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ISSUE 121 VOL 5 PUBLISHED 10/26/2007

WCAL funds examined in court

By Lauren Melcher
Staff Writer

Friday, October 26, 2007

On Oct. 17, a Rice County District Court judge ordered a fact-finding investigation into a St. Olaf petition regarding donations to the college for the WCAL radio station before its sale in 2004. A court-appointed special master will submit a report back to the judge within 60 days. Judge Gerald Wolf is looking for more information about accounting practices related to money donated to the college specifically for the purpose of supporting WCAL.

St. Olaf received monetary gifts to support WCAL, the first listener-supported radio station in North America, for decades. Some were to be held as permanent endowments for the charitable trust of WCAL, which the Minnesota attorney general has declared was its own entity under the protection of St. Olaf until the sale. Since WCAL's sale, they have not been used because their designated purpose no longer receives funding from the college.

The college submitted the petition to the District Court back in December 2006. Under Minnesota state business laws (which St. Olaf follows), the District Court is responsible for helping the college decide what to do with money that can no longer be spent in the way donors intended.

This situation is not unusual for colleges and universities when they discontinue a program or major that has endowed elements attached. "An example would be if a college discontinued a major that had an endowed scholarship, for instance, or St. Olaf offered a scholarship for a student from a specific congregation that ceased to exist," explained Janet Kringen Thompson '70, associate vice-president for advancement and college relations.

Usually, the college would contact the donor and ask how they would like the money to be spent in place of its original use. In this case, many of the donors who had earmarked money for WCAL are deceased or cannot be found. So the college went to the court for guidance in how to spend the money. In their petition (the form of communication with the court in this case), the college proposed using the money to support "programs that come closest to meeting the interests the donor had," explained Alan Norton, treasurer of the College.

Those programs listed in the petition include Sing for Joy (a St. Olaf-produced religious radio program), webcasting of chapel and music events, and training for students to be sound/recording engineers. The petition did not call for the donations to be funneled into the general endowment or to support other programs outside of the designated list.

"We are asking the court for their direction and suggesting to them what we think makes sense in light of what we are doing as a college," Thompson said.

Norton further explained that "the judge concluded this was complicated enough to appoint a special master to gather more information and to explain it to the court."

"The accounting procedures certainly added a complexity to our petition," Norton said. The college follows general accounting principles, like any other Minnesota business, but those principles do not have the status of state law.

SaveWCAL, a local organization of WCAL supporters, is also involved in the recent court decision. "The investigation was our idea," said SaveWCAL President Ruth Sylte '80. In his order, Judge Wolf also designated SaveWCAL as an official representative of WCAL donors, with "the right to stand in front of the court and have a voice about the charitable trust to which we donated," Style explained

In court proceedings last summer, SaveWCAL's attorney Michael McNabb argued that, although St. Olaf says it hopes to spend the remaining endowment on programs that mirror the "core activities" of WCAL, it has no right to do so because it is no longer carrying out the specific mission of a public radio station.

"I am very happy that the judge heard the donors and has ordered a full investigation so that everybody will be able to know what really happened," Sylte said.

The college has not yet heard from retired judge Gary Meyer, the appointed special master, but expects to hear from him soon. The college says that the treasurer's office will likely be most involved in the investigation, since they handle the accounting procedures in which Judge Wolf is interested. McNabb and the Minnesota attorney general also fall under the judge's order and will be available to the special master during his investigation. There is no anticipated date for the investigation's conclusion.

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