Brother, Can You Spare $200 Million?

Two months ago, Nike Chairman Phil Knight dangled a tantalizing offer before Oregon Health & Science University: the promise of $1 billion—cash—to finance expansion of the cancer institute that already bears his name.

Knight would contribute half the money, but OHSU would have to raise the other $500 million in the next two years.

Most people assumed OHSU would raise the match as it always has, through private donations, something the university has already shown it can do well. 

But the medical university is also known for its political clout and intends to use its influence in Salem to make Oregon taxpayers—not just wealthy donors—shell out to match Knight's donation.

As first reported by wweek.com, OHSU will ask lawmakers in February to cough up $200 million toward matching Knight's gift—money that the state would otherwise spend on schools, senior citizens and low-income Oregonians.

OHSU officials sketched out the plan for legislative leaders in closed-door meetings last month. They want the state to borrow $200 million, give the money to the university, and have taxpayers pay off the debt through the general fund.

"To raise money of that magnitude, we had to put everything on the table and not rule anything out,” says OHSU spokesman Tim Kringen. 

The university has artfully placed in front of lawmakers a difficult choice: support spending $200 million or cross Knight and OHSU—and risk appearing as if they oppose curing cancer.

WW spoke to several lawmakers who had misgivings about the proposal but declined to criticize it publicly. Two lawmakers were willing to speak up, however.

Rep. Carolyn Tomei (D-Milwaukie), chairwoman of the House Human Services Committee, says she's "uncomfortable" that OHSU's proposal may crowd out other priorities. "There are a lot of needs in this state and we can't meet all of them," Tomei says. "OHSU can get donations from other wealthy people across the country."

Rep. Ben Unger (D-Hillsboro), a strong advocate for school funding, is also skeptical. "It seems like a big chunk of money when we are billions below where we need to be on K-12 and are underfunding community colleges and higher ed,” Unger says. 

Two of Salem's budget watchdogs say lawmakers should summon the courage to just say no.   

"I thought Phil Knight was making a philanthropic challenge," says Chuck Sheketoff of the Oregon Center for Public Policy. "The state of Oregon is not a philanthropic organization.” 

Jody Wiser of Tax Fairness Oregon says sending $200 million to OHSU for Knight's priorities raids the general fund, even as Oregon has one of the shortest school years in the nation and the fourth-lowest high-school graduation rate, and ranks No. 2 among the states for percentage of residents receiving food stamps.

"I just don't see taking money away from the basic services of the state," Wiser says.

In 2008, Knight and his wife, Penny, gave OHSU $100 million to establish the Knight Cancer Institute. On Sept. 20, Knight said he wants the director of the Knight institute, Dr. Brian Druker, "to keep the miracles coming." Knight said he and his wife would give an additional $500 million "if it is matched by pledges within two years in a fundraising campaign."

OHSU has a complicated relationship with the state.

In 1995, lawmakers shifted OHSU's legal status from a public university like Portland State University or the University of Oregon to a public corporation.

Then-Gov. John Kitzhaber championed the move, saying that granting the university a higher degree of independence would allow OHSU to prosper while saving the general fund money.

He was right. In 1995, OHSU got 12 percent of its $500 million annual operating budget from the Legislature. Today, its budget is four times larger and the university gets less than 2 percent of its funding from Salem. Employment at OHSU has more than doubled to 14,000, and research award dollars have quadrupled. 

That success makes some observers wonder why OHSU is coming to Salem on bended knee. "They wanted to be independent," Wiser says. "Now go be independent."

OHSU's Kringen says the university is merely doing what it's done before—come to the Legislature for help meeting its capital needs. In 2001, the Legislature approved $200 million in bonding for OHSU construction and, later in the decade, $110 million for the Collaborative Life Sciences Building, which OHSU shares with other state universities. 

But the state's borrowing capacity is limited, and there are lots of ideas already competing to dip into it: Kitzhaber, for example, wants to borrow $450 million for the Columbia River Crossing project, and Treasurer Ted Wheeler wants to borrow another $500 million to fund college scholarships.

Wheeler convinced lawmakers to send his proposal to the ballot in 2014, and the OHSU plan could be in direct conflict with his measure. He declined to answer WW's questions about OHSU's request. "The treasurer has some questions but has not seen the proposal yet, so it would be premature to comment," says Wheeler spokesman James Sinks.

Meanwhile, public schools have been shut out. The Oregon School Boards Association asked lawmakers during the regular 2013 session to allow local school districts to use up to $200 million of the state's borrowing authority for building maintenance and seismic upgrades—work that would make children safer and create jobs all over the state, not just in Portland.

"OHSU's plan sounds wonderful," says Jim Green, deputy executive director of the OSBA, "but we've got well over $1 billion of work that needs to be done in districts all over the state."

Earlier this year, however, lawmakers let the OSBA's bonding bill die in committee. 

OHSU already has a political edge. Senate President Peter Courtney (D-Salem), himself a cancer survivor, has endorsed the university's proposal. It doesn't hurt that two of OHSU's more influential players—chief of staff Connie Seeley and state government relations director Brian Shipley—are former aides to Courtney.

In a Nov. 21 statement, Courtney expressed strong interest in the idea. "The Knight Institute would be able to attract the leading researchers in the world to Oregon," the statement read. "Their research would have the potential to save millions of lives."

Kitzhaber is taking more of a wait-and-see approach. "The governor supports the concept of state participation in the match challenge, but would like to see that the benefits reach across the state," says his spokeswoman, Amy Wojcicki.

Sheketoff says the university should focus on private donors instead. 

“Phil Knight challenged OHSU to raise the money,” he says. “He didn’t challenge them to become better lobbyists.” 

WWeek 2015