05/04/20 Board of Governors Discussion

Dear Colleagues:

The meeting of the Board of Governors (BOG) was not as personally contentious as have been other such meetings, but it was not without important controversy. The chief issue that sparked conflict was that of the proposed tuition increase for Medical School students. There were two discussions of the matter: first in the Budget and Finance Committee Meeting in the morning; and, second, in the formal meeting of the Board in the afternoon. In the morning committee meeting, there was representation of the Academic Senate and the student government. After a lengthy discussion, the Budget and Finance Committee voted to endorse the proposed increase in the Medical School tuition. The Academic Senate and the Student representative voted against the increase, but a majority of the committee, made up of members of the BOG, endorsed the increase.

In the formal afternoon meeting of the BOG, the tuition recommendation of the Budget and Finance Committee was on the agenda. There was an extensive discussion in which the newly appointed Vice President for Health Affairs and Dean of the School of Medicine, Dr. Mark Schweitzer, gave a detailed presentation in support of the Administration’s recommendation. In the course of the discussion, he also announced a 50% cut in the salaries of the Clinical Faculty in the School of Medicine. (This is not a cut in the WSU salaries of these physicians. They are protected by the Collective Bargaining Agreement; it is in the additional, and historically larger, salaries that they get from the faculty practice plans.) After a vigorous discussion, the Board voted 5 to 3 to endorse the tuition increase.

Late in the meeting (after the 42 minute mark), Governor Michael Busuito read a statement focused on the matter of the PEPPAP Medicaid funds that were at the heart of the court case between the University Pediatricians (the Faculty practice group that has cut its ties to WSU and moved to Central Michigan University). WSU won a favorable decision in court, and now has court sanctioned control of the $79 million in the PEPPAP account. Busuito argues that given the availability of these funds that a student tuition increase could be avoided.

At the end of Governor Busuito’s statement President Wilson stated that, “There were so many inaccuracies in there that I don’t know where to start but I’ll just say that we just move on and maybe at a later time I’ll be able to address some of the inaccuracies.”

If you would like to listen to the discussion for yourself, it can be found at: https://www.youtube.com/watch?v=f5SPUH8VZlk&feature=youtu.be

It is worthwhile to provide the larger University community with Governor Busuito’s statement so that a broader understanding can be had of issues confronting the University. This is particularly important given that the School of Medicine has been a multi-million dollar drain on the University budget over recent years. We can look forward to the President’s response to be able to evaluate whether it refutes whatever “inaccuracies” he found in Governor Busuito’s statement.

Governor Busuito’s statement:

I absolutely oppose a WSU School of Medicine tuition increase. We are in the midst of the greatest crisis to challenge this country since WWII. Currently our students are unable to adequately access the hospitals, the labs, the clinics and the classrooms, thus being denied the educational experience for which they paid. The pandemic is not the fault of the students or the university, however, to raise tuition at this time is dishonest, immoral and unconscionable. I add this proposal to the growing list of strategies that I have opposed coming from this administration. It is no secret that I believe that a change is long overdue.

We give this administration yearly tuition increases and the results have not been acceptable. As an example, they claim to be experts in addressing racial disparities. Over the past 8 years, despite an overall 7% decrease in enrollment, our enrollment of white students is up 4% while it is down 32% for African-Americans. The number of degrees and certificates awarded is up 20% for our white students and down 10% for our African-American students. While we bleed faculty our administration has bloated by 22%. This is not an acceptable trajectory.

Last week I asked why we would increase tuition on our medical students when WSU has an account of over $79 million dollars of PEPPAP monies. It was always my understanding that the intent of the PEPPAP dollars was to “increase access to health care by boosting the pay of physicians who work in poor or underserved areas.” That is what our WSU physicians do. The percentage of PEPPAP dollars that was paid to the physicians who provided their care to poor people was drastically changed after David Hefner was put in charge of Health Affairs by Roy Wilson. Traditionally, pre-Hefner, the tax on the PEPPAP dollars involved a 6% administrative fee and a 6% Dean’s tax. The rest of the money went to the physicians who delivered the care. Hefner set a goal to increase the tax on the physician’s payments from 12% to 60%. To justify this he brought in Larry Gage from Alston and Bird, an alleged expert in PEPPAP programs. Mr. Hefner never got a formal legal opinion but instead an initial “high level” assessment. I will quote from Hefner’s presentation to the board of February 8, 2018 regarding Gage’s opinion.

