Valpo President/Board Decide to Sell Art Masterpieces to Pay for Dorm Renovation

Started by Mbecker, February 24, 2023, 08:26:19 AM

Previous topic - Next topic

Mbecker

A controversy has arisen on Valpo's campus due to the recent presidential/board decision to sell valuable art from Valpo's Brauer Museum to pay for dorm renovation. The art in question are masterpieces by O'Keefe, Church, and Hassan. The NYT will soon be publishing a story on the matter. The Chicago Tribune has already run a front-page story about it, as have our local newspapers.

The letter that I wrote against this decision has been signed by more than 90 other Valpo faculty, including 17 emeriti and retired faculty. The letter attempts to show why the decision by the president and Valpo's board is unethical and runs contrary to the Lutheran intellectual tradition, which has generally supported the liberal arts, including the visual arts. An additional faculty memo, which I helped to write, provides bullet points for why this decision is unethical and unwise.

Here's my blog post from yesterday, which provides links to the pertinent documents and news reports:
https://matthewlbecker.blogspot.com/2023/02/stop-sale.html

Matt Becker
Professor of Theology
Valparaiso University

peter_speckhard

This has been a hot topic of conversation around Valpo. It seems to me universities in general are having a rough go of it financially and this is a sice that the situation at Valpo is more dire than people are being led to believe. While I oppose the sale in principle and have a hard time understanding it apart from the possibility that Valpo is closer to insolvent than anyone likes to think, I do think there are pros and cons to the idea that merit consideration.

1. Valpo's dorms are a joke for what they're charging. My daughter lived in one her freshman year and I considered it one of the biggest rip-offs we ever fell for. Small, old-school cinderblock room with a roommate, no A/C or climate control, communal bathroom down the hall, walk to the union for dining services, very 1950's. Except they wanted around $1500/month for the privilege of living there, and that was six years ago before rents skyrocketed. I lived in the dorms at Valpo my freshman year, but the dining hall was in the dorm at least, and it wasn't nearly as expensive. Comparable universities charging comparable amounts for housing have dorms that are drastically more attractive to incoming freshmen.

2. Art, as the currency du jour of the jet set, is at an all-time high and could be facing a bubble situation as governments crack down on using art for the purposes of money laundering. It is possible that someone has made the museum an outlandishly high offer that it would be bad stewardship to refuse, but that the president cannot disclose it yet. Let's face it, every piece of art has a price. If someone offered a billion dollars for an O'Keefe, I think it would be foolish to refuse. If they offered a thousand dollars, it would be ridiculous to sell it. But where is the line, and what is the offer on the table? It is untenable to say that art must never be sold.

3. It could simply be a matter of sounding an alarm. The board might have anticipated the outcry, and this gives them a chance to say, fine, we'll keep the art but the people making the outcry need to point out where we're going to get the money.

Selma, Portland, and Bronxville all went belly-up very suddenly and unexpectedly to everyone except those on the inside who knew the real situation. From what I understand, Valpo had an overall growth plan in the last twenty years or so to build up the campus and make improvement to accommodate a much larger student body, but that student body never materialized. And now every demographic trend is a stiff headwind. I don't know anyone involved personally, but I'm assuming the board is comprised of people who would not flippantly toss around the idea of liquidating the art museum to raise money for dorms if it weren't close to panic time. This could be an effort to liquidate assets responsibly before they get liquidated anyway.

That having been said, universities have to have a clear purpose apart from churching out employable people. Trade schools do that much less expensively. Art, Music, Literature, Philosophy (not in the trendy "re-imagined" sense, but in the classic sense) will almost never be profitable but will always be close to the core of any university's reason to exist. Even if there aren't many art majors and few of the students ever go to the museum, selling off the art collection would be symbolically brutal.

Dave Likeness

The harsh reality is that Valparaiso University is facing a financial  crisis.
For the past 20 years the Presidents of private colleges and universities
have by necessity needed to become fund raisers.  What type of endowment
fund does Valpo have?  Has there been any financial fundraising done in
recent years?

