Business issues

Clear-eyed reports on foibles of higher education finance (essay)

God bless the janitors!

I commend the 5,000 higher education workers of the Massachusetts Service Employees International Union (SEIU), Local 615. These men and women, led by Massachusetts SEIU Higher Education Director Wayne Langley, commissioned four of the most trenchant, clear reports on the foibles of higher education finance since The Jungle muckracker Upton Sinclair self-published The Goose-Step: A Study of American Higher Education in 1922.

These articulate, footnote-laden documents investigate questions that must, but may never, top the public agenda of any discussions of college access for years to come.

While the reports ask familiar questions, my thrill is that these powerful questions come from a new voice, an influential union, outside the higher education policy circles -– the 2.1 million voter, I mean, member, SEIU. The former SEIU president Andy Stern sat beside the Obamas for the 2009 inauguration parade.  If current SEIU president Mary Kay Henry would take a call from one of the nation’s leading obscure columnists, once this column runs, I’ll buy lunch for her and Langley at Kramerbooks, just a couple of blocks from SEIU’s Massachusetts Avenue headquarters. 

The new Dan Brown novel? Skip it. This winter, I pulled up in front of a roaring fire with "Errors of Omission – Transparency and Conflicts of Interest at Leading Private Colleges and Universities in Massachusetts." (To download this and the other SEIU studies, see box at right.)

In this 2012 report, Boston College and Williams led the way with five or more trustees reported as “working with firms providing investment services to the college.” As the report notes, this is legal. As the report wonders, whose best interests do trustees in such a position represent? (See The Goose Step, Chapter V, “Interlocking Directorates” and Chapter XLVII, “Introducing a Board of Regents.”) All this made me miss my friend, the late John Strassburger, president of Ursinus College, who often wondered how so many colleges had become investment-management companies with a few classrooms attached.

Next, I devoured "Public Investment in Private Higher Education: Estimating the Value of Nonprofit College and University Tax Exemptions." This estimated the value of federal, state, and city tax exemptions to Northeastern University at $94.4 million. The report notes “the lack of transparency in existing, publicly available data sources about numerous issues related to specific areas of exemption.”

The SEIU report asks only for an open, public debate on the public good deriving from such tax exemptions, because “without a clear sense of the scale of public taxpayer support that colleges receive, it remains difficult to have a well informed debate about our policy priorities.”

On to the conclusion of "Academic Excess – Executive Compensation at Leading Private Colleges and Universities in Massachusetts."  I’ll get a copy to U.S. Senator Charles Grassley (R-Iowa), one of the few on Capitol Hill willing to ask in public why nonprofit colleges and universities use their tax-exempt status to pay high salaries.

“There always seems to be more money for the executive suite even as colleges raise tuition year after year,” Grassley lamented this winter. The SEIU report, using 2009 data, covers 339 positions at 21 Massachusetts private colleges and universities. The high is $6.4 million for a Harvard Management Corp. staffer. Pity the chief of staff at Worcester Polytechnic Institute, in the cellar at just $101,941. Recent news reports show that the situation is the same with more recent data. 

“A more robust public debate about the costs and benefits of colleges’ nonprofit fiscal privileges, which subsidize the excessive pay schemes documented here, is badly needed…. We have highlighted the numerous ways in which schools continue to avoid providing a full public accounting of the compensation of their highest-paid employees, regardless of whether they are defined as ‘key employees’ or whether the source of their compensation comes from the school itself or outside corporate activities.” 

Janitors? Why would a union of janitors speak out on higher education?

“During the endowment debacle, several of the schools either approached us for wage, hour or benefit concessions or instituted layoffs of our members,” Wayne Langley said the other day in Boston. “Essentially, schools were asking us to do things like waive a 4 percent contractual raise based solely on their word that times were tough.” 

Meetings with the colleges to clarify that “times were tough” failed to answer the SEIU’s questions. “It was all very frustrating because it was impossible to determine the truth from the spin, making reasonable debate and discussion impossible and confrontation inevitable,” Langley said. “Our sponsored research is an attempt to find out what is really going on, so we could decide what positions both at the policy level and at the bargaining table.” 

Finding credible help was the next hurdle. “It took me six months to find a researcher that had the professional chops to do this and who was not terrified of offending the school lobby and being blackballed,” Langley told me. 

I’m late in my discovery of the four crisp studies Langley commissioned from the think tank The Tellus Institute, published in 2010, 2011 and two in 2012. With President Obama just unveiling an online tool to untangle the actual cost of college for students, these four reports affirm both the fog of higher education finances and the cost of that fog to the nation.  

Why would the janitors ask these questions? Listen. Langley’s clear argument would earn an A in any most highly selective private college class I’ve attended: “We believe the current (higher education) leadership is pursuing a bad model that will decrease affordability for students and parents, eliminate good jobs, increase inequality and reintroduce a class-based system where the rich will receive a good, four-year liberal arts education, and everyone else will get trained for jobs that will last 10 years and then disappear.” Wouldn’t this be a fine question for, well, colleges and universities?

