MacIver News Service | July 3, 2018
By M.D. Kittle
MADISON – The former health insurance executive who led the creation of the University of Wisconsin-Madison’s public health fund says the foundation has “strayed far from” the original intent of the endowment – the largest single gift in UW-Madison’s history.
Tom Hefty, former chairman and CEO of Blue Cross and Blue Shield United of Wisconsin, in written comments to the state Legislature’s Joint Committee on Audit, makes several stinging criticisms of the management of the public fund established years ago at the University of Medicine and Public Health.
The committee‘s public hearing last month on the “Relationships between University of Wisconsin and Certain Affiliated Organizations” received very little media attention, despite the fact that lawmakers focused on the myriad legal problems tied to the troubled University of Wisconsin Oshkosh Foundation, under the public microscope following an administrative scandal.
Not much, however, has been noted about the Wisconsin Partnership Program, the grant distribution arm of the UW fund. Hefty asserts the WPP has departed from the fund’s original, core public health mission and turned a “generous and visionary endowment” into a cash conduit for left-wing organizations and causes.
In his written testimony, Hefty wrote that University of Wisconsin System President Ray Cross has stated that the use of (UW System) foundation funds obviously must comply with the donor intent.
The failed UW-Oshkosh Foundation raised concerns about the cozy relationships between the university and fund directors, and is the subject of a state investigation into the alleged illegal transfer of public money to the private foundation, in the throes of bankruptcy proceedings. Two former UW-Oshkosh administrators face felony charges of misconduct in public office.
While the Oshkosh foundation has grabbed all the headlines for integrity issues, Hefty asserts the overseers of the UW-Madison public health endowment have for years failed to abide by the original intent of the $300 million gift to the UW health fund.
“In using that foundation endowment, the UW has strayed far from the UW’s own plan and the donor’s intent – funding organic gardening plots, bicycle paths and counseling programs for City of Madison police,” Hefty stated in his testimony to the committee.
As MacIver News Service first reported in May, the UW medical school health fund has handed out transgender education programs and stress reduction programs for Madison police, among other initiatives.
“These would be interesting United Way programs, but they are not traditional public health services,” Hefty previously told MacIver News.
The endowment was created specifically to deal with traditional public health issues.
Hefty worked with the state in the early 2000s in establishing a $600 million endowment to be shared equally by the UW School of Medicine and Public Health and the Medical College of Wisconsin in Milwaukee. The Medical College received $303.3 million and UW received $296.6 million. It was the charitable legacy, central to an agreement that allowed Blue Cross and Blue Shield United of Wisconsin to convert from a non-profit to a for-profit insurance corporation. The Madison fund has grown by more than $100 million over the years.
“It is documented in so many places that the funds were not to be used for advocacy but for traditional health care needs,” Hefty said.
The original order specified 35 percent of each school’s conversion funds be allocated for public health programs and the remaining 65 percent be allocated for medical education and research programs, according to a 2015 Legislative Audit Bureau report.
The Wisconsin Office of the Commissioner of Insurance stated as much in an informational document on the conversion, which also established the Wisconsin United for Health Foundation, Inc. to receive the proceeds from the conversion
“… (T)he foundation would assure that funds now used to support a nonprofit health insurer would continue to be applied to health care challenges and initiatives,” the June 2002 OCI document states.
Perhaps more problematic, Hefty testified, is the amount of health foundation funds that have gone to liberal activists with political connections to partisan politics.
“In late 2017, the UW (health foundation) approved $3 million in election year grants to groups for advocacy and not for delivery of traditional public health services,” he wrote in his statement to the legislative committee. “A former U.S. Senate campaign director heads one of those groups. A longtime political activist heads another.”
As MacIver News reported, the Wisconsin Partner Program late last year announced a $1 million grant to the Community Advocates Public Policy Institute in Milwaukee and its academic partners, including a professor in the UW School of Social Work, for their project, “Creating Conditions to Improve Housing for Wisconsin Families.”
While fund managers say affordable housing is central to public health, Hefty argues it is anything but a traditional health initiative, such as providing immunizations, battling teen pregnancy, or taking on Wisconsin’s opioid crisis.
Dr. Robert Golden, UW medical school dean, has said the Wisconsin Partnership Program “does not engage in or support partisan efforts.”
“The eligibility criteria for our grant programs are clear: for the community-based grants, to which you referred in your email, applicant organizations must be Wisconsin-based, nonprofit, tax exempt organizations or a tribal or government entity, and lobbying is explicitly prohibited in our policies,” Golden said in an email response to MacIver News Service’s questions in May.
