Repository: UIHistories Project: Board of Trustees Minutes - 1950 [PAGE 952]

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1949]

UNIVERSITY OF ILLINOIS

943

of these funds in such calculation. This decision was immediately protested since it was the conviction of University officials that the federal funds in question were in the nature of endowment income and were wholly unrelated to payments from the Veterans Administration which under the GI Law are "compensation" for services rendered and were not reimbursement for specific expenditures. Since the majority of the Land-Grant institutions are similarly affected by the ruling, the position taken by the University is now being actively supported by the Association of Land-Grant Colleges and Universities, the National Association of State Universities, and the American Council on Education. The rate specified in contracts listed above covering the period February 9, 1946, through February 6, 1949, included salaries paid from the federal funds in question. The Veterans Administration has called on the University for a lumpsum credit of a pro rata share of such funds received during each such period, based on the proportion of instruction to veterans to total instruction given. Such a calculation would result in a refund to the Veterans Administration of $295,117. The General Accounting Office, however, has recently made an examination of the accounts of the University and, based upon a recalculation of the original credit hour rates, has determined a deficiency of $412,967 instead of $295,117 for the three years involved. The exclusion of these funds also involves approximately $94,000 for the current contract year ending February 5, 1950. The Veterans Administration refused to negotiate a contract with the University for the current contract year ending February, 1950 without excluding such federal funds from the calculated rate. Since the receipt of the major portion of such compensation is essential to the realization of budget income for the current biennium, it was necessary to accept a new contract (V3028-751 listed above) carrying a rate excluding these funds. This contract, however, was executed by the Comptroller under protest, and with the condition that if the final decision was to include these funds the contract rate would be revised accordingly. At this date the Administrator of Veterans Affairs is being urged to rescind his ruling and allow the inclusion of such funds in these calculations. If this is not accomplished, then either Congress should be requested to revise the governing legislation or the matter should be taken to the courts for adjudication. In many institutions other more or less serious problems of relationship with the Veterans Administration have arisen. In the University of Illinois, however, relations have been congenial and generally satisfactory, except as to the federal fund problem. An informal report by the Legal Counsel of the University (November 17, 1049) is attached. President George D. Stoddard 355 Administration (IV) Re: Status of Federal Land-Grant Funds with Respect to Veterans' Administration Rulings

DEAR PRESIDENT STODDARD:

In reply to your request, following is my opinion with respect to the controversy which has developed between the Land-Grant Colleges and Universities and the Veterans' Administration concerning the status of Federal Funds appropriated by Congress under the Land-Grant Acts. This opinion deals with the broad issues that have arisen. Voluminous files have accumulated in this and other universities with respect to these issues. Numerous conferences have been held by representatives of the Land-Grant Institutions among themselves and with the Veterans' Administration. I am familiar with the files here and also with the accumulation of information, factual and legal, that has been assembled by Iowa State College and by their counsel, and also with the legislation, with the regulations of the Veterans' Administration and with the legal opinions of its counsel as they pertain to this controversy. I have participated in several conferences with representatives of the Land-Grant Colleges and their counsel. No attempt is here made to restate the extensive factual background or to restate the numerous detailed legal issues which are set forth in the correspondence, memoranda and briefs above referred to. As I see it, the whole problem heads up in the question should the funds appropriated by Congress to the several states for use by their respective LandGrant Institutions be included or excluded by Land-Grant Institutions in deter-