Saturday, December 18, 2010

Weakened Oversight of Public Assets

New legislation is dismantling century old trusts and endowments that were supposed to continue in perpetuity. This is the raiding and plundering of historic endowments to compensate for property mortgages, pet projects, failed investments and expanded personal compensation packages, which are not for the benefit of the public and certainly not the donors' intent.

In 2006,the Uniform Law Commission (ULC) released Bush era guidelines deregulating a substantial portion of nonprofit funds. More than 40 states have adopted versions of these guidelines with very little debate and even less publicity. On June 10, 2009, NJ Governor Jon Corzine signed into law the Uniform Prudent Management of Institutional Funds Act. This law creates troubling changes in the way that charitable trusts and endowments are managed and regulated.

The use of the term "prudent" in dealing with "small funds" has resulted in an expansion of the affected funds from the ULC suggested amount of $25,000 to a high of $250,000 in New Jersey and in a number of other States. These funds become "old" after the suggested 20 years in NJ, and at least one \state has shortened the time to 10 years. Language on retroactivity is strategically vague and neglects public notification and transparency.

Liquidating the principal in countless smaller endowments that support charitable work in good times and bad will do irreparable harm to the public good that will eventually achieve infamy as a crime against the living as well as the dead.

Most significant is the transfer of oversight from the jurisdiction of the States' Courts to a political appointee - the State Attorney General - making nonprofits more vulnerable to pay-to-play and unregulated asset transfers. Ethical assumptions about prudence, motives, and human nature have subsequently been changed with lessons learned by the banking crisis, predatory lending practices, bonuses amidst bailouts and the failure of the SEC to regulate the exploitation of foundations and non-profits by Madoff.

The dismantling of New Jersey hospitals, specifically Muhlenberg Regional Medical Center, Plainfield, NJ, was facilitated by a corporate, non-profit parent company with related for-profit holdings and overlapping interests. The transfer of over a century's accumulation of assets: endowments, gifts, real estate, facilities, and equipment was done under the approval of the NJ State Government, and the NJ Attorney General's Office. The cy pres doctrine was essentially ignored.

Citizens have raised the endowment issue at state hearings, in letters to the editor, and various other venues, but all of this has fallen on deaf ears. The citizens are in affect paying tax dollars to the same state government employees who are not protecting their interests. Unless the citizen's can muster enough money to initiate a court action, all of the historic endowments will be lost forever, and a crime against the dead will have occurred. In this case, the NJ UPMIFA of 2009 had not yet been passed, but the raiding and plundering of endowments happened anyway.

Wednesday, March 31, 2010

Grade Inflation Equals Consumer Fraud

Education reform can begin with a policy that prohibit the granting of honor roll grades to students who are not doing work that is on grade level. Grades are deceptive and few parents know what children are expected to know at various stages of their development. Accepted practices of grade inflation need to be banned as a destructive form of consumer fraud.
Honor rolls can create a deceptive sense of satisfffaccction for everyone involved. It would produccce a higher level of advocay and effort from parents and students if they were aware that they were achieving excellene in work below the core ontent standards for their grade.
In every school system, there are students who will do whatever it takes to master all of the work required of them. It is not fair for them to never be presented the full sclope of academic instruction that is given to other students that they will have to compete with in college. Valedictorians from one school district are place at a disadvantage next to "C" students from another.
Many college freshmen are surprised and discouraged to learn that they have to take loans and acquire debt for non-credit courses. This often includes the cost of room and board for instruction they should have obtained while living at home attending public schools where they excelled. Without proper support, many of these gifted students are lost to higher education, forever.
All positive change does not require money. A public policy that requires 'truth in grading' can go a long way toward preventing schools from languishing, unchallenged in entrenched failure.
Deborah Joyce Dowe

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