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Higher Ed Gold Rush?

May 29, 2008

Is it manifest destiny or fool’s gold?

That’s the question higher education officials are asking about a Pennsylvania private university's plan to establish graduate programs in Sacramento, and potentially a full-blown bi-coastal university.

Drexel University, which has called Philadelphia home since 1891, recently announced plans to open a Center for Graduate Studies in Sacramento. The announcement comes in conjunction with an offer made by a wealthy developer and his partners, who have said they’d like Drexel to establish an undergraduate university on donated property in northern California.

Expanding abroad and creating distance learning programs have been favorite entrepreneurial activities for universities in recent years, but few in academe have acted on bi-coastal aspirations -- assuming they even have such aspirations.

“This idea of starting up a new campus, particularly within an entirely different regional area, that’s certainly something you’re not seeing very much,” said Donald Heller, director of the Center for the Study of Higher Education at Pennsylvania State University.

“I think it’s something a lot of other institutions are going to be watching,” Heller added.

Drexel’s center in Sacramento will begin with five master’s programs in January 2009, adding four more that September. The initial programs will target adult students through an aggressive advertising campaign and scholarships for graduate degrees in business administration, engineering management, higher education, information systems and library and information sciences.

In Philadelphia, Drexel is known as a relatively large private university -- about 20,000 students -- with a technology focus and an entrepreneurial bent. But in Sacramento, Drexel is anything but a household name. So Drexel officials are working to establish the university’s brand on the West Coast, where the population is booming in comparison to the institution's home turf. A piece of the big sell is a $10 million fellowship fund to help reach a desired pool of 650 students in the first five years.

Carl (Tobey) Oxholm, Drexel’s executive vice president and chief of staff, calls the scholarships -- awarded on both need and merit -- “a free taste” intended to generate interest.

“You can’t have a new name with no name recognition and have students lining up to go there,” Oxholm said.

When for-profit colleges move into new regions, established institutions often balk about the poaching of students. But Charlie Reed, chancellor of the California State University system, which has a major campus in Sacramento, says he’s not surprised -- or threatened -- that universities like Drexel view California as a potential spot for expansion.

“What it says is there are 38 million people in California, so I think people see different markets here,” he said. “I personally like competition. If we can’t beat the competition with our tuition prices, I don’t know who can.”

The Draw

Like the “forty niners’ of the 19th Century Gold Rush, Drexel officials were lured to California with the promise of easily obtained treasures. The university has been offered more than 1,100 acres of land in Placer County, just north of Sacramento County, to build a major undergraduate university.

While university officials say no decision has been made about going forward with a full undergraduate institution, the land offer was what set California apart among many high growth areas where expansion might make sense.

The offer was made by several developers, including Angelo Tsakopoulos, a big name in California real estate and politics.

The Tsakopoulos offer has a familiar ring to Reed, who struck a similar deal with a wealthy developer in the 1990s when he was chancellor of Florida’s state university system. In an agreement that ultimately created Florida Gulf Coast University, in Fort Myers, Reed helped negotiate with Ben Hill Griffin III, who donated 760 acres for the establishment of Florida Gulf Coast. Griffin, whose father is the namesake of the University of Florida’s football stadium, went on to transform the surrounding lands from a sleepy swamp into a bustling shopping and residential district.

“It’s just a model that different developers have used; instead of building a golf course, they build a branch campus,” Reed said.

Tsakopoulos, who could not be reached for comment, has tried in the past to develop the land, according to a county official. But county leaders have resisted past efforts to build on the property, which is peppered with rice fields and designated for agricultural use.

Robert Weygandt, a county supervisor whose district contains the property in question, describes Tsakopoulos as a “colorful character” who knew he needed to link any development on the land to a civically minded cause- like higher education -- to ever move forward.

“It’s my opinion that Angelo understood that he likely wouldn’t get board approval … unless he had some kind of enticement,” Weygandt said. “So he started publicly shopping around.”

The shopping began with Christian Brothers, a religious order that eventually backed out of the deal. The deal, as described by the order in a 2002 news release, would have given the university proceeds from the development of property surrounding the donated land. But Tsakopoulos still owns other outlying land that could potentially benefit from a building boom, according to Weygandt.

“Am I suspicious, and should I be, that Angelo has ulterior motives? The answer is I certainly am considering that (profit) might be his motive,” he said.

Tsakopoulos’s developments have run into litigious snags in the past, including a 2002 Clean Water Act case that was heard by the U.S. Supreme Court. The court was deadlocked in part because the swing vote, Justice Anthony Kennedy, recused himself because he was acquainted with Tsakopoulos, a major Democratic fund raiser. The deadlock forced Tsakopoulos to pay a $500,000 fine.

Weygandt says he’d vote in favor of letting Drexel build on the land “if it’s done properly and done in collaboration with our city partners.”

Pennsylvania on the Left Bank

Drexel wouldn’t be the first Pennsylvania institution to set up shop on dual coasts, and the westward expansion of the state's universities is perhaps a predictable response to population trends. According to a U.S. Census Bureau report based on 2000 data, the target market of college-aged students is in decline in the Keystone State. In 2025, the 18-24 year old age group population could be just over 1 million people, lower than it was in 1995, according to the bureau.

In 2002, Pittsburgh-based Carnegie Mellon University established software engineering programs at Moffett Field, Calif., the site of NASA research. The idea was to connect the tech-savvy university to Silicon Valley, which is the “center of technology in the universe,” according to Ray Bareiss, director of educational programs at the California campus.

“We have something to add to Silicon Valley, and we can influence Silicon Valley,” Bareiss said.

The University of Pennsylvania’s Wharton School (of business) also established a program in San Francisco in 2001.

California’s volatile regulatory structure could make it even easier for out-of-state institutions to move into California down the line. The state has dissolved the regulatory body that once oversaw colleges approved by accreditors from other regions. While Drexel officials say they’ll abide by the old standards set by the now-defunct bureau, the university wouldn’t be under any obligation to meet those standards, according to Joanne Wenzel, former education administrator for the Bureau for Private Postsecondary and Vocational Education

“Drexel can come in and they can do whatever they want in California,” she said. “There are no ramifications.”

 

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