On to my favorite of the four, the first the SEIU sponsored in 2010 to search for the answer to a simple query: “If you want our members to take pay cuts due to the weak economy, would you please open your books and let’s see how much money you have?” This is "Educational Endowments and the Financial Crisis: Social Costs and Systemic Risks in the Shadow Banking System, a Study of Six New England Schools." (See The Goose Step, Chapter VI, “The University of the House of Morgan.”) 

The SEIU study of endowments is the only report I’ve read evaluating whether 2008-9 multibillion-dollar college endowment losses followed unavoidable fate or reckless trustees taking excessive risks.  The report, the executive summary states, “looks at what happens – and who suffers – when universities embrace high-risk investing.” 

What happens? Janitors, not trustees or college presidents, lose jobs. And, oh, at my own Williams College, the trustees revoked the short-lived no-loans financial-aid policy. At last, thank you, janitors, someone else is wondering what gives the trustees to chase endowment returns three, four, five times higher (i.e., riskier) than the risk-free rate of U.S. Treasuries. 

Our janitors asking such questions? Hopeless? I’ll take the long view, with Thomas Paine in the introduction to the third edition of Common Sense:

Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour; a long habit of not thinking a thing WRONG, gives it a superficial appearance of being RIGHT, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.

Bet against the 2.1 million members of the SEIU? Not me. I remember “Justice for Janitors.”

“Until we organized janitors in commercial office buildings, many thought it could never be done,” Langley told me. “We are predisposed to issues that will benefit the general public as well as our members. That is what unions used to do when they fought for public education, the eight-hour day, child labor laws and the like.” 

Examining and improving “issues that will benefit the general public”?

Thank you, janitors. Crazy me, I know. That’s what a college education is for, too. 

Wick Sloane writes the Devil's Workshop column for Inside Higher Ed.

Endowments averaged a small loss for the 2012 fiscal year

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College endowments averaged a small loss for the 2012 fiscal year -- the third year of losses since 2007 -- highlighting growing uncertainty about a once robust and predictable revenue stream.

Don't panic amid predictions of higher ed's demise (essay)

At 30 years old, I definitely consider myself part of the Facebook generation. Zuckerberg’s brainchild hit the ‘net when I was a senior in college, and by then I was already well acquainted with e-mail, chat rooms, text-messaging, and all the multifarious precursors to today’s social media. I text, I post, I chat, I even snapchat: in these respects, I’m an utterly unremarkable member of my society.

But I also happen to be a college professor and a molder of young minds. And, far from indulging the technology-driven spirit of the times, I make my students work as students have always worked.  They read Seneca, Pascal, Tolstoy, and Schopenhauer. They are obliged to turn in papers by hand; they must come to office hours to speak with me about their grades; they are even, and this is most anachronistic of all, required to attend class.  Physical presence is key to every aspect of their learning experience, be it my hovering, breathing presence in the classroom or the office, the cohort of 30 or so warm bodies that shows up for lecture twice a week, or the more abstract form of embodiment conveyed by the weight of a book.

To believe certain commentators, however, this embodied notion of learning is on its way out in American higher education. Writing for The American Interest’s January/February 2013 edition, the recent Yale graduate Nathan Harden offers the following ominous prognostications about the future of university instruction in our digital age:

In fifty years, if not much sooner, half of the roughly 4,500 colleges and universities now operating in the United States will have ceased to exist. The technology driving this change is already at work, and nothing can stop it. The future looks like this: Access to college-level education will be free for everyone; the residential college campus will become largely obsolete; tens of thousands of professors will lose their jobs; the bachelor’s degree will become increasingly irrelevant; and ten years from now Harvard will enroll ten million students.

On Harden’s account, one of the principal reasons for this portended transformation, which is already being partially implemented by such institutions as Harvard and MIT, is that the cost of college is increasingly out of proportion with its perceived economic benefit.  As the American job market has become more competitive, the cost of a degree has increased, and only the most naïve of students still believe that a college education is a universally redeemable ticket to middle-class prosperity.  The weighing up of costs and benefits involved in earning a college degree will lead inevitably to a re-evaluation of the current higher education model.  Luxury residence halls, face-to-face interaction between professors and students, ivied brick walls -- these will all be things of the past once the much-heralded education bubble finally bursts.  What will replace them are massively populated, inexpensive online courses and lectures, prerecorded by the very best lecturers and administered by those hordes of professors and other academics not quite sexy or charismatic enough to warrant virtual celebrity.

To anyone who thinks Harden’s predictions are a little too ambitious (not to mention deeply disturbing, at least for college professors who don’t fancy the idea of working in a grading factory), don’t worry -- they most likely are. What Harden forgets -- and indeed, what just about everyone prophesying the eclipse of face-to-face interaction in a virtual world forgets -- is that human beings are, above all else, bodies, and that to lead full, happy, and meaningful lives, we need other bodies. Let’s consider the following examples of how technologies of virtualization have failed to triumph over our species’ thirst for physical presence.

