Second Place Writing – Enterprise Reporting

Lindsey Boyd

Second Place
San Jose State University
$2,000 Scholarship

San Jose State allegedly mishandled $6.3 million per documents

By Lindsey Boyd

Less than 5% of Spartan Foundation money intended for athletic scholarships was distributed to San Jose State athletes from 2013-2016, according to sources and confirmed by documents reviewed by the Spartan Daily.

The documents detail misuse of more than $6.3 million during the tenure of former athletic director Gene Bleymaier. Less than $275,000 from the Spartan Foundation fund was distributed from 2013 to 2016, according to the account details.

The Spartan Foundation was marketed to donors on SJSU athletics’ website as a fund that provides athletic scholarships, and was managed as part of the Tower Foundation since 2014.

Money intended to go to the Spartan Foundation fund was sent to the athletics department office on South Campus, instead of Tower Foundation in Clark Hall, according to university documents reviewed by the Spartan Daily.

Athletics staff opened the envelopes and were supposed to identify which checks should go to the Tower Foundation and which should go into athletics’ current use accounts, according to the university documents. The latter accounts were used for car allowances and stipends for coaches and staff, rather than athletic scholarships, according to a Spartan Foundation account summary.

“The Spartan Foundation is the fundraising arm of the San Jose State University Athletics Department,” the website previously stated. “As its primary objective, the Spartan Foundation provides scholarship support for all of San Jose State’s NCAA Division I athletic teams.”

Media relations specialist Robin McElhatton said the web page about the Spartan Foundation was outdated and has been deleted this week.

The Spartan Daily repeatedly reached out to President Mary Papazian, Charlie Faas who is the vice president of administration and finance, and athletics director Marie Tuite, all of whom declined to comment.

In an email statement, the university said, “SJSU always has and always will honor donor intent. Several years ago, SJSU leadership learned that some of the Spartan Foundation’s marketing and communications did not adequately convey how gifts were being used.”

The Spartan Foundation’s purpose as written on its 990 tax forms is, “To raise funds for athletic scholarships for San Jose State University scholarships.”

Three sources told the Spartan Daily that it is common knowledge among certain circles of the university advancement office that the Spartan Foundation fund was not used for scholarships.

In 2017, the Spartan Foundation website stated, “San Jose State Athletics has been awarding over $4,500,000 a year in athletic scholarships. The Spartan Foundation has nearly 1,500 members, but we need your help to double our membership base needed to raise the scholarship funds.”

The Spartan Daily reviewed documentation on four separate occasions. Each time, account details confirmed that in the 2013-2014 and 2015-2016 fiscal years, $0 was distributed to athletic scholarships from the Spartan Foundation fund.

$4.5 million was not distributed per year for athletic scholarships through the foundation fund, according to Spartan Foundation account details.

“The university responded in multiple ways,” the university said in a statement. “The university changed its marketing and communications with donors to clearly state how donor gifts would be used.”

The Spartan Daily spoke with seven different sources, who all wished to remain anonymous because of fear of retaliation from the university administration. One source was formerly employed in the athletics department, four are current Tower Foundation employees, one was formerly employed in the Tower Foundation, and the final source is a former university employee with direct knowledge of the university’s business practices.

Two sources with access to the account details of the Spartan Foundation fund declined to provide them and said that the Spartan Daily should obtain them through a public records request first.

The university declined to fulfill parts of the Spartan Daily’s public records request regarding athletic funding and specific emails and documents.

Marna Genes, senior associate vice president of finance, responded to the request and wrote, “San José State University has conducted a reasonable search for these records under California Government Code [section] 6253, and determined that many of the records are protected by the deliberative process privilege, or do not ‘relate in some substantive way to the conduct of the public’s business.’ ”

Address confusion leads to incorrect deposits of donor money

Spartan Foundation account records reviewed by the Spartan Daily confirmed that 95.9% of donations were transferred to current accounts that paid for car allowances and bonuses to coaches and athletic administration staff.

According to documents the Spartan Daily has reviewed, Spartan Foundation money was sent to the athletic department on South Campus, staff opened the donations and deposited them into current use accounts.

The university then announced in 2014 that the Spartan Foundation account was moved out of athletics and into the Tower Foundation, according to the Spartan Athletics website.

“When we embarked on the plan to partner with athletics advancement, we saw much to gain from combining the resources and talents of University Advancement and Intercollegiate Athletics,” said Lanning in 2014 to SJSU Athletics, according to the SJSU news website.

Even though the Spartan Foundation account was moved to the Tower Foundation in 2014, as late as the Spartan Foundation’s Bocce Battle fundraising event in April of 2017, the address was listed as: “Spartan Foundation, 1393 S. 7th Street, San Jose, CA 95112,” which is the athletic administration office on South Campus.

This led to a situation where athletics staff were opening donations sent in the mail and deciding where checks should be distributed, according to documents.

“In early 2017, the university began the process of moving athletics fundraising solely to [University Advancement], to improve management and stewardship of gifts to SJSU Athletics,” the university said in a statement.

Former athletic director Bleymaier served in his position for more than four years.

He also received a base salary of $220,092 per year plus an additional $102,000 from the Tower Foundation for a car allowance, public speaking engagements, public relations activities and supplemental salary, according to his athletic director contract.

