O F F I C E O F L E G I S L A T I V E R E S E A R C H
P U B L I C A C T S U M M A R Y
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PA 21-19—SB 996
Higher Education and Employment Advancement Committee
AN ACT CONCERNING FU NDRAISING BY THE FOU NDATION OF
THE UNIVERSITY OF CO NNECTICUT
SUMMARY: By law, UConn must have a written operating agreement with the
UConn Foundation (“the foundation”) that governs their relationship, and it must
contain specific provisions about the cash compensation paid by the university to
the foundation. These provisions generally require UConn to (1) decrease and
eventually eliminate payments to the foundation as the market value of its
endowment exceeds specified thresholds and (2) increase payments if the
endowment’s market value falls below those thresholds.
This act requires the agreement to include a provision that renders these
payment reduction, elimination, and increase requirements inapplicable in any
fiscal year when the foundation’s average fundraising for the previous two years
is at least five times its average compensation from UConn during the same
period.
EFFECTIVE DATE: July 1, 2021
CONTRACTUAL PROVISIO NS GOVERNING CASH CO MPENSATION
PAID TO THE FOUNDATION
Under state law, all foundations related to public higher education institutions
must enter into a written operating agreement with those institutions. For UConn
and its foundation specifically, the written operating agreement must provide that
UConn decrease the total cash compensation payment to the foundation in a fiscal
year from either the amount paid in the preceding fiscal year or in the base fiscal
year 2016, whichever is greater, according to the market value threshold
requirements of the endowment fund outlined in the table below.
Required Cash Compensation Reductions from UConn
to the Foundation Under Existing State Law
Change in Cash Compensation
Paid by UConn to the Foundation
Market Value Threshold of
the Foundation’s Endowment Fund
(as of January 1 of preceding FY)
Decrease of $1 million $500 million to less than $700 million
Decrease of $1.5 million $700 million to less than $900 million
Decrease of $3 million $900 million to less than $1.25 billion O L R P U B L I C A C T S U M M A R Y
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No compensation permitted $1.25 billion or more
Source: CGS § 4-37f(10)(E)
Alternatively, if the endowment fund’s market value decreases to an amount
below any of the first three thresholds listed in the above table as of January 1 of
the preceding fiscal year, then existing state law requires UConn to increase its
payments to the foundation to the same amount that it paid prior to exceeding the
threshold. These increased payments continue until the July 1 following a January
1 on which the market value of the endowment fund once again exceeds the
threshold (CGS § 4-37f(10)).
The act requires UConn and the UConn Foundation’s agreement to include a
new provision under which existing law’s scheduled payment reductions,
eliminations, or increases would not apply in any fiscal year in which the
foundation’s two-year average of total gifts and commitments raised for the
preceding two fiscal years, according to its annual report to the Higher Education
and Employment Advancement Committee and legislative leadership, is at least
five times its average compensation from UConn during the same period.