Members of the Gateway Technical Education Association spent much of their summer uncovering a complex scheme concocted by district leaders that, they argue, is straining Gateway’s budget and fleecing the district’s property taxpayers.

Both the Wisconsin Attorney General’s Office and the Wisconsin Technical College System (WTCS) State Office are now conducting investigations into Gateway’s relationship with two private, non-profit corporations – BioCATT, Inc. and CATI, Inc. The two corporations – which offer training and other services – are based in Gateway-owned buildings.

Under state statutes, technical college districts have authority to spend up to $5 million without conducting a referendum for the construction of applied technology centers (ATCs). In 2001-02, the Gateway District Board opted to exercise this authority to construct two new facilities, BioCATT (the Center for Bioscience and the Integration of Computer and Telecommunications Technology) and CATI (the Center for Advanced Technology and Innovation).

To date three technical colleges – Chippewa Valley, Gateway and Moraine Park – have constructed ATCs. Chippewa Valley and Moraine Park have structured their centers as a part of general college operations.

However, Gateway took a decidedly different approach. Gateway President Sam Borden and other district leaders organized two non-profit corporations – BioCATT, Inc. and CATI, Inc.

Upon completion of the two ATCs, the Gateway District Board contracted with BioCATT, Inc. to manage the day-to-day operations of the BioCATT facility and oversee the programming run out of the building. Likewise, the district board contracted with CATI, Inc. to oversee operations within the mission of the CATI facility.

Gateway faculty were originally concerned that educational programming offered by the two non-profit corporations could fall outside the union’s collective bargaining agreement. However, other concerns arose as faculty leaders began to dig into the details and finances of the two organizations.

Faculty found that significant resources were being expended by Gateway to fund the operation of BioCATT, Inc. For example:

• Gateway purchased several hundred thousand dollars of information technology equipment for BioCATT, Inc.’s regional broadband initiative.

• Gateway paid license fees to IBM, allowing BioCATT, Inc. to offer an IBM training program. The program was brought back on to Gateway’s books after failing to attract anticipated student demand.

• Gateway is responsible for the debt service on the BioCATT facility and has furnished the facility with state of the art equipment. BioCATT, Inc. uses the facility and equipment free of charge.

• Gateway has also spent untold resources on legal advice related to the creation of BioCATT, Inc.

• Gateway pays more than $90,000 in management fees to BioCATT, Inc. each year.

Faculty argued that Gateway’s investment is not paying off. Hundreds of thousands of dollars were being expended by Gateway while BioCATT, Inc. was returning only a trickle to Gateway coffers. Faculty claimed this was not the best use of taxpayer dollars, especially given significant budget reductions at Gateway that have resulted in class reductions and position cuts. Why was the district making speculative investments in entrepreneurial activities while cutting operating budgets?

Faculty also found a complex web of relationships that test the bounds of Wisconsin’s ethics laws. Gateway President Sam Borden, for example, created BioCATT, Inc. and sits on its board of directors. For a time, Tom Pleuger both sat on the Gateway District Board and served as the BioCATT, Inc. executive director. Ron Jandura is a member of the Gateway District Board and serves on the CATI, Inc. Board. The list goes on and on.

Concerned with these and numerous other issues, Gateway faculty contacted their area legislators.

Sen. Judy Robson, Sen. Robert Wirch and Rep. John Lehman responded to faculty concerns by sending a series of questions to President Borden. After Gateway failed to adequately respond to their inquiries, the legislators requested the Attorney General open an investigation into Gateway and its affiliated non-profit corporations.

On August 4, the Wisconsin Department of Justice opened a criminal investigation into the activities at Gateway. The investigation is ongoing.

The WTCS State Office is also investigating Gateway’s compliance with state statutes. The WTCS State Office review is expected to be completed by September. The results will be shared with the WTCS State Board soon thereafter.

The three legislators, along with Sen. Glen Grothman, have also requested that the Legislative Audit Bureau examine the retirement packages of senior administrators at all 16 technical colleges.