Repercussions for the sale of cornerstone works from the Brauer Museum of Art at Valparaiso University to raise funds to renovate dorms for first-year students continue to reverberate with three key developments in recent days.
The Faculty Senate passed a resolution on a spit vote asking for a halt to the sale and for the university to find other ways to fund renovations at dorms for first-year students; Moody’s dropped the university’s bond rating, part of downward slide since 2016; and the Association of Art Museum Directors sent a letter to the museum’s director threatening censure or sanctions if the sale proceeds.
University officials continue to defend the sale of the three works of art, “Rust Red Hills” by Georgia O’Keeffe, perhaps the museum’s famous work; Frederic E. Church’s “Mountain Landscape”; and “The Silver Vale and the Golden Gate” by Childe Hassam. Collectively, the paintings are worth millions of dollars.
A university spokesperson has said that the projected cost of renovating Brandt Hall and Wehrenberg Hall is approximately $8 million. With a goal of having access to the proceeds quickly to meet an urgent need, other avenues would not allow the university to stay on track to have the project completed by fall 2024.
Richard Brauer, the museum’s first director and for whom it is named, has said he wants his name removed from the facility if the sale goes forward. That was the first in a series of strong reactions from the campus and art communities to word of the sale.
The Faculty Senate voted 13-6 on Thursday in favor of a resolution asking university leadership to halt the sale of the artwork and find another source of funding to renovate the dorms. Two members abstained.
“We wanted to take some action and we wanted to do something conciliatory,” said George Potter, an associate professor of English, who helped write the resolution. He is one of two at-large representatives on the Faculty Senate representing the College of Arts and Sciences.
The resolution acknowledges that everybody involved wants what’s best for the university and that all need to work together to achieve that end but at the same time, involving faculty in key decisions is at the core of the university’s mission.
The resolution asks that the university “put a halt to the sale of the artwork both on ethical grounds that are connected to our university mission and on grounds connected to the potential collateral harm it may have to our institution, monetarily and to our brand.”
The resolution also requests a business plan with bids for the dorm renovation be developed and released to the campus community, and find other funding for the work, suggesting a short-term loan against the endowment; intensive fundraising; or working on other options with art museum associations, including leasing of the artwork rather than selling it.
The senate doesn’t pass resolutions all the time, Potter said, and to pass one taking a stand against the administration “takes a pretty substantial moment.” Still, because the senate represents the faculty, Potter said the resolution was a representation of what faculty members were hearing from their constituents.
The resolution’s message is beyond the scope of the Faculty Senate’s responsibilities and it’s not the job of the senate to tell university President Jose Padilla and his cabinet what to do with the school’s resources, said Sami Khorbotly, a professor of electrical and computer engineering who represents the College of Engineering in the senate.
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Entrance of the Brauer Museum of Art on the Valparaiso University campus in Valparaiso, Indiana Friday February 10, 2023. Campus and community members continue to react to announcement of the pending sale of O’Keeffe’s and two other works to fund first-year student dorm renovations. (Andy Lavalley for the Post-Tribune) (Andy Lavalley / Post-Tribune)
Khorbotly opposed the resolution and said as much during the senate meeting.
“It is the job of the administration, the president and the cabinet to prioritize the use of university resources and to practically leave no stone unturned,” Khorbotly said during a phone interview.
The Faculty Senate does not have any executive power in this situation, he said.
Since the Faculty Senate has no standing in the situation, Khorbotly said, the sale would proceed. Because the comfort and well-being of students is a priority, he added, renovating the dorms should be a priority as well.
The senate voted on the resolution shortly before the university’s two-week spring break, Potter said, and as such, didn’t have a response from the administration as of Friday.
On Monday, Moody’s downgraded the university’s bond rating from Baa1 to Baa2. At its peak, in 2016, the university’s bond rating was A2 but it’s been slipping since then. The fact that the drop has coincided with the university’s decreasing enrollment is not a coincidence, a Moody’s official said, and news about the sale of the artwork also was a factor that Moody’s took into consideration when doling out the most recent bond rating.
