Michigan State University’s handling of the Larry Nassar scandal has created a new wave of support in the state legislature for increased transparency around state university legal spending.
Lawmakers argue that transparency around MSU’s investigations into its former faculty member would have forced the university into action sooner, potentially saving young women from abuse and limiting damage to the university.
Nassar, a sports medicine physician who was an associate professor at MSU, has been sentenced to more than 175 years in prison for sexual abuse of students and athletes over the course of two decades. The university faces more than 100 lawsuits from plaintiffs claiming the university shares some responsibility for their alleged abuse at Nassar’s hands.
Currently, the three state universities with elected boards of regents – Michigan State University, the University of Michigan and Wayne State University – are considered independent governmental bodies and cannot be compelled to provide information on their legal spending to state legislators.
House Bill 5488, introduced this week by State Rep. Jim Runestad, R-White Lake, would use the legislature’s appropriations authority to require state universities annually to report “all costs … in connection with any civil or criminal case, filed or anticipated” against the university or any of its staff. In addition to attorney fees and other costs, such as those incurred during MSU’s internal Nassar investigations, universities also would be required to report the amounts of court judgments or settlements against the school.
“We, the legislature, fund these universities,” said Runestad, who chairs the House Judiciary Committee. “There’s a potential this fiasco will cost taxpayers a billion dollars. There’s a minimal cost for university administrators to do this and a potential bonanza in savings. It’s time.”
His original interest in university legal spending began when he attempted to investigate their enforcement of speech codes that potentially restricted students’ First Amendment rights. He was concerned, he said, over anecdotal reports from the Foundation for Individual Rights in Education on state universities fighting protracted legal battles against their own students even when the chance for success in court was slim.
Runestad said he came to believe some university administrators share a mindset he described as, “If they sue us, we’ll defend it and if we lose, we’ll pay it. It’s taxpayer dollars, so who cares about that?”
Experts are beginning the process of assessing that financial cost to the university and to the state, and the effects could be far-reaching. Rating service Moody’s announced on Jan. 30 that it was placing MSU’s credit rating, currently the second-highest possible, under review for a potential downgrade because of the Nassar scandal’s financial implications. This could increase the cost of MSU’s existing $975 million in long-term debt as well as make future borrowing more expensive.
“Our review will include the potential financial impact on the university, offset by the university's available reserves and insurance coverage,” Moody’s explained, while noting more than legal liability is at stake. “Potential negative implications for the university's student demand and fundraising will also be assessed during the review period.”
These potential costs have state legislators’ attention, and Runestad’s legislation has 24 cosponsors with what he characterized as “very good bipartisan support.” It has been assigned to the appropriations committee for consideration.
In addition to reports on legal spending, the Nassar scandal has driven other proposals for increased transparency at Michigan’s public universities.
Attorney General and gubernatorial candidate Bill Schuette informally proposed a constitutional amendment that would require state universities and colleges “to live by the same Open Meetings Act and Freedom of Information Act laws that apply to most state institutions.”
State Rep. James Lower, R-Cedar Lake, introduced a joint resolution on Feb. 1 to amend the state constitution to eliminate the elected boards at MSU, U-M and WSU and replace them with appointed boards as is done with other state universities.
“I have long considered the nomination and election process for these positions to be problematic. Voters often simply opt for the most recognizable names, or randomly bubble in their choice,” Lower said. “This situation, coupled with eight-year terms, leads to very little accountability and a lack of thorough vetting.”
Advocates for the state’s 15 public universities have not yet taken positions on these proposals.
“Right now, we are looking at what is going on and what has been proposed and considering whether improvements can be made to reporting and transparency that would have a meaningful impact,” said Daniel Hurley, CEO of the Michigan Association of State Universities.
