Court to decide if skybox fees are tax-deductible
ByIevaAugstums
Senior staff writer
Colleges and universities nation
wide, including the University of
Nebraska-Lincoln, could see a sub
stantial loss in private charitable dona
tions and a possible increase in student
fees if the Internal Revenue Service
has its way.
In a cast pending in Iowa, the IRS
is challenging Omahan Rod French,
owner of R.L. French Corporation, and
his recent contract lease of a skybox
suite at Iowa State University.
The case would determine whether
skybox fees, similar to those at UNL,
are tax-deductible. The case would
also set a national precedent concern
ing charitable or business deductions.
“What the IRS wants to do is disal
low charitable or business deductions
to university donors,” said Robert
Johnson, chief financial adviser for
French’s company. “This could mean
trouble for students and the universi
ties they attend.”
Two years ago, French donated
$200,000 to Iowa State University’s
charitable foundation, in return leasing
a skybox for 10 years. The issue sur
faced after French was audited by the
IRS, which was not too keen on French
deducting about $145,000 as a charita
ble contribution.
French said he followed the “80/20
rule” and deducted the appropriate
amount from his tax return.
It has been assumed that colleges
and universities have operated under a
U.S. tax code that allows 80 percent of
a charitable donation to be deducted
after benefit costs like tickets and
parking are removed from the total
amount paid to the school, French said.
The IRS concluded French would
not receive a deduction for his skybox
lease. French has since lost an appeal in
Des Moines, Iowa, and has asked the
IRS in Washington, D.C., to reconsider.
A decision is expected in about three
months, he said.
| French said he wanted to fight the
case, because he was concerned
about the future of fund-raising for
universities.
“I’m very high on young people
receiving the best education they can,”
French said. “When they start jacking
around with the future of my grand
children, I become concerned. Where
does the IRS think money would come
from if it weren’t through private dona
tions?”
University officials said if the case
is won by the IRS, UNL could face
hardships in recruiting donors, not
only for the sky boxes, but in all areas.
“Yes, this is one of those situations
that every university has their eye on,”
said Scott Lewis, associate vice chan
cellor for Academic Affairs. “It could
affect every college and university
nationwide.”
Lewis said he would not comment
on the direct effect the Iowa case
would have on UNL, but he said the
university probably would have to
rethink its strategy in attracting private
donations.
“This is an issue that affects more
than athletic funding,” he said.
Johnson agreed.
“If you want to have quality pro
grams and the finest facilities, it is
important you have community sup
port,” Johnson said. “Without it, stu
dents will have to pay the price - in
some cases literally.”
NU Foundation spokeswoman
Theresa Klein said the skybox con
tracts are strictly between the universi
ty and private donors.
“The question of deductibility is
solely between the donor and the IRS,”
she said. “We do not guarantee any
type of deductibility.”
For every gift the foundation
receives, tax deductibility is related to
the total amount of benefits the donor
received, she said.
Klein said the skybox contracts
urged donors to seek tax advice on
their donations.
Many skybox owners say they
were aware of the issue and that
whether or not they would receive a tax
deduction didn’t directly affect their
decisions to lease the skyboxes.
This fall, about 1,150 wealthy
Husker fans will be sitting in 42 new
skyboxes atop Manorial Stadium.
Ten of the skyboxes cost $2 million
for a 25-year lease, and 29 skyboxes
cost $750,000 for 10 years. Three
remaining boxes wae assigned to the
UNL chancellor, the athletic director,
and the NU Foundation and NU
President’s office.
u---—
Where does the IRS think money would come
from if it weren’t through private donations”
( Rod French
lessee of a skybox suite at Iowa State University
Johanns proposes budget plans
Academic Senate debate centers on school funding
By Shane Anthony
Staff writer
Gov. Mike Johanns pitched his bud
get ideas to Academic Senate members
Tuesday afternoon in what he said could
be the first in a series of talks.
“I hope that today is the start of a
continuous dialogue between myself
and you,” he said.
Tuesday, the dialogue centered on
funding for schools and Johanns’ pro
posed tax rebate plan. Johanns said the
state would enhance support for educa
tion if his plan went forward. The gover
nor’s proposal for university funding
has changed.
