Des Moines Register
10-11-07
Iowan to schools: I'll sue over cards
By CLARK KAUFFMAN
REGISTER STAFF WRITER
Five years ago, Arlen Nichols went to court and began a long, successful fight to
force the Iowa State University Foundation to open its records to the public.
Now, Nichols is focusing his attention on the privately run alumni associations of
the three state universities. He says he would rather not sue the state again, but
he is adamant that the alumni associations should be more open and
accountable to the public.
"I'm waiting to see what the Iowa Board of Regents does about all this," he said.
"If they say, 'Well, this is just going to go on, and it's business as usual,' we'll
drop a lawsuit on them."
By "all this," Nichols means the controversy surrounding credit card marketing
agreements between the alumni associations at the University of Iowa, Iowa
State University and the University of Northern Iowa, the three taxpayersupported schools and Bank of America.
Those agreements, which are now being investigated by state lawmakers and
the Board of Regents, generate millions of dollars for the alumni groups.
University officials declined to comment on Nichols' talk of a lawsuit, but they
have said the alumni organizations are private, independent organizations that
are separate from the universities. Employees of the associations draw their
salaries from the schools, not the associations, however.
Last month, The Des Moines Register published a series of articles about the
credit card marketing efforts by the alumni associations at the three schools. At
the U of I, the school has agreed to aggressively promote Hawkeye-branded
Bank of America cards on campus, but many details of that arrangement are
spelled out only in a contract that the alumni association refused to make public.
Nichols, a retired Des Moines businessman, said that lack of disclosure means
there is no public accountability as to the manner in which the state universities
and their alumni groups are raising and spending millions of dollars. As he sees
it, the regents need to exercise more control over such activities. "I think schools
and alumni are infringing upon the duties of the regents," he said.
Nichols and former ISU employee Mark Gannon filed the lawsuit against the
Board of Regents and the ISU foundation in 2002. After three years of litigation,
the Iowa Supreme Court ruled the foundation was basically an extension of the
school and was subject to Iowa's open records laws.
Gannon said he is not prepared for another long legal battle with the state.
"There are other people who can step up and do that," he said. "To me, the
Register ought to do it."
The credit card marketing agreements with Bank of America are believed to be
similar to those at many universities and colleges nationwide. The deals have
sparked congressional investigations and consumer protests.
Even at public universities, the deals are often kept secret because the banks
contract only indirectly with the schools, using the alumni associations as a gobetween.
The University of Iowa Alumni Association made its contract with Bank of
America public Wednesday evening. But the UNI alumni contract is being kept
confidential.
At the U of I, alumni officials say they collect about $1 million in annual revenue
from Bank of America. The school gets about $200,000 of that money each year.
At ISU, the alumni association stands to collect $500,000 annually, while the
school expects about $40,000 in annual revenue.
At UNI, alumni officials will not say how much they collect from Bank of America.
University officials say the school derives no direct financial benefit from the UNIbranded credit cards.
Background briefing
Last month, the Iowa Board of Regents asked the three state universities about
their alumni associations' contractual arrangements with Bank of America. The
regents did not ask for copies of the contracts, but instead asked for information - such as alumni revenue -- that is spelled out in those contracts.
In response, Iowa State University officials gave the regents a complete copy of
their alumni association's contract with the bank.
University of Northern Iowa officials did not give the regents a copy of their
alumni group's contract with the bank, and said disclosure of the alumni
association's share of revenue was prohibited by the terms of the deal with Bank
of America.
University of Iowa officials did not give the regents a copy of their alumni
association's contract with the bank, but U of I officials did say their alumni
association stands to lose about $1 million per year if the contract is vacated.