By Christina Littlefield and Laurie Babinski
A&E Editor and Editor in Chief
For the last two years, Pepperdine University has been listed in the U.S. News and World Report as one of the top 50 universities in the nation.
But for the past 20 years, it’s had the stigma of being one of only a handful of universities listed in The Chronicle of Higher Education as claiming exemption on the IRS 990 form for nonprofit organizations.
Now, Pepperdine administrators have decided it’s time for a change.
Amid continuing pressure from members of the university community to be more open with financial information, Pepperdine University will file the required Form 990 June 15, making key financial information public, including the top five salaries and net profits and losses.
Form 990 is considered by many to be the best source available for financial information on private colleges. Each year, The Chronicle compiles the data, which also includes major donations and the top five contractors, into a national survey that analyzes the financial health of higher education institutions.
The survey is widely read by university administrators, donors and key policymakers across the country as a way of judging the overall health of higher education and where each institution stands in comparison to other universities.
Form 990 also allows for public accountability of a nonprofit organization, according to the Quality 990 Web site sponsored by the National Council for Nonprofit Organizations and the National Center for Charitable Statistics. The data also affects policy decisions regarding nonprofit organizations.
In the past, Pepperdine claimed exemption from filing the 100-page document by submitting a letter from Vice President for Finance and Administration Jeff Pippin stating that the university was an “internally-supported, church-controlled organization.”
For fiscal year 1998-99, The Chronicle sought 990 tax forms from 484 private institutions. Only five — Marygrove College, Brigham Young, Harding, Pepperdine, and Saint John’s (Minn.) — did not file the form because they have a religious exemption. Harding and Pepperdine are both affiliated with the Church of Christ. Concordia College-Moorhead, in Minnesota, also claimed an exemption, but provided the information to The Chronicle.
“The University took the exemption available for ‘religiously affiliated’ institutions, which reduced the time and expense involved with governmental filing and reporting and maintained privacy over certain financial and other sensitive information,” Pippin said in an e-mail interview with the Graphic.
Though the university could have continued to claim exemption from filing the 990, Pippin confirmed the change in the university policy last week.
“The new administration believes that the dramatic increases in the university’s profile and visibility, and the public’s heightened awareness and desire for more openness on the part of all organizations, argue for a reconsideration of our status election,” Pippin said.
Business professor Dr. Jere Yates has been prodding Pepperdine administrators to file the form for years.
“I felt so strongly about this that a number of years ago I sat down at lunch with (then) President Davenport and said that I am embarrassed that we are one of four or five schools in the country that would hide behind that tax situation,” Yates said. “I mean we are trying to be a first class institution and everyone else in our category doesn’t hesitate to reveal these (figures).”
The Graphic has also requested budget information in the past with little success.
Some of the information that will be available once Pepperdine files the 990 form includes President Dr. Andrew K. Benton’s salary and the salaries of other top employees. The university will be filing for the fiscal year ending July 31, 2001. The public can then request copies of the form from the university. Interested parties can also look up the information on www.guidestar.com. The Graphic will publish details on the financial data in August.
The Chronicle of Higher Ed-ucation’s annual survey focuses on the salaries of university presidents and helps set the market scale for top salaries for other university employees.
Yates believes this may be one reason Pepperdine administrators may have stopped filing in the 1980s. In the 1970s, when money was tight all around and trust was low between faculty and administration, faculty used the form as a bargaining tool for higher salaries.
“I think probably because that got waved in the administration’s face they probably sought the refuge of this,” Yates said.
But while Yates praised the administration for deciding to file the form, he does not believe that they should necessarily be more open on other budget details.
“I don’t think shareholders need to know every detail of where it goes,” Yates said. “There are several different philosophies on this in the business world, on the one hand you have people with total open book management. Every employee and every shareholder knows precisely what everyone in the company makes, where every nickel is, and there is something to be said for that.
“On the other hand, the other extreme is that it is closely held information, closely held by just a few people,” Yates continued. “I think somewhere in the middle is best for an educational institution.”
April 04, 2002