Have Colleges Flouted the Prudent-Investor Rule?

[Many investment balloons, inflated by the Morrhttp://ill Hall Gang,
are punctured in this article...]

For some background information, please see:

Poshlust - The University Administration's Attitude Toward the Public's Right to Know

and

The Ten Worst University Endowment Managers

August 8, 2010 - Chronicle of Higher Education By Lawrence Rosen

Over the past year and a half, many colleges have seen their endowments decline by as much as 30 percent, and their investment income cut even more. The question thus arises whether colleges have violated what is commonly known as the "prudent-investor rule."

Colleges, like other institutions that operate in a trust relationship, have long been required to invest in a reasonably conservative way. The Massachusetts Rule, first articulated in an 1830 Harvard University case, suggested that trustees must "observe how men of prudence, discretion, and intelligence manage their own affairs," taking both "probable income" and "probable safety" into consideration.

While risk is left undefined, and we no longer follow the 19th-century practice of permitting only those investments registered on an acceptable list, we do know that certain practices are still unacceptable. Colleges may not, for example, buy lottery tickets, since the chance of losing is simply too great.

The law requires due care in selecting, instructing, and monitoring agents, but is silent on how much trustees must understand about their actual investments. Thus it is an open question whether trustees meet this standard if they do not make adequate efforts to understand the risks of these complex investment instruments.

Naturally, college officials offer many reasons for the decline in their endowments, often claiming, as a Harvard financial officer told the Harvard Gazette, that someone else had "ultimate financial responsibility." Explanations for their poor performance usually fall into several categories:

Everyone was doing it. Not since I tried that one on my second-grade teacher and received a look I will never forget would I commend this as a workable excuse. To be told that "prudent" means "reasonable," and, as John Langbein, a Yale Law School professor, notes, that "reasonable" in turn means the usual ways in which other trustees operate, may suit the lawyers and professors who drafted the rule. But doing it just because others do it still would not pass muster with my second-grade teacher.

We did very well for many years. Reliance on modern portfolio theory, however, often seemed to promise more than it could deliver. Not only were the Dow and S&P 500 indexes lower in 2009 than a decade earlier, but, as the legal scholar Stewart E. Sterk has pointed out in a research paper, greater immunization of trustee liability only encouraged greater trustee risk-taking.

Nor has that risk-taking diminished since the market lows. A recent survey by Russell Investments, a pension-consulting firm, found that 58 percent of institutional investors had not changed their fundamental philosophy, and that many were actually increasing, by 5 percent, their investments in the same instruments that had gotten them in trouble before.

Investment strategies based on the latest Nobel in economics may work for a time, but one is reminded of what the man who jumped off the roof said as he passed the second floor: "So far, so good."

Again, the proof of prudent investing is not solely in the results, but in the appropriateness of the risks taken to achieve them. The level of risk was appropriate to institutional needs and purposes. Many colleges were able to offer more scholarships, support, improved facilities, and smaller classes when endowment returns were high. But if tolerance for risk is connected to the trust's main purpose of the trust, then maybe colleges need to reconsider: Is constant construction always necessary? Will no good president be found for a salary lower than a million dollars? If held to a meaningful interpretation of risk under the prudent-investor rule, colleges might have to reconsider their priorities.

Even the professionals got it wrong. We all know examples: Long-Term Capital Management, a highly leveraged hedge fund set up by two Nobel-winning economists, failed; Lehman Brothers Holdings Inc. was leveraged to the point that a small downward movement in the property market wiped it out. As the political philosopher and author John Gray has written, much of the underlying free-market theory took hold in the 1990s, "when economists came to believe that complex mathematical formulae could tame uncertainty in the murky world of derivatives." Colleges were caught up in an environment in which the operative theory was that "self-interest plus competition equals nirvana," as John Cassidy wrote in How Markets Fail: The Logic of Economic Calamities (Farrar, Straus and Giroux, 2009).

But not everyone failed to see the handwriting on the wall. Several people were forced out of Lehman when they warned of the impending crisis. And Iris Mack, an investment analyst at Harvard, was fired after warning Lawrence H. Summers, Harvard's president at the time, of the risks of the university's strategy.

But perhaps there is an even more important sociological factor in this process, which might be referred to as "the culture of complicity." A powerful group may entice others into its practices so that the latter can neither extricate themselves without loss of stature nor blame others for what they are doing.

