A historic million dollar home once owned by famed surgeon Dr. Olga Jonasson is now used as the home of the chancellor for the University of Illinois at Chicago. (Credit: CBS)

CHICAGO (CBS) — You would think the donation of a million dollar home is a good thing, right?

But a donation to the University of Illinois at Chicago is raising questions about why the school has spent more than $600,000 to fix up the house.

Neighbors contacted CBS 2 Investigator Pam Zekman after watching construction crews restore the million dollar historic home that used to be owned by famed surgeon Dr. Olga Jonasson, a University of Illinois graduate and faculty member. Upon her death, the home was donated to the University of Illinois at Chicago.

“The fact that they’re spending this kind of money on a house that’s sitting on Jackson Boulevard, as opposed to on the future of a student, I find reprehensible,” said one concerned neighbor, who lives in the historic district.

The home serves as a residence for Paula Allen-Meares, who must live there under the terms of her $375,000-a-year contract as Chancellor for the Chicago campus. She also hosts fundraisers there, according to UIC spokesman Mark Rosati.

“There was extensive work on virtually everything to do with the house,” Rosati said, noting the house had been vacant for several years.

The costs totaled $625,000, including $175,000 to make the home ADA compliant with an elevator and other requirements.

Asked if that could be considered wasteful spending, Rosati said, “While you’re talking about a lot of costs. These are upfront costs. … We do expect this to be the residence of the chancellor of this institution for decades to come.”

Records obtained by CBS 2 showed some lavish spending.

A high-end decorator furnished the home with over $100,000 worth of furniture. The furniture was selected to be in keeping with the historic look of the house built in 1882.

The choices included a custom-made tufted sofa for $8,124; a double pedestal dining room table for $8,810; an oriental rug for $6,240; and a $522 wedgewood teapot, sugar and creamer set.

Rosati said the furnishings were selected to be in keeping with the historical significance of the house. The tea set and other items, like plates and silverware, were purchased because, over the long term, it will be much less expensive than having to rent them from caterers when hosting formal events for major donors and other guests, according to Rosati.

“There is certainly no tuition money in that house and very little state money,” Rosati said. “It’s university money, unrestricted gifts.”

The money spent could have paid one year of tuition and room and board for about 31 students.

“Since it was donated to the school .. I’m pretty sure they were donating it for the students to use,” said Alejandro Bedolla, a UIC freshman. “Not for the personal use of the chancellor who I’m sure can afford their own home.”

“You don’t need to spend $9,000 on a dining room table,” commented another student, Nika Diaz.

So how does it all look? All we could get was one photograph released by the university.

“Cameras can get in to see the White House. Why can’t we get in to see the chancellors house?” Zekman asked Rosati.

He said he would think about it, then later denied a request to video tape inside the Chancellors home.

Before the house was available, previous chancellors got a $24,000-a-year housing allowance.

Rosati said it is common practice for universities to provide housing for chancellors and that it’s a perk the university needs to stay competitive and attract the best talent.

Another perk in Meares contract is a $75,000-a-year salary bonus payable after five years.