asked why the administration failed to get board approval, university spokesman Matt Lockwood responded, “No comment.” President Wilson also didn’t return requests for an interview.

Although the Board of Governors oversees the university and is directly responsible to taxpayers and students, Chairman Gary Pollard and Vice Chairman Paul Massaron refused to comment despite repeated requests for interviews. This raises questions about their willingness to serve in the best interests of students and taxpayers. Both Pollard and Massaron have touted the deal as a new era for the university without telling the public details of the agreement.

In June, the board voted to increase tuition by an average 4.1%. Two board members, Dana Thompson and David Nicholson, voted against the tuition hike. The remaining members – Pollard, Massaron, Sandra Hughes O’Brien, Marilyn Kelly, Diane Dunaskiss and Kim Trent – supported the tuition increase.

What remains unclear is how the secretive deal took shape, and whether university officials applied due diligence to protect taxpayers, and why the university would sign an agreement with so many strings attached.

On Tuesday, Motor City Muckraker filed a Freedom of Information Act request for e-mails involving the naming and construction of the business school that were sent to and from university accounts. Our request included e-mails between top university officials and the Ilitch family and foundation.

President Wilson has championed the gift agreement in interviews with the media, which obediently publicized the business school without scrutinizing the costs or contract.

The gift agreement was signed by Chacona Johnson, vice president for Development and Alumni Affairs, and William Decatur, treasurer, CFO and vice president for Finance and Business Operations.

A confidentiality clause in the agreement, a legal document that binds Wayne State University to the terms of the deal, even prohibits Wayne State officials from disclosing details to the public, and that includes the university’s “directors, officers, staff or employees who do not have a reason to know the information.”

Local media outlets, some of which receive advertising money from Wayne State, have essentially served as mouthpieces for the university, despite serious concerns about the school’s spending. In the wake of the Motor City Muckraker probe, the university administration has successfully distracted the establishment media with positive stories that were published in the past two weeks, while ignoring the more pressing issues raised in our ongoing investigation.

This is part of Motor City Muckraker’s ongoing series about Wayne State University’s spending decisions at a time when enrollment is declining and tuition is increasing.

Motor City Muckraker is an independent, ad-free watchdog that relies on donations. Your contribution will help us continue serving as a watchdog who answers to no one but the public.

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Steve Neavling

Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.

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