Johanns said NU President Dennis
Smith convinced him after reading the
first budget that “you’ve got to do bet
ter.”
“He’s a pretty effective lobbyist
when it comes to securing funds for the
university system,” Johanns said.
He said his budget compares favor
ably with those of past administrations.
Chancellor James Moeser said the
governor is on the right course. Salaries,
he said, are crucial. UNL lost one
employee recently to a pay increase of
50 percent at another Big 12 school, he
said
Moeser encouraged Johanns to sup
port the Appropriations Committee’s
budget proposal, which Johanns said is
very close to his own.
“We have prepared to make some
really tough decisions’*" if the
Appropriations Committee’s proposal
goes forward, Moeser said.
Biochemistry Professor Stephen
Ragsdale asked Johanns how his prop
erty tax rebate plan would affect fund
ing for elementary schools, high
schools and universities. Johanns’ plan
would refund tax payers 11 percent of
i their property taxes.
Johanns said he is proposing the
exact amount certified for state aid.
That amount includes $22 million that
schools would have to pay back because
of a miscalculation in state aid. Johanns
also said his plan would leave the prop
erty tax levy limit at $ 1.10 instead of
dropping it to $1.
The feeling among senators, he
said, is that if the levy drops, the
Legislature should replace the lost fund
ing.
His plan, he said, would do a better
job of providing property tax relief.
Furthermore, he said, it allowed
more flexibility in funding. If the
Legislature had to provide an additional
$84 million in aid funding would be
stuck at that level.
In other news, the senate elected
Sheila E. Scheideler, associate profes
sor of animal science, to the position of
president-elect for the remainder of the
semester.
Current President Gail Latta, asso
ciate professor of libraries, moved up
from president-elect after Patricia
Kennedy resigned as president in
January to become the associate dean of
the College of Business Administration.
The senate also recognized
Kennedy for her service.
Latta’s term expires next May. In
April, the senate will vote again for next
year’s president-elect
The senate also passed two resolu
tions. One supports a proposal to make
non-tenure track faculty members clas
sified as senior lecturers eligible for
membership in the graduate faculty.
The other was a senate endorsement
of the continued commitment to the
standard of mutual agreement in negoti
ations of changes in the apportionment
of faculty appointments.
At last month’s meeting, senate
members expressed concern over a pro
posed change in the wording of two
bylaws dealing with faculty responsibil
ity appointments.
One bylaw supports mutual con
sent, while the other uses language that
eliminates the standard of mutual
agreement between the faculty and
administration in deciding faculty
responsibilities.
Senators debate spending growth
___ ' , \
By Shane Anthony
Staff writer
Senators tried to talk dollars and
sense Tuesday as they opened debate
on a resolution that would set a goal for
keeping spending growth down.
LR3, introduced by Sen. Pam
Brown of Omaha, sparked two' hours
of debate about spending growth, how
to curb it and whether or not the system
even needs fixing. Brown’s resolution
would create a nonbinding goal that
the Legislature not increase general
fund spending by more than 3 percent
per year during the 1999-2001 bienni
um.
“It is not a lid,” Brown said. “It is an
opportunity to have a serious discus
sion on the floor about our spending ”
Some senators did not agree with
the resolution’s specifics, but they had
similar ideas.
Speaker Doug Kristensen of
Minden said he would prefer to see a
limit based on a five-year average of
personal income growth minus 1 per
cent instead of the 3 percent figure,
which is based on personal income
growth last year. Using only one year
would not be accurate enough, he said.
“I think it adds too much unpre
dictability,” he said.
Hebron Sen. George Coordsen
presented and withdrew an amend
ment that would have changed the res
olution to suggest using the same
restrictions placed on local govern
ments last year through LB989. That
bill put a 2.5 percent base limitation on
local governments’ spending growth in
the fiscal year 1998-99 that could be
exceeded by 1 percent with a three
fourths vote of die local government.
But Harrison Sen. Bob
Wickersbam said he did not think the
current system was broken. Even if it
is, he said, neither Brown’s nor
Coordsen’s ideas were likely to fix it.
He said the debate was premature.
“We, as of yet, have no real idea of
what the needs of the state are,” he said.
I He said funding for schools and
Nebraska Educational Telecommunic
ations concerned him.