As a practical matter, the ratings are Moody’s determination of the relative credit risk of every entity the firm rates, including universities and municipalities, said Jared Brewster, vice president for the higher education and not-for-profit team.
Even with the downgrade, Brewster said, the university is still considered quality and not speculative, which is important to note.
Moody’s most recent report also notes that the university’s overall outlook has been revised from negative to stable.
“The issue here is primarily enrollment and it’s not just the closure of the law school. And if you look at that decision, it made sense,” Brewster said, calling the law school, which ceased operations in 2020, a “loss leader.”
“But they’ve seen losses on their undergraduate side and that’s their bread and butter,” he said, adding 70% of the university’s operating base comes from net tuition revenue.
The university’s ability to generate cash flow and attract students is under pressure, Brewster added, noting that Indiana, with its strong public universities, is a competitive market for college students.
Valparaiso University, he added, is “a bit boxed in” because it’s so tuition dependent.
Brewster said the artwork sale was “a dicey situation” and the headlines about the sale were discussed in the committee that determined the university’s rating because anything that could be representative has to be taken into consideration.
“We’ve seen this go in different directions depending on the university,” Brewster said, adding donations could dip and go back up.
“Really the question is how the university handles this in the coming months and years,” he said. “If I had to guess — and I don’t want to put words in their mouths — this is something they’re going to have to be very careful with in the near term. The more pressing situation is getting the enrollment situation improved.”
A statement from Moody’s about the bond rating notes that “the outlook is currently stable incorporating the university’s identified budget initiatives, which have some prospects for success on both the revenue and expense side. The stable outlook also incorporates broader wealth levels that provide some financial flexibility to implement plans. The university’s management team is relatively new without a yet established track record of reversing the university’s multi-year enrollment and financial challenges.”
Moody’s recognized the university’s strengths and noted that the issue of enrollment is the most pressing concern for the university, university spokesperson Michael Fenton said in an email.
“That is our focus. Further, the outlook was revised from negative to stable due to the prospect for success on both the revenue and expense sides for the next fiscal year,” he said.
On Wednesday, Julie Marciari-Alexander, president of the Association of Art Museum Directors, notified Jonathan Canning, the Brauer Museum’s director, that if the sale of the artwork proceeds, despite the resistance from the campus community, the museum could be subject to censure and/or sanctions from the association.
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Jonathan Canning, new director of the Brauer Museum of Art at Valparaiso University, discusses the exhibits now open to the public after a two-year hiatus. (Deena Lawley-Dixon / Post-Tribune)
The association represents more than 200 museums, including those on college campuses, across North America. The association, Marciari-Alexander said in her email, has a long-standing policy restricting the use of funds obtained through deaccessioning and for direct care of the collection.
The purpose of the police, she added, is to prevent institutions from treating their art collections “as fungible assets.”
“It is precisely because of this deeply rooted belief in the importance of collections that AAMD considers deaccessioning a serious issue, for which strict professional standards apply,” Marciari-Alexander wrote. “Once lost, this resource cannot be recovered — to the detriment of current and future students, and to the citizens of Indiana.”
In an email last month, a spokesperson for the AAMD said museums are rarely subject to censure or sanctions. Censure, Sascha Freudenheim said, is a formal expression of disapproval or criticism, such as a formal statement by AAMD criticizing an action taken by a museum or other entity.
“A sanction refers to a penalty or measure that might be imposed, e.g., if AAMD encourages its members not to lend to or collaborate with another institution,” Freudenheim said.
While Padilla has said the funds from the sale of the artwork would not be used for operating expenses, Freudenheim said capital investments such as the ones Valparaiso is proposing are still outside the boundaries of what AAMD considers the appropriate and acceptable use of funds from deaccessioned works of art: acquisitions and direct care of works of art.
University officials recognize that outside groups and some community members may have different viewpoints about the sale of the artwork and respect them, Fenton said in his email.
“The museum’s over 5,000-piece collection of 19th, 20th, and 21st Century American art will continue to serve as an important resource for the appreciation and study of students, alumni, and the greater community,” Fenton said.
alavalley@chicagotribune.com
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