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DSU students footing bill of Foundation's troubles

Kenzie Hilsen stayed true to her school when Dickinson State University and its separate fundraising entity got bad press, reported low graduation rates and a high amount of transfers. For three years, the elementary education junior stayed loyal.

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Signs encouraging Dickinson State University students to voice their concerns over a $100 increase in rent are posted at Altringer Apartments near the school’s campus. An unauthorized letter offering appeal options was sent to students, though an official with the Foundation later clarified that the rent hike was final.

Kenzie Hilsen stayed true to her school when Dickinson State University and its separate fundraising entity got bad press, reported low graduation rates and a high amount of transfers. For three years, the elementary education junior stayed loyal.

Now, though, she feels deceived.

Hilsen and all other DSU students living in the three housing facilities owned by the DSU Foundation will see rents rise $100 starting next month, as the Foundation uses the one source of revenue it can control to dig out of a financial hole.

An arbitration ruling last fall forcing the Foundation to pay $1.7 million in shares to a developer in another building project triggered North Dakota Attorney General Wayne Stenehjem to look closer at the nonprofit, and to place it in receivership in December.

Under the receivership, Bismarck attorney Sean Smith is charged with overseeing the finances of the Foundation as it recovers from its "financial stress."

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It's not the first time the Foundation's mismanagement and bad record-keeping have trickled down to affect DSU students.

Grants that would've paid for six endowed student scholarships and a professor's endowed chair, altogether worth $663,000, were withheld from the state pending assurances that all the financial state is cleaned up.

And in general, donors are wary.

One donor took back the money pending Smith and the receivership process "can provide some guarantee that the assets can be safe," Smith said.

"There are people who are asking questions as would be normal," he said of other donors.

Interim Foundation CEO Glen Young said the Foundation has subsidized rent in the past, but that financially, it's "to the point that we can no longer do that, at least to the degree that we have." He referred further questions to Smith.

Smith, too, emphasized that the Foundation was already subsidizing rents compared to what the facilities actually cost, and that this is just lowering the subsidy. But students are still angry over paying for someone else's past mistakes.

The pain the Foundation is going through, and the unpopular remedies, may only hurt the group in the future, at least according to future alumnae Hilsen and roommate Shannon Patterson, who came from California to attend DSU for its affordability.

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"This isn't gonna make me want to give back to the university when I graduate," Patterson said. "It's obviously not giving back to the students."

Patterson said she sits in class distracted, worrying she won't be able to stay where she's living now if rents keep increasing.

To Smith, it's strictly business. He is, after all, charged with securing the continued viability of the Foundation.

And without tough decisions like this one, the Foundation may not survive.

"The Foundation does desire to continue to help the students and it did not do this lightly, this was a very hard decision," said Smith, who has a team of accountants working on a solution for the Foundation's finances.

Being a nonprofit, the revenue from rent is the only type the Foundation can control and plan for, Smith said. Pledges come as donors decide to make them.

An unauthorized letter offering appeal options was sent to students when they learned of the increased rent, though Smith clarified in another letter Thursday that the rent hike was final, and that no appeal process exists.

As it has since the Foundation's troubles began, DSU distanced itself from the Foundation, a separate entity, in a statement from spokeswoman Marie Moe.

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"I think it is important for the community to understand that the University is not involved in the management decisions for these apartments," she said.

'On its hind legs'

Starting in March, rent is increasing to $525 a person for Hilsen and roommate Patterson at Altringer Apartments. At Miller Apartments, rent will be $900. At Blue Hawk Square -- the project that in 2012 caused the Foundation to start losing money on its properties -- two-bedroom units are now $1,450, and four-bedroom units, $2,400.

Hilsen gathered more than 100 signatures within 24 hours from members of the DSU community -- students, teachers, cafeteria workers, among others -- who are against the increase. Signs urging unhappy Altringer residents to "let your voices be heard" adorn the doors there.

Hilsen and Patterson met with Foundation leadership Friday afternoon to air their concerns.

Young reassured them that rent wouldn't increase more this semester, and explained that it was necessary for the Foundation to break even and survive.

The Foundation is "on its hind legs" right now, he told them, "so this is their last desperate chance," Hilsen recounted.

But the women have heard this story before -- when they were told a few months ago rents wouldn't rise -- and the Foundation has lost their trust.

"Everything seems really up in the air and people before the current people working there just made some bad decisions," Patterson said, "and essentially we're footing the bill for it."

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