The current situation at Valpo calls for genuine leadership and financial
honesty by the Valpo President  and Board of Regents.  Selling off your assets
from your art museum is a desperate measure but it is better than declaring
bankruptcy.  Hopefully, Valpo can remain viable  as a Lutheran university for
the future.

George Rahn


Dave Likeness

There are 3 paintings slated for sale:

"Rust Red Hills" by Georgia O'Keeffe
"Mountain Landscape" by Frederick E. Church
"The Silver Vale and the Golden  Gate" by Childe Hassam

Michael Slusser

Many museums own more artworks than they can display. Is that true of Valpo? and if so, is that a responsible use of their value?

The terms of the deed of gift play a role in what an institution can do with an object; careful institutions don't let themselves be bound too tightly.

Peace,
Michael
Fr. Michael Slusser
Retired Roman Catholic priest and theologian

peter_speckhard

Quote from: Mbecker on February 24, 2023, 08:26:19 AM
A controversy has arisen on Valpo's campus due to the recent presidential/board decision to sell valuable art from Valpo's Brauer Museum to pay for dorm renovation. The art in question are masterpieces by O'Keefe, Church, and Hassan. The NYT will soon be publishing a story on the matter. The Chicago Tribune has already run a front-page story about it, as have our local newspapers.

The letter that I wrote against this decision has been signed by more than 90 other Valpo faculty, including 17 emeriti and retired faculty. The letter attempts to show why the decision by the president and Valpo's board is unethical and runs contrary to the Lutheran intellectual tradition, which has generally supported the liberal arts, including the visual arts. An additional faculty memo, which I helped to write, provides bullet points for why this decision is unethical and unwise.

Here's my blog post from yesterday, which provides links to the pertinent documents and news reports:
https://matthewlbecker.blogspot.com/2023/02/stop-sale.html

Matt Becker
Professor of Theology
Valparaiso University
Here is the meat Dr. Becker's reasoning, from the blogpost linked:

Yesterday, at a special meeting of Valpo's faculty senate, a few of us presented a memo, which we hope will become the basis for a senate resolution that would call upon the president and board to rescind their decision. Here is the content of that memo:

1. The sale constitutes a gross violation of professional museum ethics. VU will be censured by professional organizations, lose credibility with those associations, and the museum will be unable to lend, borrow, or collaborate with other museums in the world. The president claims he has his own "ethic" to uphold—a confusion of ethics and expediency? Will that "ethic" trump ethical standards across all disciplines, professional schools, and university organizations?

2. The sale violates the trust of artists, the public, donors, and faculty. The Brauer Museum is at the core of Valpo's liberal arts identity. The three masterpieces anchor the collection and its international reputation. Artists want their work to be displayed in notable public collections. Donors expect their gifts to contribute to the strength of the museum in perpetuity. Faculty count on these works as crucial pedagogical resources. This action tramples on the generosity and trust of current and past donors. It conflicts with the strong support for the arts and humanities in the Lutheran intellectual tradition. What is the presidential and board rationale for breaking these basic and long-term trusts for the sake of short-term, perishable goods?

3. The sale may be illegal. The sale clearly violates the terms of the trust agreement signed by the VU board president when the core collection was acquired in 1953. The Church painting was part of that gift; the other two paintings in question were purchased with funds from the restricted Sloan endowment fund. The president claims that will not be a legal problem. That remains to be seen. And, does it not matter that violating the trust is clearly unethical?

4. This sale is a poor management of assets. To sell an asset of appreciating value and use it to buy something of depreciating value (dorms) is problematic. Furthermore, by selling these pieces through a private auction, Sotheby's will be entitled to at least a 25% commission. Add in PR and legal fees, and that is a very poor return on the value of these assets. Selling university assets in a reckless and/or unethical manner has already resulted in the loss of major donors and negative press. More will come. This could also have a negative effect on our bond rating. Is this short-term sale really worth the net outcome, especially in view of Valpo's long-term future?

