UH makes changes after investigation

May 11, 2009 10:18:21 PM PDT
College donations, which could be going to scholarships, are paying faculty bar bills instead. We have new questions for the University of Houston about the millions donated in the name of education. Our dean's list investigation has forced UH to ban the use of tuition money for food, liquor and entertainment. That will save more than a million of the students' money, but so far there's no sign they plan to stop using donated money for expensive dinners and big liquor bills.

It's not the first time someone's refused to open a door for 13 Undercover. We showed up at the University of Houston Foundation offices where they are spending millions in money donated to The University of Houston. There's a photo of the university on the wall, the school magazine on the table but no welcome mat.

I asked an employee through the office door's glass how I could leave my business card. I had to slide it under the door. We wanted to look at how the foundation spends donated money. They could have said yes but hired lawyers to tell us no. I asked the employee through the door if we looked like trouble. She said yes.

But from tax returns you can see the foundation controls $75 million in donations to support a state university. It raises all of its money with the permission of the University of Houston.

The guys in Animal House got horrible grades. We asked Houston accountant Bob Martin to grade the foundation's tax return.

"I give this one a D minus," he told us.

That's because the foundation provided nearly $5,930,368 to the university in one year. The tax return provides little detail about what the money was used for.

"It does not appear to have the minimum detail that is required by the law and IRS instructions," Martin said.

In nearly two months, even the University of Houston couldn't provide all of the details. Days before our story aired, we were showed a general breakdown of foundation spending by the university itself.

The foundation appeared to spend more on its own management than it did on fellowships and scholarships for the kids. The executive director of the foundation makes $180,000 a year. The assistant who wouldn't open the door makes more than $60,000. There's $976,000 for faculty support. We don't know if that is where the alcohol bills fit in.

At the annual dean's retreat in Galveston, the dean of the honors college at the time picked up the bar bill, but he was eventually reimbursed by the foundation. That includes those $40 a piece drinks of the rare Johnnie Walker Blue. Don't forget the tequila shots.

"We're talking about direct payment of conference expenses, payments for alcohol and other things and they are completely using this foundation to mask these expenses," Martin said.

"What's really going on here," asked education critic Tom Smith. "Is the foundation doing what it's supposed to or is it just a slush fund for the upper management of the university?"

Among the university receipts, we found tens of thousands of dollars in food and alcohol paid for courtesy of the UH foundation.

"The University of Houston Foundation is a totally separate institution, separate by charter, by law," said Welcome Wilson of the University of Houston Board of Regents.

"I don't buy that because the foundation appears to be entirely funded through the direction of the university," Martin said.

Since Dr. Renu Khator became chancellor, the University of Houston is raising millions more. On the UH Web site, she offered her life philosophy, "When life gives you lemons and everyone else is busy making lemonade, think about making margaritas!"

UH is no Animal House, but it looks like some administrators there have taken the chancellor's message to heart.

UH now admits it's wrong for administrators and faculty to use student tuition money to wine and dine. Maybe other state schools will go along because you can see the rising cost of tuition at all of Texas' colleges below.

Documents related to this story

UH announces travel policy change after 13 Undercover investigation (pdf)
Letter from UH Chancellor/President Renu Khator (pdf)
Texas Tuition increases from Fall 02 to Fall '08 (xls)
Texas Higher Education Coordinating Board: Tuition and Fees (ppt)
Discretionary spending by UH President/Chancellor Renu Khator (xls)

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