COLUMBUS (WCMH) – The Ohio Senate heard testimony Wednesday that could restrict the way Ohio’s colleges and universities spend money from privately-funded endowments.
Last year, it was reported that Ohio State University failed to provide 30 promised law school scholarships a year, using income from an endowment established by the late attorney Michael Moritz.
Instead of 30, most years, the university awarded only around 15 of the scholarships.
The endowment system is now part of a new education bill being hammered out at the statehouse.
Committee co-chair Sen. Jerry Cirino said he saw Colleen Marshall’s stories on the endowments, including an interview with Jeff Moritz, who said he father wanted to provide scholarships to deserving, needy law students.
The Moritz family said OSU did not live up to the terms of the endowment, and now they want lawmakers to make big changes.
“Not only my family, but thousands of other donors to universities in Ohio will benefit from this and ultimately, it’s the students that benefit,” said Jeff Moritz.
Dozens of law students now weighed down by debt, who missed out on scholarships the Moritz family wanted them to have while while the family said the Michael Moritz Fund was being slowly depleted. The family alleges the OSU Advancement Office was “dipping into” the principal, to entertain other prospective, wealthy donors. Instead of scholarships,,some of the money went to parties, dinners, and trips.
Jeff Moritz said when his family tried to reopen his father’s estate to challenge the university and protect the scholarship fund, OSU took them to court.
“That’s what boggles my mind the most, you know,” he said. “They have spent, with outside legal expense, several hundred thousand dollars, as well as the time and money of their internal staff, to fight this.
“I would really like to have the chair of the Board of Trustees come before you, Colleen, and explain why that makes sense,” Jeff Moritz continued. “Why was it a smart use of resources to sue the Moritz family as opposed to just giving that money to the scholarships, which they promised my father in 2001 they would do in the first place?”
The Trustees have refused requests for an interview, but the university may have some explaining to do at the statehouse.
“It’s a question of do the donors understand up front, is everything disclosed, and is their intent going to be met in terms of how the dollars are spent,” Cirino said.
An amendment to the education bill would require Ohio’s colleges and universities to inform donors upfront how their money will be spent.
“Not only is the original intent of the donor being honored, but all of this money that’s sitting in these funds, how are they being invested and managed to enhance the funding,” Cirino said.
The donors’ surviving family members would have the right to hold colleges and universities accountable, something Jeff Moritz has been fighting to do for more than two years.
While Jeff Moritz said his father would be proud to see his son waging this fight, he believes his father would feel something else.
“More importantly, I think he would be very upset with Ohio State,” he said. “You know, for them to treat his family like this after the gift that he made, I think he would more importantly be very upset with Ohio State. I mean, the way they’ve managed the whole thing for the past 20 years.”
Although Ohio colleges and universities are allowed to take up to five percent of an endowment fund for development, Ohio State said it currently has a development fee of just one percent. OSU said donors have committed $500 million and currently, the endowments are all worth more than the initial investment.
In a statement, OSU says, in part:
Ohio State manages all endowment funds in accordance with state law, which is consistent with the uniform endowment law that has been adopted by 49 states. The university has always been transparent about our modest development fees, which have been in place since 1994.
Development fees are recognized in Ohio law as prudent and are a respected practice among universities and charitable institutions. Development fees contribute significantly to the growth of the Long-Term Investment Pool, which funds education and research across the university’s 15 colleges.