5. This sale seems very rushed. Do we understand why a dorm renovation suddenly rose to the top of the university's priority list? What is the urgent necessity for this project? The administration could provide no concrete evidence.

6. The process of making the decision to sell these masterpieces lacked transparency. The plan to select and sell the works has been conducted with deliberate secrecy. The paintings were selected purely for cash value, without any investigation into or concern for their importance to the museum and the community it serves. No one with any knowledge of the collection was consulted, as if the details of the works themselves were irrelevant to the process. This is a shocking way to approach the sale of university assets, and not a path to a sustainable future.

7. The administration's withholding of knowledge of the impending sale resulted in an unethical hiring process. Last summer, while in the process of finding and hiring Jonathan Canning, representatives of Christie's Auction house were on campus. This information was withheld from the search committee, and more importantly from Canning when he accepted the job. Any association with this sale will be devastating to his career. The university asked Canning to participate in a sale that would violate his professional ethics.

8. This impending sale represents a further attack on the arts and humanities at VU. Student response has been spontaneous, strong, and often emotional. They immediately connected this action to the administration's ongoing dismantling of the arts on campus. Notably, among the nearly 400 signatories on the student petition, approximately half are STEM majors. The board/presidential decision is contrary to Valpo's stated mission.


I have to say I agree fully with #1-3, 7-8, but think I disagree with #4-6.

As for #4, I don't think the faculty are in a position to have a relevant opinion. Clearly it is sometimes expedient to sell something that is appreciating in order to buy something that will depreciate. People do it all the time depending on their circumstances. The physical dorn building will certainly depreciate (unless it were convertible to apartments down the road, in which case it will appreciate) but if it works to attract more freshmen to enroll or upperclassmen to stay in student housing, the depreciation will be offset by an income stream, much like machinery on a farm or factory depreciates but more than makes up for it.

On #5, it seems to me they've been talking about the need for new dorms for ages. How would slowing down and delaying all this affect anything? Valpo needs a better housing situation. I don't that much is really arguable. The issue is whether they're going to something about it soon or wait until later, and it could very well be (and likely is) that advisers are saying there might not be much of a later if they don't show signs of life on this front sooner. I just don't think the question of whether they need now dorms one year from now or three years from now changes anything, because of #6.

#6-- Secrecy of this sort is a hazard of actual leadership. You can't investigate possibilities in public without starting self-defeating rumors and self-fulfilling doomsday prophecies.

Faculty and administration are not the same lane of the highway. On items 1-3 and 7-8, I think there is a legit complaint from the faculty that the administration needs to stay in its lane. On 4-6, I think the adminstration can tell the faculty to stay in their lane.   

Dan Fienen

Another point of view from the publication The College Fix, "Valparaiso University Wisely Plans Art Sale to Finance New Dorms." https://www.thecollegefix.com/valparaiso-university-wisely-plans-art-sale-to-finance-new-dorms/


From the article: "But the Lutheran university is correct to sell of luxury items to directly contribute to the future success of the university by building dorms.
First, the university is wise not to take on more debt, which only saddles future students with potential tuition increases or budget cuts."


"Paintings are like classic cars - we can enjoy them, we can look at them - and we can sell them.
The purpose of a university is to educate students and school leaders have a duty to provide that service at an affordable price. This is a good decision by the university."

The article also estimates the value of the three paintings under discussion as about $20 million.
Pr. Daniel Fienen
LCMS

peter_speckhard

Those valuations of the paintings might be considerably out of date. Art is like crypto-currency in how it has gone through the roof (and might crash back down).

Dave Likeness

Here is a reality check on student enrollment at Valpo:

In the Fall of 2015, the student enrollment was 4,544.
Today, that enrollment has dropped by nearly 1,500 students.
That is a serious decline in enrollment and that fact needs to
be addressed by the President and Board of Regents of Valpo.

The university has experienced a 17% reduction in full-time
faculty and staff.  This amounts to 135 positions.