Hastings Sen. Ardyce Bohlke also
cited NET as one of her concerns.
Priorities become more clear as the
session goes on, she said, and she had
confidence that the Appropriations
Committee will bring a good budget to
the floor.
But Lincoln Sen. Chris Beutler
said the Legislature does too much
“trading up.” Senators agree to vote for
each others’ appropriation bills, he
said, but no one ever agrees to combine
forces to kill a series of bad bills.
“You trade up. You don’t trade
down,” he said. “You end up with more
spending than you ever intended.”
Wickersham said the current sys
tem does not lead to the Legislature
spending every dime it gets. Last year,
he said, the Unicameral could have
spent an additional $9.9 million. He
said the Legislature won’t spend every
dime if senators give carefUl consider
ation of bills. The governor also plays a
part with his veto power, he said
“That’s not bad,” he said. “The gov
ernor has to have something to do after
all.”
Brown said holding down spend
ing is everyone’s duty.
“It is the job of each and every per
son on this floor,” she said.
Aside from passing a committee
amendment that made a wording
change, the Legislature took no action
on the resolution.
6
i
Anthrax hoaxes concern
FBI; 42 incidents cited
WASHINGTON (AP) - Virtually
every day for several weeks, the FBI
has heard about an anthrax threat
somewhere in the United States. So
far, they have all been hoaxes, but the
bureau responds seriously to every
one. ,
“My personal fear is that some
day there will be a real anthrax threat,
and American society will react by
saying, ‘There’s another hoax,”’ Neil
J. Gallagher, FBI Assistant Director
in charge of the national security
division, said Tuesday. j
Sporadic threats of contamina
tion with the potentially lethal
anthrax bacterium date back several
years. But beginning last fall and
accelerating in the past few weeks,
the FBI has seen a spate of letters,
containing a sticky substance or dark
powder and the ominous warning:
You’ve been contaminated by
anthrax.
The letters have been received in
almost every region of the nation.
They often arrive in bunches, at 10 or
15 similar targets in a city. The tar
gets have been quite varied: abortion
clinics, Catholic schools, nightclubs,
department stores, hospitals, post
offices, courthouses, news media
offices, FBI offices and even the Old
Executive Office Building beside the
White House.
“Not a day goes by without us
hearing from somewhere in the
United States about an anthrax
threat,” Gallagher said.
“Anthrax threats have become
what bomb threats once were or
product tampering threats in the
1980s” after the Tylenol poisoning in
Illinois, FBI spokesman Bill Carter
said.
“The only way to slow this down
is for us to prosecute someone,” said
Gallagher’s deputy Dale L. Watson.
“So we are diligently investigating”
the hoaxes.
Even the hoaxes are federal
felonies.
Mailing a threat to injure some
one is punishable by up to six years in
prison. Threatening to use a weapon
of mass destruction, including a bio
logical agent like anthrax, can bring
life in prison. _
Los Angeles accountant Harvey
Craig Spelkin, 53, was charged at
yearend with such a biological threat.
Federal prosecutors allege he tried to
avoid a Dec. 18 appearance in U.S.
Bankruptcy Court by telephoning the
courthouse with a warning that
anthrax might be in the air condition
ing system.
Another man was charged in
January with telephoning anthrax
threats to a Los Angeles area hospital
and is undergoing psychiatric tests.
They are among very few people
charged so far, none of them with the
letter-threat hoaxes. The FBI has
investigated 42 incidents since the
beginning of this year; the Justice
Department could not say exactly
how many people have been charged.
Letter threats are difficult to
prosecute, Gallagher said.
“They don’t walk into a post
office where they can be spotted.
They use a remote mailbox. You can’t
trace a letter to a particular mailbox,
only to a time of day and a part of
town,” he said.
Police investigate lipstick graffiti on Bessey Hall door
UNL Police investigated possible graffiti on the door to Bessey Hall where
American Indian remains were found in October 1997 and Feb. 5.
Corp. Call Oestmann said police received a call about toe graffiti a little after
10 a.m. The letters “AIM” were written on toe door, possibly in lipstick, he said.
The marks were believed to have been made between 5 p.m. Monday and 10 a.m.
Tuesday, he said.
Compiled by staff writer Shane Anthony