CLAYTON — Several donors who sued Webster University to stop the institution from using scholarship funds for a loan obligation dropped their suit Monday, clearing a major hurdle for the private college as it seeks to tap more than $30 million in restricted donations.
Donors and former trustees Mary Alice Dwyer-Dobbin and Jack Schreiber, plus Schreiber’s wife, Sherry, settled with the college Monday. Jack Schreiber said he was satisfied with the settlement and declined to share details.
Two more donors, Jane and Bruce Robert, dropped their suit on Friday. Their attorney did not respond to a request for comment.
Board Chair Sumit Verma said Monday that the university has been working with donors.
“Through that process, we have resolved the objections of all the donors who filed motions to intervene in Webster’s pending legal action to reclassify endowment funds,” Verma said in a text message.
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Webster wants to use restricted endowment funds, which are earmarked for scholarships, research and professorships, in order to meet the “liquidity ratio” on a loan it obtained to construct new science and business buildings on its main campus in Webster Groves. Its lawyers have said that university officials fear that without it, the lender could demand immediate payment. A recent Moody’s report warned Webster, whose bond rating fell into junk status, is at risk of default without a boost to its liquidity ratio.
Webster’s move to tap into restricted donor funds underscores the financial problems before the university. Over the past decade, Webster has lost more than $160 million, including a $37 million deficit at the end of the 2022-23 school year. Yet its board of trustees continually awarded raises to then-Chancellor Beth Stroble and President Julian Schuster that made the two among the highest-paid university leaders in the St. Louis region.
Four of its leaders, including Stroble and CFO Richard Meyer, have since resigned.
University leaders have said the COVID-19 pandemic and changing demographics have increased competition for students and impacted operations.
Webster filed its petition to tap restricted endowment funds on Feb. 1, two days after Verma, the board chair, sent a letter to donors informing them of the university’s plan. The Missouri attorney general’s office told Webster it did not anticipate intervening in the school’s attempt, according to court filings.
Verma said in the letter that the school would only spend the money to pay bills as a last resort.
Some donors said they supported Webster. Barbara Havira said she has donated more than $100,000 to the university over the years.
“I respect that they’re trying to make up for financial losses,” Havira said last week. “My commitment was to the university, not to honoring (an) individual in particular.”
Other donors spoke out against the move, including David Underwood, who established a scholarship in memory of his late wife, Nancy.
“I’m just deeply disappointed in the conduct of Webster’s board and the Missouri (attorney general) and feel a great sense of loss for the good I tried to make from Nancy’s death,” Underwood said Monday.