This week Nebraska taxpayers dodged a very costly mistake.
On Tuesday, the University of Nebraska Board of Regents unanimously voted to bring the Omaha Community Foundation on as a shared governing member alongside the University, to replace the position that Clarkson Regional Health Services held. The new arrangement moves the ownership of Nebraska Medicine under the University, and OCF is an invested philanthropic governance partner, rather than a co-owner.
If you find this all confusing, you’re not alone.
Understanding the previous roles of the University, Clarkson, and Nebraska Medicine requires a flow-chart diagram and a narrative description, which I’m happy to provide if requested. Regardless of the previous structure, the short version of the story is that Clarkson felt that their (roughly) $800M in assets could be better deployed in other areas rather than being tied up in the UNMC system. UNMC negotiated a deal that would have required them to take on debt to buy out Clarkson, something that raised my eyebrows significantly when it was announced early this year.
That announcement came on January 2nd, Friday of a holiday weekend, and indicated that the approval of the deal by the Regents would happen just a week later. The “red flags” to me were:
- Lack of transparency: The announcement indicated that negotiations had been ongoing for some eighteen months with no visibility to state lawmakers, or the public. Why the announcement at a time of low press visibility and why the rush to approve the deal so quickly?
- Lack of support: The board members of Nebraska Medicine, themselves significant business and public leaders in our community, were adamantly opposed to the transition for a number of reasons including financial, operational, and governance. They were concerned about breaking a model that was, by all measures, successful. Further, members of the philanthropic community were also concerned and immediately reacted by placing their ongoing operational support and commitments to the future Project Health Initiative at risk.
- Failing the smell test: A payment by the University of $800M (which would be financed) and, in turn, a contribution back from Clarkson of $200M seemed to be an odd, if not improper arrangement.
- Potential impact to taxpayers: The University system receives a $700M+ annual appropriation from the State of Nebraska General Fund, over 10% of the entire budget. There was no way that I could see that this transaction would not increase the cost of operations and increase the future financial burden to Nebraska taxpayers.
How could this NOT negatively impact taxpayers?!
If you think that nothing happens in a bipartisan way in the Legislature, this is an example of that perception being incorrect. I drafted a letter to the Regents and immediately began reaching out to my fellow lawmakers across the room. In the end, 33 of 49 state senators signed on to this letter asking the University to hit the pause button on the transaction.
The University acquiesced.
In the coming weeks, there were presentations by University leaders and by Nebraska Medicine Board members, along with countless meetings in my office with officials from all sides of the conversation. Following those meetings, conversations were initiated with members of the philanthropic community; more meetings and some very frank discussions occurred, resulting in the University choosing to forgo their original path and consider a different means of funding the Clarkson buyout.
In the end, and after nine months of hard work, we now see what often happens in Omaha: an incredible investment and engagement of substantial donors whose desire is to better our community.
I am grateful to many for this outcome:
- To the Regents and University leadership for considering and taking a better path.
- To the philanthropic community for taking a strong stand and stepping up with a tremendous financial commitment.
- To my colleagues for working without an ounce of partisanship or political motivation to ensure a better outcome for Nebraska taxpayers.
- To you, for allowing me to have a positive impact on our great state.
If you have any questions about this matter, please don’t hesitate to reach out to me for further clarification. My office email is brad.vongillern@leg.ne.gov. I’m always happy to hear from you.