institutionalfinance

PR Campaign Backs Temple President

Temple University President Neil D. Theobald does not seem to be going away quietly.

Theobald on Friday was the subject of a strongly supportive press release listing his accomplishments and saying that his focus “is on students and faculty.” The release, issued by a consulting and crisis communications firm, came days after Temple's Board of Trustees recorded a vote of no confidence in Theobald and announced its plans to fire him.

The board scheduled a vote on Theobald's removal for Thursday. The vote was scheduled only weeks after the president abruptly removed Hai-Lung Dai as provost, surprising many at Temple. Dai's removal came as a $22 million financial aid overrun was revealed.

Friday's news release on Theobald does not reference his possible removal. Instead, it references “the significant highlights of his first four years in office.” Highlights listed include improving Temple's research classification, increasing its funded research, boosting fund-raising, raising the university's ranking and bringing in large, academically strong and diverse student classes.

The release also includes supportive quotes from faculty and alumni.

New Papers on Performance-Based Funding

The Lumina Foundation last week released a new series of white papers on how public colleges are responding to performance-based funding policies in their states. The five papers by outside experts follow two previous batches the foundation funded and produced. The latest round focuses on how colleges can structure their academic programs and finances to support student success.

Lumina said the papers "focus on how institutions can align internal finances, student supports and incentives, and educational delivery to respond to funding formulas that create incentives for on-time degree completion and year-over-year increases in the numbers of students of color and at-risk students who earn degrees or other credentials."

Proposed Education Department rule could negatively impact HBCUs (essay)

The U.S. Department of Education introduced a new rule on June 13 that could have an outsize negative impact on historically black colleges and universities.

And no one noticed.

As the former president of Bennett College -- the nation’s oldest historically black college for women -- I have been honored to play a role in increasing the immense opportunities HBCUs have provided to black students and other students of color over the past 150 years.

I have also witnessed the sharp increase of higher education costs, even as the importance of a good college degree continues to grow. Millennials will be burdened with more student loan debt than any other generation before them. According to The Wall Street Journal, cumulative outstanding student debt has surpassed an astounding $1 trillion. Yet with a decline in state and federal support -- states are now spending, on average, 20 percent less per student than they did in 2008, according to one think tank -- colleges and universities are more and more dependent on tuition for their financial stability.

Although HBCUs provide excellent academic opportunities for their students, they do not have the monetary security other colleges and universities enjoy. For example, top-rated HBCU Howard University maintains an endowment of about $660 million, while top-rated non-HBCU Harvard University has an endowment of $36 billion.

This fiscal contrast could become an immediate problem for HBCUs and their students in light of the Education Department’s new proposed rule.

The department recently announced the revised borrower defense to repayment regulation, which would allow students to sue their college or university and default on their loans if they think that the institution misled or defrauded them during the time they were enrolled. The original rule has been around for 20 years and provides essential protections for students who have been defrauded by their educators. The revised rule would greatly expand the criteria for students to sue their educators, with a far lower burden of proof on the student.

While I agree that students must be able to petition their educational providers for student loan forgiveness if they feel they have been defrauded, I worry about the unintended ramifications of such an enormously wide-open regulation. The Education Department has estimated it will have an economic impact of $4.2 billion in tuition repayments and other costs, but that could be just the tip of the iceberg. Institutions could also accumulate mounds of fees, as legal counsels attempt to wade through the vague and confusing regulations -- a cost HBCUs can ill afford.

The new rule has other costs and implications for HBCUs, as well, by requiring institutions to obtain new and costly letters of credit from lenders. HBCUs could be negatively impacted by “financial responsibility regulatory requirements,” which could threaten “their ability to continue their historic education mission,” according to a May 2016 letter from the United Negro College Fund.

My concerns mirror theirs.

According to a Gallup-Purdue University report, black students who graduated from historically black colleges felt more supported, both academically and emotionally, than their black peers at predominantly white institutions. Additionally, HBCUs graduate 18 percent of all African-American undergraduate students and 25 percent of all African-Americans in science, technology, engineering and math fields.

