SCU Employees Frustrated, Allege ‘Unethical Financial Behavior’

Morale is low at Santa Clara University.

With an opaque budget process, slashed retirement funds, stifled unionization efforts, pay increase freezes and a besmirched former president, university staff and faculty are telling their leaders it’s time to shape up.

Earlier this year, a pages-long email began circling through the university’s faculty email list, detailing allegations of misdeeds by the university’s budget office and administration.

Written by a former budget office employee, the email said the office cut many positions to save money during a difficult financial time during the pandemic, but none of it was necessary. Instead of a more than $4 million deficit, the school ended the latest fiscal year in a $7.3 million surplus.

“I wanted to provide your office with a more detailed explanation on why I have decided to terminate my employment with SCU,” wrote the employee, identified by multiple employees as Assistant Budget Director Lucy Haro. “After many agonizing and anxiety-ridden months, ... I see no other alternative but to leave SCU altogether.”

Haro didn’t respond to requests for comment, but the university’s website history shows her name was removed from the department’s roster the day after the email was sent.

The employee detailed their experience for more than a decade in the budget office and said the “unethical financial behavior and negligence” of Budget Director Alex McAfferty caused them angst and forced them to speak out.

“I have worked tirelessly to ensure our tuition dollars are used ethically and with our students in the forefront of all our financial decisions, and that our financial practices are aligned with our Jesuit values,” the employee wrote.

Representatives from Santa Clara University did not respond to multiple requests for comment, but the letter has kicked off an investigation into the allegations, board documents show.

Other employees said if the allegations are true, it’s a stunning blow and deviation from SCU’s Catholic values, but not unexpected.

“There’s always explanations and statements about the shortfall is here; we don’t have the money,” says Brian Buckley, a professor of legal ethics at SCU. “The problem with that is frankly [paying teachers] is not a priority for them.”

Buckley pointed out that the university’s endowment totals more than $1 billion today, and has weathered the financial uncertainty of the pandemic. According to the National Center for Education Statistics, in 2018 the university’s endowment was the 106th largest in the nation, out of nearly 4,000 post-secondary U.S. schools.

Most of that is untouchable, Buckley says, but about 17%, or about $170 million, is available for immediate use.

“They’re constantly trying to raise funds for this or that, why don’t they raise funds to pay their teachers?” says Buckley, who has been a lecturer at the school for 14 years. “It’s just not a priority and it’s never been a priority.”

He says competition for academia jobs is so fierce, there are “100 people applying” for any teaching position, creating little incentive to pay more.

Most adjuncts and lecturers make between $50,000 and $80,000, a pittance Buckley says, when compared to the costs of living in Silicon Valley. But most teachers, like himself, stay because they love teaching and they believe in the Catholic values of the school.

“I would think a Jesuit university wouldn’t use the marketplace to justify what is owed to their teachers who are running the school,” Buckley says. “I’d think they would make it a greater priority to pay them good wages.”

The breakdown

So where did more than $7 million go?

According to the former budget employee, the surplus was eroded in several financial transfers to miscellaneous funds and facility reserves to reach a net zero for the year, they said.

Last year retirement funds were cut, and an annual 3% cost of living increase was erased. The school never returned the funds once leaders learned they were in a surplus.

Multiple teachers said they never heard about the school’s surplus and faced pay cuts.

“It is important to note that these transactions did not have an adverse effect on any auditing protocols and therefore would not alert KPMG (SCU’s auditing firm) of any wrongdoing on the part of SCU,” the employee wrote. “In a secretive shell game, these transfers were not done as an illegal practice but steeped in deception and I believe are in direct violation of our deeply ingrained SCU Jesuit values.”

In response to the accusations and rumors, university trustee and board chair John Sobrato sent out an email to all staff and faculty.

“Acting President Lisa Kloppenberg has received complaints that the University’s internal budget processes for projecting revenue and expenses, which the community has relied upon for communication and decision making during the turbulent and uncertain time of the pandemic, are subject to manipulation,” Sobrato wrote. “The University and the Board of Trustees are taking this issue seriously and are committed to a careful, timely and independent review of this matter.”

Sobrato said the university would hire a new independent auditor to investigate the complaints.

A SCU teacher who is familiar with the process but wished to remain anonymous for fear of retribution, says they knew the university hired an auditor, but hadn’t heard updates as of mid-May.

Union Hampered

Budget woes and cries of foul play come on the heels of a four-year long unionization effort by the school’s adjuncts and lecturers, who teach more than 50% of the university’s classes.

The union organizers ran up against a block last year as they prepared for a vote. The National Labor Relations Board resolved it had no jurisdiction at religious institutions.

That meant the SCU professors couldn’t get their union vote certified the traditional way, but through an in-house vote. That’s when the school’s administration hired the law firm Littler Mendelson, known in the labor world as a “union busting” firm.

Organizers and the school couldn’t agree on the voting rules and mediation attempts failed this month.

“Part of why non-tenure track faculty are seeking a union is that we are in the position of continually not knowing whether we have a job,” says Madeline Cronin, a philosophy department lecturer and an organizer for the unionization movement.

“One thing that SCU has emphasized in their messaging to the public, and what they clearly want to communicate, is they’re a university committed to justice and they want to see themselves as the premier justice-oriented institution,” Cronin says. “And I want that. I want to teach my students that. But that outward message is not meeting the inward message.”

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