1. The Giant Head.  Some older readers may recall a famous article in Reader’s Digest from the late 1950s featuring an illustration of a massive human head connected to miniscule arms and legs.  What was the thesis of that article? The tech junkies of the time believed that in the future technology would become so advanced that human beings would no longer need to use their bodies, leading to a swelling of the brain and a shriveling of our appendages.  Many also foretold a time when food supplements would replace food. Wouldn’t it be great, they asked, if instead of spending hours preparing and eating meals, we could nourish ourselves in just a few seconds?  No one at the time seemed to consider that human beings might not want to do any of this — that we might enjoy using our bodies, eating, and the like.  In the half-century since these predictions were made, restaurants have proliferated, and heads haven’t grown one bit.

2.  Live Theater.  When I was a kid, there were hardly any live theaters in my hometown of Bakersfield, Calif. Now there are about ten. Many people used to believe that movies had sounded the death knell for live theater, but today the latter enjoys just as much, if not more, prestige than it did 100 years ago. I recently had the good fortune to see Kevin Spacey’s production of Richard III. I’ll remember his performance for the rest of my life — it had never occurred to me that acting could be so visceral, so violent, so physical.  How many of us can say the same thing about movies? Again, those who foretold the demise of live theater never reckoned that people might just plain like seeing living bodies move around and speak on the stage, and that no amount of special effects could compensate for the lack of real flesh and blood.

3. The myth of social media. This myth holds that virtual, online or technologically mediated interactions are in the process of replacing face-to-face interactions.  Most people never take the time to think about what the world would be like if this were really the case. I live in a small college town, and I can assure anyone interested in such things that student interactions on Friday and Saturday nights are plenty physical —sometimes I can hear them from across the lake!  Social media does little more than provide a way of sharing information that enhances the intimacy of eventual physical contact.  Anyone who doesn’t know this doesn’t understand the technology.        

Of course, people like Harden will point to other sectors of the economy where technological innovation has erased thousands of jobs.  People don’t need information from stockbrokers or travel agents to make decent decisions about travel or investment anymore, so why should a living, breathing professor be necessary to convey the sort of information one gets out of a college education?  If that information can be distributed more cheaply thanks to virtualization, why should students be expected to bear the extra expense of classroom education?

The answer to this question is so elementary that the objection supporting it is almost hard to take seriously.  The truth is that education is not simply the conveying of information.  In fact, it is probably only marginally that.  How many people remember most of what they learned in college?  Only very few, I would guess.  The benefit of a classroom education is that it keeps students under a certain amount of mental pressure, forces them to think on the spot, and obliges them to explain themselves to other people who are physically present.  Information is afoot in these interactions, but so are wisdom, passion, empathy, and a whole host of other viscera that only an embodied teacher or student can properly convey. 

How effective, for instance, do we imagine an online church experience would be compared to the real thing? Is it reasonable to think that a virtual tour of the cathedral at Chartres would be as spiritually moving as being there?  We should also consider that many students might simply enjoy the physical classroom and their interaction with peers and professors -- or at least they might recognize that they learn better under these conditions.  The costs of classroom education may be soaring out of proportion at present, but this is not a verdict on the education itself.

So let’s ask -- what developments are behind these grim augurs of the collapse of America’s higher education model? Some of it undoubtedly has to do with politics. Many commentators on the right (and perhaps Harden is one of them) would likely cheer the dismantlement of a system whose values are often perceived as far left of center. If taking education online can put “tenured radicals” out of work, then why not welcome it? At the same time, however, just as many moderate and left-leaning thinkers have joined the chorus of those predicting the failure of higher education (for instance, see Thomas Friedman’s recent writings in The New York Times), and it would be simplistic to chalk this latest round of doom-peddling up to politics. 

The real culprit, I suggest, is what, for lack of a better term, we might call Appleism. Innocent in principle but nefarious in practice, the doctrine of Appleism holds that increases in technological capability are synonymous with increases in human happiness. Anything that can be put on a screen is better than what can be seen with the naked eye. The passage of electrons through a cathode tube is equivalent to passage from a lower to a higher state of being. Proponents of Appleism hold out technology as an intrinsic good; they are the sorts of folks who compulsively buy the latest Apple product, simply on principle

We can point to fiscal insolvency all we want, but one has difficulty believing that Harden’s and others’ vision of a fully or almost-fully online education is not also the product of society’s limitless fascination with virtualization. Proponents of the current craze ought to think carefully about the human costs of technology before enthusiastically proclaiming the end of a system that could leave hundreds of thousands of people without work, students cheated out of a quality education, and that would further contribute to the creation of a world where virtualization is always and everywhere, without qualification or questioning, heralded as an unequivocal good.

Louis Betty is an assistant professor of French at the University of Wisconsin-Whitewater.

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