The following letter was sent in response to Espi Sanjana's refutation of the Union's exigency report.

See original document here.  See original Espi Letter here.

TO:                FACULTY UNION OF THE SAN FRANCISCO ART INSTITUTE

FROM:           HOWARD BUNSIS

DATE:            MAY 6, 2009

______________________________________________________________________

I write this memo in response to statements made on May 5, 2009 by Espi Sanjana, the Chief Operating Officer of the San Francisco Art Institute. 

The SFAI Administration’s claim that my analysis is misleading and erroneous is typical of the way management characterizes the facts.  Just for the record, I will state my qualifications:

·         Undergraduate Degree in Accounting from the Wharton School of Business at the University of Pennsylvania;

·         Masters in Business Administration from the University of Chicago;

·         Doctorate in Accounting from the University of Chicago;

·         Juris Doctorate Degree from Fordham University School of Law;

·         Professor of Accounting whose research and teaching area of expertise is governmental and nonprofit accounting;

·         Certified Public Accountant;

·         Attorney;

·         Treasurer of the National AAUP;

·         Treasurer of the Michigan Conference of the AAUP;

·         Treasurer of the Eastern Michigan Chapter of the AAUP.

My credentials should speak for themselves. 

I stand by my conclusion that SFAI is not in a state of financial exigency.  Not even close.   Here are my responses to the specific points made by the SFAI administration.

1a.       Level of debt

·         There is less debt on 2/28/09 than on 6/30/08.  This fact is not refuted by the administration.

·         I would compare June 30 of 2009 to June 30 of 2008, when the June 30, 2009 data is available.  Remember, the SFAI Administration delayed by several months in providing the June 30, 2008 financial statements.  Now we know why.

·         The Administration provided a balance sheet as of February 28, 2009.  This balance sheet compared two dates: 2/28/09 and 6/30/08.   I simply reported a summary of the data that the administration provided.

1b.       Dates of borrowing

·         SFAI takes two statements from different points in my report, and totally misrepresents the contentions that were made.

·         SFAI may have borrowed money in August of 2008, but they paid back more principal than any new debt that was issued. Therefore, even if they took out a bridge loan, they repaid more than they borrowed.  That is the point I made – SFAI’s debt level was actually lower in February of 2009 than June of 2008. 

·         Why is this important?  An organization reducing its debt level is not in a state of financial exigency.

1c. and 2.       Inability to borrow money and difficulty in borrowing money

·         For the first time, the SFAI administration presents tangible evidence of its capacity to borrow money.  And what do they say?  That there is a 10% reduction in SFAI’s ability to borrow money.  A 10% reduction is nowhere close to a state of financial exigency.  Notice how SFAI does not claim it cannot borrow money; it simply claims that its capacity to borrow has been reduced by 10%.  And has this capacity reduction been further alleviated by the likely 10-20% increase in SFAI’s endowment portfolio in April 2009?

Overall summary

·         Notice how the SFAI administration does not refute the most important reason for my conclusion that there is no financial exigency: the fact that there has been a $1 million surplus in the current fiscal year.

·         The ability to borrow money was discussed several times in my memo, and it is now clear that SFAI has the ability to borrow further.

I stand by my conclusion that SFAI is not in a state of financial exigency. 

This document is from the original electronic communication and has not been altered in any way, save for formatting to improve readability.  Please feel free to contact the administrator of this page with any further questions regarding the contents.>