The Yak

Quote from: peter_speckhard on February 24, 2023, 12:04:16 PM
As for #4, I don't think the faculty are in a position to have a relevant opinion. Clearly it is sometimes expedient to sell something that is appreciating in order to buy something that will depreciate. People do it all the time depending on their circumstances. The physical dorn building will certainly depreciate (unless it were convertible to apartments down the road, in which case it will appreciate) but if it works to attract more freshmen to enroll or upperclassmen to stay in student housing, the depreciation will be offset by an income stream, much like machinery on a farm or factory depreciates but more than makes up for it.

Dorms are regularly regarded as income-generating centers and are those things that many fiscally-responsible universities will build (if needed) without securing the entirety of their funding beforehand, unlike, say, a new academic building which would need to be fully funded first.
Rev. Dr. Scott Yak imow
Professor of Theology
Concordia University - Ann Arbor

peter_speckhard

Quote from: The Yak on February 24, 2023, 01:24:35 PM
Quote from: peter_speckhard on February 24, 2023, 12:04:16 PM
As for #4, I don't think the faculty are in a position to have a relevant opinion. Clearly it is sometimes expedient to sell something that is appreciating in order to buy something that will depreciate. People do it all the time depending on their circumstances. The physical dorn building will certainly depreciate (unless it were convertible to apartments down the road, in which case it will appreciate) but if it works to attract more freshmen to enroll or upperclassmen to stay in student housing, the depreciation will be offset by an income stream, much like machinery on a farm or factory depreciates but more than makes up for it.

Dorms are regularly regarded as income-generating centers and are those things that many fiscally-responsible universities will build (if needed) without securing the entirety of their funding beforehand, unlike, say, a new academic building which would need to be fully funded first.
True, but that is probably what adds to the urgency. It isn't that people can't live in the existing dorms, it is that they have too many better options for the same price. The anticipated income stream generated by increased enrollment might be different in the eyes of the bank and the eyes of the administration, and VU's credit might be extended beyond sustainability. From what I understand the goal ten or twenty years ago was to push into a different size category altogether and have around 6,000 undergrads, but the growth never materialized and the same shrinking of the available pool of students exacerbated by Covid has left a lot of places scrambling. I'm not for selling off the paintings, but I'm also not in on the discussion of options, and I suspect being president of a university (unless it is a state school or a massively endowed elite school) is in the top ten crummiest jobs to have right now, so I'm at least sympathetic to the possibility that this is a perfectly responsible decision.

Michael Slusser

Quote from: The Yak on February 24, 2023, 01:24:35 PM
Quote from: peter_speckhard on February 24, 2023, 12:04:16 PM
As for #4, I don't think the faculty are in a position to have a relevant opinion. Clearly it is sometimes expedient to sell something that is appreciating in order to buy something that will depreciate. People do it all the time depending on their circumstances. The physical dorn building will certainly depreciate (unless it were convertible to apartments down the road, in which case it will appreciate) but if it works to attract more freshmen to enroll or upperclassmen to stay in student housing, the depreciation will be offset by an income stream, much like machinery on a farm or factory depreciates but more than makes up for it.

Dorms are regularly regarded as income-generating centers and are those things that many fiscally-responsible universities will build (if needed) without securing the entirety of their funding beforehand, unlike, say, a new academic building which would need to be fully funded first.
That varies. When I was assistant to a college president in 1968, there was a firm policy to set room and board at a break-even rate. We also borrowed for building or renovation of academic buildings, with the payments to be provided out of tuition and philanthropy.

Peace,
Michael
Fr. Michael Slusser
Retired Roman Catholic priest and theologian

Mbecker

Quote from: peter_speckhard on February 24, 2023, 10:25:25 AM
This has been a hot topic of conversation around Valpo. It seems to me universities in general are having a rough go of it financially and this is a sice that the situation at Valpo is more dire than people are being led to believe. While I oppose the sale in principle and have a hard time understanding it apart from the possibility that Valpo is closer to insolvent than anyone likes to think, I do think there are pros and cons to the idea that merit consideration.