Other university employees also received Tower Foundation funds, according to 990 tax forms.

In 2016, four individuals received more than $150,000 in compensation from the Tower Foundation and “related organizations,” including Faas, Bleymaier, Andy Feinstein, the provost and vice president of academic affairs, and Coleetta McElroy, the president of the SJSU Alumni Association.

Endowments mishandled

Three sources said that athletic donations are not the only type of donations being mishandled.

“Endowments held by each school are not even all distributed,” one source said. “There are cases where endowments have not been spent with donor intent.”

Two other sources confirmed what that source said.

The sources said they saw Tower Foundation money distributed to individual colleges, but the deans spent the money against donors’ intent. When the donors came back to ask where the money went, the Tower Foundation realized the mistakes made by individual colleges.

“There’s been so much fear about bringing anything forward because of retaliation and because [human resources] stands by anything the administration does,” one source said. “People feel uncomfortable reporting these things because they get fired.”

Another source said they saw multiple people fired from the Tower Foundation but did not know why they were fired.

Student scholarships sit in the Tower Foundation because sometimes the deans have a hard time reading the Tower Foundation quarterly report or the deans didn’t know the scholarship money existed, sources said. The sources also said that when development officers in charge of donor accounts leave their job, their endowment accounts were forgotten about.

Csilla Kuehn, the current Tower Foundation senior endowment accountant, said when donors ask for a printed out accounting sheet showing where their money got distributed, “sometimes we discover mistakes, obviously, but we correct them.”

She said one example is, “The donor says that I only want one scholarship and [the college] accidentally did two.”

Or, instead of distributing the money, Kuehn said the deans of each college on campus have a difficult time finding students to match the scholarship requirements.

“What we encounter quite a bit is that [the college] cannot spend the money because there is this description . . . some colleges can’t find a 4.0 [GPA] average . . . that particular subject is no longer here,” she said.

Kuehn was hired in December of 2016, and since then, Tower Foundation employees said an accounting system in the Tower Foundation has been instituted to ensure donor money is properly logged and going exactly where it is intended.

“Regarding tracking information from the Tower Foundation, we receive quarterly reports, and if I ever have a question it’s easy to call and get information, so that process works fine,” Walt Jacobs, the dean of the college of social sciences, wrote in an email.

Tower reforms and resignation

In 2018, the Tower Foundation set up a separate branch strictly for athletic donations, hiring Josh Thiel to be the university’s first-ever deputy athletics director for athletics advancement.

Then, after being called the Spartan Foundation since 1958, the Spartan Foundation was renamed the Spartan Athletics Fund in August of 2018.

President Papazian announced the resignation of Paul Lanning, who was the CEO of the Tower Foundation, on April 19 in a campus-wide email. A week later, a lawsuit against San Jose State University and Lanning was marked as closed, according to the Santa Clara County Superior Court website.

The lawsuit alleged money mismanagement at SJSU, multiple instances of misappropriation of donor funding for SJSU athletics, endowments and the Tower Foundation, and unfair firing of SJSU employees who reported such violations.

“My work to ensure transparency and proper use of donor funds throughout my tenure at SJSU is well documented and verifiable, including changes my team and I instituted to ensure that these in fact occurred,” Lanning wrote to the Daily.

Budget reports disguise fund

SJSU began reporting athletic donations differently in its annual budget report.

The university’s 2012-2013 budget report had a section titled “Spartan Foundation” that listed the foundation’s revenue. But, in the years after Bleymaier became athletic director, the budget report changed.

Starting with the 2013-2014 budget report, the Spartan Foundation fund was lumped into “other revenue sources” along with ticket sales and other “miscellaneous revenue-generating revenue.”

The Spartan Foundation reported in its 2014 990 EZ tax filings that it had received $0 in gifts, grants, contributions and membership fees. However, according to the documents reviewed by the Spartan Daily, almost $1.5 million was collected that year.

In February of 2017, Bleymaier was removed from his position and appointed special advisor to the president, according to his employment contract.

Athletes feel unsupported

Athletes and parents are speaking out about what they could have done with more donation money.

“The [track and field] team was out fundraising on our own,” Sarahvaughn King said, a women’s track and field athlete. “We were just wondering what can we do on our part at least to make sure that we can try and bring in some funding”

Three athletes from different sports have come forward saying that the athletics department pulled their scholarships without giving them a reason.

King’s mom also said the team often couldn’t afford to send all of its athletes to competitions.

“How do you go to African-American families and recruit them based upon the history and legacy of the school telling them that you are standing for that, that you are proud of that and then you tear it down and pour no money into it, give them bad shoes, given them a broken track to practice on, give them a cement track to practice on, make them wait for the football players [to see trainers and doctors],” King’s mother, Lavette King said. “Excuse me, isn’t that against their Title IX rights?”

Sarahvaughn King said athletes want more than just financial support.

“Sometimes when we bring up our frustrations it feels like we aren’t fully being heard,” she said. “I think they are just expecting us to be OK with the bare minimum that we have and that they think we are ungrateful when we do bring up our frustrations and we are not. We are just trying to see what we can do to have the greatest experience we can here with what we have.”


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