Dickinson State President Distances University From Foundation After Arbitration Ruling

It didn’t take very long after voters shot down Measure 3, a constitutional amendment to reform the governance structure of the university system, that one of the state’s institutions has landed in hot water again.

Earlier today I put in an open records request to the North Dakota University System for details about an arbitration case involving the Dickinson State University Foundation. The foundation has been involved in a dispute with a construction contractor, and in a court filing an arbitrator has awarded over $1.5 million to the contractor.

You can read the court filing below.

I had been told by a source that the DSU Foundation had used endowment dollars (that is, money set aside to fund scholarships and the like) to secure a loan in this case. NDUS Director of Legal Services Murray Saugsveen confirmed that fact to me this morning.

“It is my understanding that the Foundation pledged its endowment funds (i.e., funds used for student scholarships and grants) as collateral for a loan obtained from 1st International Bank in Watford City,” Saugsveen told me via email.

I was working on getting more information regarding what this represents for the DSU Foundation’s finances, but Dickinson State President D.C. Coston sent out this message tonight prompted by my open records request. In it, he distances his institution from the DSU Foundation, though I’d point out that Attorney General Wayne Stenehjem has consistently ruled that these spin-off foundations from the schools are not separate and are subject to open records laws (see this opinion issued earlier this year finding that the DSU Foundation had broken open records laws in denying a request to a Dickinson Press reporter).

Here’s Coston’s video message, sent out to a DSU faculty email list at 6:38pm today and forwarded to me by a SAB reader, in which he sounds like he’s delivering a eulogy:

Here’s his statement (watch the video too as the messages aren’t the same) which landed in my inbox this evening in which Coston references what I assume is my open records request as prompting his message:

Recently, the DSUF has been in arbitration involving construction projects. The details of the arbitration have been private to this point; however, the contractor involved in the arbitration filed for judgment in Stark County District Court today. This resulted in these documents becoming public. Additionally, these documents were released today by the North Dakota University System (NDUS) as part of fulfilling an open records request.

The DSUF is a separate entity from the university; as a separate entity, it has its own management team and governance structure. While the University and the foundation are separate, the foundation includes DSU’s name and exists to support the University.

When I arrived on campus in August 2011, I made a commitment to you, the students, faculty, staff, alumni and community. I made a commitment that we would work together to restore the integrity of this institution. Although it is too soon to speculate about the ultimate outcome of these actions, interim chancellor Larry C. Skogen and I will be proactively working with others in the NDUS to understand the situation and take appropriate action.

This could be a very ugly situation for a university that has been plagued by scandal for years now, dating back a 2012 audit report finding that the university had issued hundreds of phony diplomas. Clearly, if my open records request prompted this sort of a response from Coston, they’re worried.

Last month Kevin Thompson, the former executive director of the foundation, stepped down saying he wanted to spend more time with his family.

Here are the documents I received via my open records request.