Community Advocates Public Policy Institute, which asserts that “(a)dvocacy is more than just helping families and individuals,” is staffed by some notable liberal policy advocates in the progressive movement.
Mike Bare, the group’s research and program coordinator, is a vocal critic of Gov. Scott Walker’s policies and an even bigger supporter of Obamacare. Bare has an “extensive grassroots politics and government service background, having worked and consulted for political campaigns at every level of government,” according to the Public Policy Institute’s website. He was a longtime aide to former U.S. Sen. Russ Feingold in the Middleton Democrat’s Washington, D.C. office, and served as Feingold’s research director for his 2010 campaign.
David Riemer, the institute’s senior fellow, served as budget director for former Wisconsin Gov. Jim Doyle, a Democrat. Throughout the late 1980s and ‘90s, Riemer was budget director and chief of staff for Milwaukee Mayor John Norquist, also a Democrat. At one point, Riemer served as legal counsel to U.S. Sen. Ted Kennedy’s Subcommittee on Health and Scientific Research.
“As the UW-Madison was moving to use Foundation funds for advocacy rather than traditional health care services, Wisconsin dropped significantly in independent national public health rankings,” Hefty wrote.
The Badger state has fallen from 6th best to 21st in America’s Health ranking, formerly known as the United Health ranking. Wisconsin was one of only three states to drop eight rankings in five years.
While Wisconsin ranked 12th in the nation in overall child well-being, according to a 2017 Annie E. Casey Foundation report, the state was 28th among state’s for children’s health. The numbers were worse when looking at disparities in the health of African-American children.
Former UW-Oshkosh administrators and foundation leadership have been accused of hiding key information, shirking transparency requirements.
Hefty says a lack of transparency has plagued the University of Wisconsin Foundation since the imposition of a 1 percent “institutional advancement fee.”
“That fee was not disclosed to donors whose funds are being diverted nor is it being disclosed to future donors. Nor is that fund disclosed today. It reflects a complete lack of transparency,” Hefty wrote in his testimony.
As MacIver News previously reported, millions of dollars each year continue to be siphoned from the UW medical school endowment fund in management fees. Managers now charge 1 percent for amounts up to $250 million and 0.7 percent over $250 million.
The Institutional Advancement Fees were $1,586,589 for the six months ended June 30, 2017, according to the latest fund report.
“Revenues are shown after these fees have been deducted,” the report states.
The Medical College in Milwaukee does not have a management fee.
According to a previous Legislative Audit Bureau report, the UW fund was valued at $381.2 million at the end of 2013, while the medical college fund was worth $428 million, a $47 million difference.
“Think of how many scholarships, how many immunizations that could have gone to,” Hefty said in May.
There’s a potentially bigger problem, Hefty asserts. Conflicts of interests have complicated the health endowment’s mission. In his letter to the legislative committee, he notes the UW accepting more than $2 million in grants from opioid manufacturers to promote the prescription of opioids by physicians – “a UW research program that ended only after Wisconsin media exposure.”
The Legislature has allocated millions of dollars to deal with the opioid crisis, some of that funding going to the UW.
“Through its commercial enterprises, the UW continues to receive payment for opioid prescriptions, as would other prescriptions,” Hefty wrote. “Finally, in 2017 the UW used its public health foundation funds to create a pilot opioid treatment program in five counties. In 2018 Dane County announced that it would sue one of the opioid manufacturers – the same organization which provided the grant to the UW.”
The Joint Audit Committee remains concerned with the UW’s lack of compliance in “correcting recurring problems and a lack of full access to records to complete” a wide-ranging audit, state Sen. Kathleen Vinehout (D-Alma), ranking minority member on the committee and Democratic candidate for governor, wrote recently in Urban Milwaukee. “As a consequence, auditors could not fully answer lawmakers’ questions.”
“Lawmakers on both sides of the aisle publically explored what to do to force compliance with audit recommendations,” she wrote.
“I explored the possibility of using subpoena powers to require agencies to turn over documents. My colleague, Senator Chris Kapenga (R-Delafield), suggested we take a much stronger approach to compelling agencies to release necessary information and comply with LAB recommendations,” Vinehout added.
Kapenga has proposed hefty financial penalties for state agencies that withhold information from auditors or fail to comply with audit recommendations. Government entities would face the kind of consequences private sector companies deal with under federal oversight. Kapenga suggested a $50,000 fine for each instance of recurring noncompliance.