I had the privilege of working alongside many bright young women of color at Bennett who have graduated to become doctors, lawyers, teachers and engineers and have all made significant contributions to the American workforce. And I hope HBCUs can continue to produce such exemplary students of color.

Unfortunately, if this rule is implemented in its current form, opportunities for black students to receive the education they need to compete in the 21st century could decline. HBCUs would be forced to funnel their already limited monetary resources into unnecessary legal counsel instead of into the classrooms where they belong.

The proposed language in the rule is vague, difficult to understand and could cost taxpayers up to $43 billion over the next 10 years. The rule change was doubtless written in reaction to the May 2015 bankruptcy of Corinthian Colleges, a for-profit college system. The federal government may have to forgive millions of dollars in loans Corinthian students now owe. HBCUs are different from for-profit colleges, but the hastily written language of the rule makes no distinction among types of institutions.

We can all agree that students must have strong protections if they can prove they have been defrauded by their academic institution. Those protections already exist, and students should be better informed of their current rights and better empowered to pursue loan forgiveness in the case of legitimate grievances. But that shouldn’t come at the cost of financial instability, especially for HBCUs whose fiscal position is often not as strong as traditionally white institutions. Policy makers should revisit the rule and include HBCUs in the public comment process, which should be extended to take into account an examination of these issues.

I am hopeful that the Department of Education will consider these concerns and invite us to the discussion table before the comment period closes Aug. 1, and will do what’s in the best interest of students, educators and taxpayers. But in the meantime, it’s essential that our community makes our voices heard.

Julianne Malveaux is an author and economist and the founder of Economic Education. She is the former president of Bennett College, America’s oldest historically black college for women.

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Bennett College

German University to Rewrite $166M Gift Agreement

The president of Johannes Gutenberg University Mainz, in Germany, announced plans to rewrite a 150 million euro (about $166 million) gift agreement that critics say gives a donor too much control over faculty appointments and publishing decisions at the university's Institute of Molecular Biology, Science reported. President Georg Krausch acknowledged that the agreement with the Boehringer Ingelheim Foundation includes problematic language granting the foundation veto power over faculty hires -- which, he said, it never used -- and requiring the university to get the foundation's consent prior to the release of publications. Krausch said the university will work with the foundation to revise the language. A spokesperson for the foundation said it will continue to support basic research and give “maximum freedom” to researchers, and that it is waiting to hear what changes the university will propose.

Many College Business Officers Poised to Retire

A new report from the National Association of College and University Business Officers indicates a wave of retirements could be coming among chief business officers in the next several years.

Almost 44 percent of chief business officers expect their next career move to be retirement, according to the NACUBO National Profile of Higher Education Chief Business Officers, a report issued every three years that was released Thursday. The portion expecting retirement to be their next career move was 43.6 percent, up from 39.6 percent in 2013 and 39.8 percent in 2010. Of those planning to retire, 10 percent said they would like to do so in less than a year, and another 34 percent said they planned to retire in one to three years. Meanwhile, 37 percent of chief business officers said their institutions do not have any succession plans in place.

The survey of 713 business leaders found chief business officers are predominantly white males and average 56 years old. Typical salaries were reported between $150,000 and $300,000, depending on institution type, and the report found business officers' responsibilities stretch far beyond budgeting and accounting, with nearly a third saying strategic thinking and decision making is the second most important part of their job after managing financial resources.

State, Local Spending on Prisons Outpaces Education Funding

State and local government spending on prisons and jails increased by 89 percent between 1990 and 2013, while state and local appropriations for higher education remained flat, according to a new report from the U.S. Department of Education. During that same time period, 46 states reduced higher education spending per full-time-equivalent student, the department found. On average, the report said state and local higher education funding per student fell by 28 percent while per capita spending on corrections increased by 44 percent.

“Budgets reflect our values, and the trends revealed in this analysis are a reflection of our nation’s priorities that should be revisited,” U.S. Secretary of Education John King Jr. said in a written statement.

