OSU sports funding idea gets attention
BY JIM MYERS World Washington Bureau
Thursday, March 15, 2007
An Iowa senator is reviewing the proposal touted by Boone Pick- ens to fund athletics via life insurance policies.
WASHINGTON -- A "creative" program to use life insurance benefits to provide millions of dollars for Oklahoma State University's athletic department has caught the attention of at least one key member of Congress -- and that might not be good.
As first reported by Congressional Quarterly, U.S. Sen. Chuck Grassley, R-Iowa, wants to know more about the program pushed by major OSU donor Boone Pickens.
Grassley, who is the ranking member of the Senate Finance Committee, is known for keeping his eye on abuses of the nation's tax system.
"Sen. Grassley is generally interested in how tax-exempt entities such as universities are using their tax-exempt status or being used for their tax-exempt status," spokeswoman Jill Gerber said.
At this point, Grassley has not contacted OSU for specific information, but Gerber confirmed that he is interested in learning more about the program.
The senator explained in an article he submitted to the Iowa City Press-Citizen several weeks ago that he launched a broad review of how tax laws were used after the Sept. 11, 2001, terrorist attacks.
He wrote that the federal government forgoes the collection of about $280 billion each year from tax-exempt entities.
"What's not paid here is paid by the rest of the taxpayers, so Congress needs to make sure that those enjoying the special tax benefits are acting for the public good," Grassley wrote, singling out donations earmarked for university athletic departments.
A Senate aide cited "nervousness" and "uncertainty" created by charitable efforts in the life insurance area.
OSU spokesman Gary Shutt said Tuesday that the university is looking at expanding the program and noted that Grassley has raised similar concerns in the past.
"We are extremely excited about this innovative method of securing long-term funding for our athletics program," Shutt said.
"We also are exploring the potential of a similar plan for academics. We conducted thorough due diligence in establishing this plan and appreciate the participation of some of our most loyal donors."
He said OSU has received calls from other schools asking about the program.
Pickens has been credited with coming up with the idea, which was described as ambitious and creative by a top OSU official.
Dubbed the "Gift of a Lifetime," the program calls for OSU to buy a $10 million life insurance policy on 25 university alumni who will then designate Cowboy Athletics Inc. as the beneficiary.
Through the years, the result could add up to $250 million, which is expected to be used to endow scholarships.
OSU is paying for the premiums with borrowed money totaling $20 million.
Jim Myers (202) 484-1424