University of Illinois trustees Thursday rejected a proposal by President Stanley Ikenberry to withdraw $14.6 million invested by the university in companies doing business in South Africa, even though Ikenberry warned that a failure to do so could be costly.
The rejection, by a 5-4 vote, was the first time since Ikenberry became president in 1979 that trustees have not supported him on a major issue, a university official said.
Ikenberry said his request stems from concern that leaving investments in South Africa would put the university at financial risk–an argument for divestment one expert called unique. Trustees said the proposal marked the first time Ikenberry has introduced a pro-divestment resolution.
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The four votes in favor of the resolution are two more than previous calls for divestment have received, trustees said. After Thursday`s vote, trustee Albert Logan of Chicago promised to again introduce the proposal, possibly in November.
Ikenberry recommended that the university remove all funds from firms doing business in South Africa if it did not abolish apartheid by May 31, 1987.
He emphasized financial concerns, referring to moves in other states, including California, where legislators recently approved plans to divest $11 billion in state and university funds. He said the efforts could jeopardize the value of stocks in businesses tied to South Africa.
”If such policies were to continue to be adopted by other states, as some now believe may be the pattern, the business ramifications will grow,”
Ikenberry said.
”There is no clear plan for an end to apartheid, nor is there a clear prospect that shortly one will be developed. There is no timetable. And there are no negotiations between and among the contending factions.”
Peter Walshe, the University of Notre Dame`s director of African studies and a leading pro-divestment activist, said Ikenberry`s reasoning was ”the first time I`ve heard that argument used publicly as a major reason for getting out.”
”Up until now,” he said, ”the argument has always been not self-interest but how the university can effectively contribute to some leverage against the apartheid regime.”
But Nina Shepherd, president of the U. of I. board of trustees, said that board members had discussed the possible financial consequences of large-scale divestment more than a year ago.
At the end of August, the U. of I. had $14.6 million invested in companies doing business in South Africa, a university official said.
University trustees consistently have refused to pull funds from firms involved with South Africa, but Thursday`s vote was closer than usual.
Nina Shepherd, president of the board of trustees, said she and George Howard, of Mt. Vernon, were the two members swayed by Ikenberry`s argument.
”It was the first time that a resolution consistent with the Sullivan Principles has been brought forth by the president of the university,” she said.
In 1977, she said, the board endorsed Rev. Leon Sullivan`s principles for businesses operating in South Africa to improve conditions for blacks. In subsequent ”amplifications,” Sullivan has set May 31 as a deadline for U.S. companies to begin pulling out of South Africa if apartheid has not been abolished, she said.
Joining Shepherd, Howard and Logan in voting for divestment was Ann Smith of Chicago.
Galey Day of Belvidere, Susan Gravenhorst of Lake Forest, Ralph Hahn and William Forsyth of Springfield, and Dean against Ikenberry`s proposal.
”I happen to feel that the participation of a university board of trustees in a social issue is not appropriate,” Gravenhorst said. ”I also felt we should have had a little more time to consider the new resolution.”
She said the vote was a ”matter of conscience” on behalf of board members and should not be taken as a lack of faith in Ikenberry.
”He feels, I believe, that the pendulum is swinging the other way” in South Africa, she said. ”On the other hand, the university employs very highly regarded financial experts to manage our investments. And I feel our investments can safely be left in their hands.”
Day, on the other hand, said her vote was motivated by fear of financial backlash.
When the California legislature authorized trustees of the university system there to divest, she said, it gave them legal protection from laws holding trustees responsible for mismanaging funds.
”If we got that kind of a law passed, then our fiduciary responsibility is changed,” she said. ”Not that you don`t still have it, but you have leeway to do something that you think is right without somebody saying, `If you lose money, I`ll sue.`
”My position today really was, if you go to the legislature and the governor and get us the kind of protection the trustees were given in California, then, yes, I will vote for it.”
Logan said he believes that by November ”all of the objections raised today will be resolved.”
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Fears about the South African business climate, Shepherd said, are probably sparked by actions in 15 states and 39 municipalities throughout the country that have some sort of divestment deadline approaching. Six Big 10 universities have similar deadlines or are divesting holdings, she said.
Later in the meeting on the Urbana-Champaign campus, Ikenberry won trustees` support for his 1987-88 operating budget, which seeks a 13.9 percent increase in state funds to provide faculty members with an average 7 percent salary increase and improve undergraduate education with new programs and replacement of deteriorating and outmoded equipment.
Ikenberry won approval of the budget proposal calling for the current $535.7 million in state funds for operations to be increased by $74.4 million in 1987-88 to $610.1 million.
Approval by the trustees is only the first step in a lengthy budget process that will require review and approval by the Illinois Board of Higher Education, another review and possible reduction by the governor`s office and eventual approval next June by the General Assembly.
The average faculty member`s annual salary at the university is now $40,235. In addition to a 7 percent average pay increase, the U. of I. wants another 2 percent boost to use to improve fringe benefits. The university is last among Big Ten schools in employer contributions to dependent health insurance, percent of salary paid for long-term disability and in employer-paid life insurance.
The funding increase includes $33.7 million for staff salary and fringe benefit improvements and $14.7 million for academic program initiatives revolving around five major themes–scientific and technological advances, economic and professional development, promotion of instructional excellence, revitalization of engineering programs and minority recruitment and retention. Another $2 million would be spent to replace equipment and buy computers in other academic areas. The university said the funds are needed because
”student access to modern scientific and technical equipment must be maintained if the quality of their educational experience is to remain high.” It also said that ”the intense competition for top-quality faculty members frequently includes the requirement to upgrade laboratory or computer workstation equipment when a new faculty member is hired.