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Short-Term Budget Deal Aids Illinois Colleges, Students

Governor Bruce Rauner of Illinois signed legislation last week that will fund the state's public colleges and universities and the state's student grant program through the fall -- but does little to ensure long-term stability of state support, the Quad-City Times reported. Illinois's colleges have struggled through most of this year with a lack of funding stemming from the inability of Illinois's political leaders to come to an agreement on the budget and other matters. The short-term agreement enacted last week repays colleges and universities for the grant money they gave to recipients of the state's student grant program, the Monetary Award Program.

College leaders in the state praised the lawmakers for the funds but said they needed more reliable help. "This piecemeal approach to funding does not forecast a future of predictable and appropriate state investment in public higher education," said Larry Dietz, president of Illinois State University.

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New Birmingham-Southern president faces financial and leadership challenges

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Recent presidential turnover is one issue hanging over the college.

Salt in Wounds for Closing College's Employees

When St. Catharine College announced this month that it would be shutting down, officials of the small Roman Catholic college in Kentucky said that employees would be paid through July 31. Now it turns out employees will only be paid through June 30. For some faculty employees whose duties are 10 months a year but who are paid over 12 months, that means that they won't be paid for some work they performed.

Cindy Gnadinger, president of the college, said that a bank acting as a trustee for bondholders refused to allow the payments. "The college explained to the bond trustee that some faculty members were entitled to these funds, as they had already completed the work," she said via email. "Unfortunately, the bond trustee explained it viewed faculty who needed to be paid for the academic year as unsecured creditors, and they could not be paid from the bondholders’ collateral."

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Kentucky AG Moves to Stop Louisville Board Overhaul

The University of Louisville’s leadership situation became even more unsettled Wednesday with Kentucky Attorney General Andy Beshear legally challenging Governor Matt Bevin’s ability to replace the troubled institution’s Board of Trustees.

Beshear, a Democrat, announced he was filing an intervening complaint in Franklin Circuit Court challenging the Republican Bevin’s authority to carry out executive orders issued last week. Bevin on Friday dissolved Louisville’s board and moved to replace it with a new, smaller group of trustees. He also reconstituted the Kentucky Retirement Systems Board of Trustees.

Kentucky’s Constitution and statutes do not give the governor the authority to carry out those actions, Beshear said in an afternoon press conference. The governor is not reorganizing boards to make them more efficient, Beshear said. Instead, Bevin has established a pattern of reorganizing boards just before those boards have to vote on major decisions, said Beshear, who went on to call the pattern an apparent attempt to control those decisions.

Louisville trustees face decisions on how to handle cuts to Kentucky higher education, proposals to raise tuition and the retirement or resignation of President James Ramsey, Beshear said. He criticized the broader implications of the governor dismissing trustees under those conditions.

“Teachers and students rightfully argue that if the governor can take the action he’s taken, he can remove that board any time he disagrees with a decision,” Beshear said. “That not only makes him the de facto president and de facto board of U of L, it makes him the de facto president and board of every public university.”

Bevin’s office issued a statement calling Beshear’s challenge “purely political.”

“Sadly, this courtroom circus act is what the people of Kentucky have come to expect from [Beshear],” said the statement from Communications Director Jessica Ditto. “Governor Bevin’s executive orders stand on solid legal ground.”

The fight over Louisville’s board comes as Ramsey prepares to step down from the institution’s presidency following a series of controversies and scandals. Ramsey offered to resign or retire under the legal formation of a new Board of Trustees, prompting some speculation he would seek a way to keep his job. But he said Tuesday he has no intention to serve beyond the upcoming academic year, according to the Louisville Courier-Journal.

Beshear’s office was requesting an immediate hearing and a temporary restraining order preventing Bevin’s overhauls from taking effect. The attorney general’s legal challenge is technically an attempt to join a lawsuit filed by retirement system trustees -- to unite in court disputes over the two board overhauls. A group of Louisville faculty members have also urged trustees of the disbanded board to try to legally block Bevin’s reorganization.

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