February 2, 2000
Grand Canyon University breaks
trustees' links to state convention
___PHOENIX--In what could be continued fallout from the troubles of the Arizona Baptist Foundation, trustees of Grand Canyon University voted Jan. 13 to remove the school from a formal relationship with the Arizona Southern Baptist Convention.
___School officials issued a carefully worded statement about the action, which took leaders of the state Baptist convention by surprise. Neither side drew a direct link to the bankruptcy of the Arizona Baptist Foundation, although the university's action was suggested by its auditors, the statement said.
___The Arizona Southern Baptist Convention has been in turmoil since summer, when a year-long investigation of the convention's foundation prompted government officials to "cease and desist" selling certain kinds of individual investment products. Subsequently, the foundation's top three executives were fired, the state accused the foundation of having been involved in a "Ponzi" scheme, and the foundation declared bankruptcy.
___No other state Baptist foundation, including the Baptist Foundation of Texas, has been involved in marketing the same kinds of investment products the Arizona foundation specialized in. However, because of its aggressive marketing, the Arizona foundation served investors from across the nation, including many Texans--and some Baptist agencies.
___Grand Canyon University reportedly lost $2 million in endowment money in the bankruptcy, according to a recent article in the Phoenix New Times, an alternative newspaper that first reported on the foundation's troubles a year ago.
___For a university affiliated with a state Baptist convention to break its formal relationship of trustee selection is nothing new. Several schools in multiple states have taken similar actions in recent years, primarily amid escalating concerns about potential "takeovers" by the same conservative movement that gained control of the Southern Baptist Convention.
___The Arizona Southern Baptist Convention, however, is generally viewed as a theologically conservative convention, and it has not experienced the same level of dissension as larger state Baptist conventions in recent years.
___"The board of trustees took the action upon advice from its auditors and legal counsel in order to guarantee its ongoing accreditation and the ability of its students to receive federal financial aid," university President Gil Stafford said. "This action was taken after considerable prayer and thought and was taken only to guarantee that Grand Canyon University will be able to operate in the best way that God wants it to."
___Speculation has mounted for months about how far claims of ascending liability against the Arizona foundation could reach, since it was so closely linked to the state convention and other agencies. Beyond the foundation, the university would be the largest single financial asset in the convention.
___With an enrollment of about 2,000 students, Grand Canyon is the only Christian liberal arts university in Arizona. It was founded by the state convention 50 years ago.
___The state convention's constitution lists Grand Canyon University as among the institutions that the convention "shall own and operate." Amendments to the university's charter can be "made only by action of the convention in session," the convention constitution stipulates.
___University trustees maintain they have the right to alter the relationship with the convention, however.
___Stafford's statement on behalf of the trustees said the board "voted to reorganize the university's corporate ownership and control so as to redefine its relationship with the Arizona Southern Baptist Convention."
___Although no longer allowing the convention to elect the university's trustees, the university will be in a "close, cooperative relationship" with the convention, the trustee statement said.
___No details were released about how trustees will be elected in the future or what the vote was in the trustee meeting where the change was approved.
___The convention's executive board, which is scheduled to meet this week, "will explore all options open to us," said Executive Director-treasurer Steve Bass. The result likely will be a special session of the state convention, during which messengers can consider and vote on a proposed response, he added.
___Bass, an ex-officio member of the GCU trustee board, was unable to attend the Jan. 13 trustee meeting, but was not advised of the possibility of a vote to end the university's ties to the state convention.
___Bass said his understanding of what transpired is that Grand Canyon trustees voted to create a new 501(c)3 entity and transferred the assets of the university to the new entity. As a part of this action, they also declared themselves to be a self-perpetuating board that is no longer related to the convention.
___The Phoenix New Times quoted Stafford as saying the break was made on the advice of university accountants. Because the convention had selected the school's board of trustees, the school must technically file a joint financial statement with the convention, Stafford told the New Times. Such joint filing would make it difficult for students to get federal loans, he explained.
___When asked if filing a joint financial statement also would make the university liable for investor lawsuits filed against the convention, Stafford told the New Times: "That would be speculation. In today's world, it is probably not wise to make speculative statements."
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