ST. LOUIS COUNTY — A major donor and former trustee on Monday filed to block Webster University from using scholarship funds to meet the school’s loan obligation.
Former Trustee Jack Schreiber and his wife, Sherry, say in the suit that Webster University failed to provide evidence as to why it needs all $37 million from private donors — including the more than $100,000 the Schreibers helped grow for scholarships they established in memory of their son and of Jack’s mother.
“To try to get it done on the backs of donors, many of whom have these funds in memory of individuals, like ours, it just isn’t right,†Jack Schreiber told the Post-Dispatch. “I can’t imagine anybody would think that this is right.â€
Several Webster University donors, including the Schreibers, have come forward against the college’s plan to use restricted endowment funds, which are earmarked for scholarships, research and professorships, to meet an obligation of a loan.
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Board chair Sumit Verma declined comment late Monday.
Webster’s move to tap into restricted donor funds underscores the financial problems before the university. Over the past decade, Webster has lost more than $160 million, including a $37 million deficit at the end of the 2022-23 school year. Yet its board of trustees continually awarded raises to then-Chancellor Beth Stroble and President Julian Schuster that made the two among the highest-paid university leaders in the ºüÀêÊÓƵ region.
The school’s problems compounded over the past year when Webster was sued for allegedly not paying rent at its satellite campus in downtown ºüÀêÊÓƵ. Its bond rating also has fallen into junk status, which affects the school’s borrowing power.
Four of its leaders, including Stroble and CFO Richard Meyer, have since resigned.
University leaders have said the COVID-19 pandemic and changing demographics have increased competition for students and impacted operations.
The school is now on a positive trajectory with growing enrollment after years of decline, they said.
Webster filed its petition to tap restricted endowment funds on Feb. 1, two days after Verma, the board chair, sent a letter to donors informing them of the university’s plan. The Missouri attorney general’s office told Webster it did not anticipate intervening in the school’s attempt, according to court filings.
Verma has said that the university would first use donor money to satisfy a “liquidity ratio†for a loan related to its new science and business buildings, and, in the letter, said that the school would only spend the money to pay bills as a last resort.
But several donors have said that they don’t want their money to be used for anything other than what they designated it for — such as scholarships made in memory of loved ones who have died.
The Schreibers established two scholarships for late family members — one in 2014 for Jack’s mother, Bette Jane Wolff Schreiber, who was a 1947 Webster graduate, and a second one in 2015 for the Schreibers’ son, Andrew, also a Webster graduate, who died in 2015. The scholarships now total more than $113,000 in value, according to court filings.
Jack Schreiber, who served several years on the board of trustees, said in an interview on Monday that he doesn’t have confidence in the university and its turnaround plans. A former president of Commerce Bank, he said he resigned from the board in 2018 after the university took on debt, didn’t cut expenses and didn’t heed his warnings that it must.
“I had a front-row seat with all of this, and I didn’t think management was adequately addressing all the serious financial problems that were going on,†he said.
The Schreibers said in their suit that the university did not show that it had exhausted all other options before seeking to reclassify donors’ money as unrestricted.
Schreiber said he wants to see documents showing Webster’s current financial status, for more assurance that the university won’t use donors’ money for any other purpose.
He and his wife would not have established scholarships if they knew the money would go to a different purpose.
“We don’t want to wake up one day and see that these funds are gone,†Schreiber said.