1. Valpo's dorms are a joke for what they're charging. My daughter lived in one her freshman year and I considered it one of the biggest rip-offs we ever fell for. Small, old-school cinderblock room with a roommate, no A/C or climate control, communal bathroom down the hall, walk to the union for dining services, very 1950's. Except they wanted around $1500/month for the privilege of living there, and that was six years ago before rents skyrocketed. I lived in the dorms at Valpo my freshman year, but the dining hall was in the dorm at least, and it wasn't nearly as expensive. Comparable universities charging comparable amounts for housing have dorms that are drastically more attractive to incoming freshmen.

2. Art, as the currency du jour of the jet set, is at an all-time high and could be facing a bubble situation as governments crack down on using art for the purposes of money laundering. It is possible that someone has made the museum an outlandishly high offer that it would be bad stewardship to refuse, but that the president cannot disclose it yet. Let's face it, every piece of art has a price. If someone offered a billion dollars for an O'Keefe, I think it would be foolish to refuse. If they offered a thousand dollars, it would be ridiculous to sell it. But where is the line, and what is the offer on the table? It is untenable to say that art must never be sold.

3. It could simply be a matter of sounding an alarm. The board might have anticipated the outcry, and this gives them a chance to say, fine, we'll keep the art but the people making the outcry need to point out where we're going to get the money.

Selma, Portland, and Bronxville all went belly-up very suddenly and unexpectedly to everyone except those on the inside who knew the real situation. From what I understand, Valpo had an overall growth plan in the last twenty years or so to build up the campus and make improvement to accommodate a much larger student body, but that student body never materialized. And now every demographic trend is a stiff headwind. I don't know anyone involved personally, but I'm assuming the board is comprised of people who would not flippantly toss around the idea of liquidating the art museum to raise money for dorms if it weren't close to panic time. This could be an effort to liquidate assets responsibly before they get liquidated anyway.

That having been said, universities have to have a clear purpose apart from churching out employable people. Trade schools do that much less expensively. Art, Music, Literature, Philosophy (not in the trendy "re-imagined" sense, but in the classic sense) will almost never be profitable but will always be close to the core of any university's reason to exist. Even if there aren't many art majors and few of the students ever go to the museum, selling off the art collection would be symbolically brutal.

The Valpo faculty were told by an admissions officer last week that student housing is #5 on the list of priorities for "most residential students," when they are making the choice of which college/university to attend. She didn't share what the top four criteria are.  At Wednesday's special faculty senate meeting, the majority of speakers were students who are outraged by this decision and the way in which it has been made (and reinforced by subsequent behavior on the part of our president). One student: "Our school's motto is 'In Thy Light, We See Light," and yet this decision was made in dark secrecy." She and other students also stressed that they did not choose Valpo because of its dorms or dining halls (the central dining halls in the Harre Union are relatively new, ca. 2008). The dorms need some renovation, no one disputes that point (my son lived in Brandt his freshman year, in G-M for part of his sophomore year, until he moved off campus), but students are rightly worried that the renovations themselves may be used to jack up the cost of on-campus living. Many of our students, a lot, lot more than was the case even five years ago, are living off campus and are commuting. According to my son and his friends, people want to move off campus and get away from the meal plan(s) as quickly as possible. But I think that is likely the case at other universities as well. (Side note: Valpo has constructed many new residences on campus in just the past five years: Beacon Hall and the sorority houses down by the ARC. Beacon is not full because only the wealthiest of the wealthy [or those on a full-ride scholarship] can afford to live there. Greek housing is relatively full since it is also relatively cheaper.)

Valpo must move away from the false notion, "If we build it (or dramatically improve it), the freshmen will come."

What has hurt the institution over the past decade has been the amount of money that has been poured into athletics, the amount of building debt that was allowed to accrue, the amount of student discounts that are given out each year, the 17% reduction in faculty in the past two years (mostly in the arts and humanities), the elimination of the secondary ed program and the theater program, and then Covid-19 (which directly led to the faculty cuts and early retirements--a huge payout was just made a few weeks ago to cover those RIFs).