- “WSU has the ability to assess the following fees on the Program funds: Institutional Adjustments, Dean’s Taxes and Administrative Fees.”

- “Once the funds have been received from the State and the Health Plans, WSU has broad discretion in determining the uses for which adjustments may be applied.”

- “WSU’s established principle is that these adjustments are to be earmarked for specific purposes that align and contribute to the mission and goals for the program.”

- “Institutional Adjustments are applied towards academic support and mission-related clinical access programs. Some examples include but are not limited to: Training programs and institutional support to increase supply of specialist/sub specialist physicians and the health professions.”

Don’t all of these apply to the mission of our School of Medicine?

At a board meeting of May 7, 2018 the board was presented with a PEPPAP Funding Summary slide. It showed a fund balance of $61.5 million dollars after expenditures of over $11.5 million dollars. This was the first time that I know of that the board was made aware of this account. We asked what this money represented and we were told that these funds came from the PEPPAP dollars generated by our pediatricians. Governor O’Brien asked David Hefner why there were expenditures from the account of $11.5 million and he stated that it was for “consultants and to pay bills.” Governor O’Brien asked for an accounting of the monies spent and we still have not been provided with the data.

Last Sunday I asked for an accounting of the PEPPAP monies in WSU accounts, especially the expenditures from those accounts. I still do not have the complete information but I will share with you my reasons for opposing the tuition increase based on the incomplete information that I received. The end balance in 2015, Hefner’s first year was $4.7 million. It then grew to $28.5 million in 2016, $47.4 million in 2017 and $62.4 million in 2018. The expenditures during that period were over $150 million. The balance on the account is currently $79 million.

When I asked last Sunday why would we increase tuition on our students when we had tens of millions of PEPPAP dollars available to us I was given the following response: “WSU did not withhold money owed to UPeds. Further the $61 million has no relevance to UPeds. These funds were never intended to defray the costs of medical education programs. Given increased scrutiny of these funds by the state and CMS, WSU is interpreting allowable uses of these funds very conservatively.”

Without a physician seeing a patient and generating a Medicaid claim there are no PEPPAP dollars. These are clinically generated dollars. I cannot find anywhere in the PEPPAP guidelines where it says that the intended use of these dollars is to hoard PEPPAP monies in a WSU account and let them collect dust. I see nowhere in the government’s guidelines where it says that it is OK to stockpile PEPPAP dollars in a WSU account in the hope that this board will change in the coming election to give the president a fifth vote so that he can try carry out his pet projects, like trying to give our school of medicine to Henry Ford Hospital, a deal that provided no solution to our problems and no pledge to support of our research. When the Higher Learning Commission president was recently brought in to push a Code of Conduct to silence the president’s critics on the board she was informed that four board members irreversibly lost confidence in this president. She was asked what she would do under the circumstances and she told us that she would resign. Mr. President, your failure to resign in the face of a split board has paralyzed this university. You split this board.

Now you hold $79 million dollars of the hard-earned money of our physicians and you want us to burden our students with an increase in tuition during a national crisis. By letting that money sit while you are waiting for political change how are we not stealing that money from the physicians who generated it and the School of Medicine? Is this why we lost our pediatricians to CMU? Is this why our pediatricians are suing us? Is this why WSUPG went bankrupt? Is this why the School of Medicine is in need of money? If we believe the justification of David Hefner and Larry Gage for taking the money in the first place then a perfect use for these dollars is to avoid a tuition increase on our students.

To avoid a tuition increase would entail using less than 2% of the hoarded funds. To ask the students to bear this burden would be dishonest, immoral and disgraceful. I will not support a tuition increase. Furthermore, since I don’t have a fifth vote I ask that the students, faculty and taxpayers support my request for a forensic audit in light of the blackbox accounting that has been used to manage our PEPPAP dollars.

Stay well,



Charles J. ParrishPresident, AAUP-AFT, Local 6075, WSU ChapterVice President-at-Large, AFT MichiganPresident, AAUP Michigan ConferenceMember-at-Large, National Council, AAUP5057 Woodward Avenue, Suite 3301Detroit, MI 48202313.577.1750