We are told, however, that the university is not facing imminent financial collapse. The projected enrollment for fall is up over the past two years. Our endowment is somewhere above $300 million, not a small chunk of change for a university of our size.

At the faculty senate, two proposals were made by economics experts. One proposal is to wait a year on the renovations and to draw out of the endowment the projected $10 million for those projects. The other proposal is to take out a $10 million loan from the endowment, so not a draw-down but a loan that would be paid back with interest (like one could do on a retirement account).

According to my colleagues who know these things, the paintings are not worth the amounts that have been quoted in the press. Those amounts were strictly for insurance purposes. To auction these paintings privately is very risky, precisely because the seller will not be paid what the paintings might sell for in a public auction. No musuem will purchase these paintings because their sale is unethical (and potentially illegal), according to standard museum ethical principles. The figure that is currently bandied about is about $10 million for the three pieces, which means that Valpo would net approximately $7.5 million (or less, if the auction house takes a larger cut than 25%, which is a possibility). So that leaves $2.5 million still to cover construction costs for the renovations--and what building project comes in under budget these days? And Valpo's bond rating could take a significant hit next year, if the ratings agencies think this cannibalization of core assets runs contrary to the stated mission of the university--precisely a key point I make in the faculty letter.

Bottom line: the sale is unethical, it may be illegal, it is contrary to our stated mission as a liberal arts institution. The announced sale has already hurt our public image and our future endowment (one donor, a former Valpo law professor, who had written into his will a gift of $2 million for Valpo, has now taken that bequest out of his will; he was present at the faculty meeting to let everyone know what he has done and that there are others like him who are doing the same; he has also filed a suit with the Indiana Attorney General's office, which is investigating the matter of the potential violation of the Sloan Trust). The decision to sell the paintings, if carried out, will ultimately hurt our brand equity. In my letter I tried to show why faculty should be opposed to the decision, grounding my rationale in Valpo's historic Lutheran heritage and mission.

There is fundamental distrust right now between at least 1/3 of the faculty and the president/board. Some of my colleagues--who have talked to others who did not sign the letter--have told me that these non-signers had their own reasons for not signing the letter, but they also distrust the president. So the percentage of distrust in the faculty may be higher than what the 76 current faculty signatures signify.

Matt Becker

Mbecker

Quote from: Dave Likeness on February 24, 2023, 11:04:38 AM
The harsh reality is that Valparaiso University is facing a financial  crisis.
For the past 20 years the Presidents of private colleges and universities
have by necessity needed to become fund raisers.  What type of endowment
fund does Valpo have?  Has there been any financial fundraising done in
recent years?

The current situation at Valpo calls for genuine leadership and financial
honesty by the Valpo President  and Board of Regents.  Selling off your assets
from your art museum is a desperate measure but it is better than declaring
bankruptcy.  Hopefully, Valpo can remain viable  as a Lutheran university for
the future.

Dave,
The endowment is somewhere above $300 million. I don't have the exact figure in front of me.

The faculty has been told that the university is not facing a financial crisis. (And yet why all the secrecy about the proposed sale? The sale would have taken place in secret, too, had not the matter been accidentally discovered by a senior faculty member who works in the Brauer.)

Enrollment for fall is up at this point over where we were at this time last year and the year before. We who help to define what Valpo is need to set our sights on an enrollment in the 2500-3000 student range, not the 6000-range that the previous president envisioned (hence the new campus residence halls that were built during his tenure, which have put us into significant debt; Beacon Hall was opened just a few years ago).

We don't need to sell these paintings, which will net us perhaps $7.5 million (perhaps less, given the potential illegality connected with their sale; and what buyer wants to purchase these paintings if that person will be told to return them once the litigation is over?)

We could do a targeted campaign to improve residental living spaces, or we could take out a loan from the endowment to pay for the renovations, or we could wait a year to draw from the endowment, and do it that way.

M. Becker

SMF spam blocked by CleanTalk