As college boards have become dominated by business executives and investment bankers, and as college presidents are paid higher and higher salaries, the air of complicity has come to resonate with the title of that popular 1960s book I'm OK, You're OK. An athletics coach with an atrocious record is quickly fired. Yet that has not been the case with administrators who make financial decisions.

At a time when accountability is the watchword of the American public, colleges' involvement in the culture of complicity helps explain their unwillingness to accept blame. It is just unfortunate that, along with their corporate culture-mates, they have so far escaped any such accountability.

Justice Louis D. Brandeis once said that "a lawyer who has not studied economics and sociology is very apt to become a public enemy." It may also be true that those who fail to take note of their college's involvement in the culture of complicity become equally complicit in its public misdeeds.

No one wants to return to an era when delegation and diversification are impermissible. And rules should not be constructed simply as a function of any one moment in the markets. But one may fairly ask whether a given institution has, in fact, used the care, skill, and caution required by the prudent-investor rule in choosing its investment professionals, and whether trustees have ignored warnings about their agents' decisions.

Given the legal requirement that risks be appropriate to purpose, one may even ask whether college endowments, notwithstanding their long-term horizon, can ever bear a substantial portion of volatile investments. ... the prudent-investor rule may be interpreted to require a greater quest for information and greater oversight of those responsible for an institution's financial well-being.

Although remedies like trustee reimbursement or removal may be sought, obtaining judicial clarification of an otherwise vague statute and achieving greater investment transparency for colleges may be the litigation goals most worth pursuing.

Like players and fans, however, those affected by decisions involving colleges' investments will know if the prudent-investor rule has been violated only when the call is made.

Perhaps, in the name of meaningful accountability, it is time that some of those who have borne the burden of their colleges' investment practices got the umpire back in the game.

Lawrence Rosen, a fellow at the Center for Advanced Study in the Behavioral Sciences, at Stanford University, is a professor of anthropology at Princeton University and an adjunct professor of law at Columbia Law School.

First Reactions to University of Minnesota

New Academic Health Center

Conflict of Interest Policy

Kudos to MPR's Alex Friedrich, another fine journalist who spent time at the Pioneer Press, for getting informed reaction to the U's much hyped new policy.

From On Campus:

Last week when the University of Minnesota released the revised conflict-of-interest policy for its medical staff, I wrote a summary of it and looked at some criticisms of the old policy.

... officials from two organizations that look at such policies — The Pew Charitable Trusts and the American Medical Student Association (AMSA) — have given me an initial idea of what they think looks strong and weak.

Both gave credit to the U for revamping its policy, and they saw definite improvements. Still, they found some policies vaguely worded, leading them to wonder whether faculty and industry reps will have a little too much ethical wiggle room.

“Sometimes policy wording is very nice, but when you see the nitty-gritty of how it’s applied, things aren’t what they seem,” said Tim Anderson, director of AMSA’s scorecard for conflict-of-interest policies. “Many policies are couched in legal language, but the best policies are the ones that are clear and straight forward.”

Allan Coukell, Director, Medical Safety Portfolio, The Pew Charitable Trusts:

What he likes: Disclosure. He applauded the requirement that staffers publicly disclose to patients what financial relationships they have with the drugs or devices they prescribe.

What he’s wary about: Industry-sponsored medical talks. He didn’t find any absolute prohibition on faculty giving talks that involve some sort of payment.

“That’s not what we’d consider a strong policy,” he said. “It’s not consistent with the Association of American Medical Colleges’ recommendation that companies don’t pay for travel to industry-sponsored events. Our longstanding position has been that (faculty) ought not to be paid speakers involved in promoting a product. And it’s not clear to me that this policy would have that effect.”

He pointed to the University of California – San Francisco, which does not allow its faculty to participate in speakers’ bureaus.

Tim Anderson, AMSA scorecard director:

The food-and-gift policy.

The outright ban on ghostwriting.

The policy on consulting.

Then again: Freebies don’t appear to be completely restricted. “Through the use of food and gifts, marketing reps have time with physicians and students. It’s a marketing approach — and not a substitute for unbiased education.”

So will the changes be enough to bump up the provisional C grade of the U’s old policy? Anderson said the new scorecard will reveal all when it comes out late this year.

[My guess is a B.]

+++

Carleton Listed in top 11 National Liberal Arts Colleges

[To the surprise of no one who went to Carleton
(or taught there)...]

From USNews:

To whet your appetite for the 2011 Best Colleges rankings, U.S.News & World Report is sharing a little information ahead of time. Each year, U.S. News surveys more than 1,400 colleges and universities and ranks them according to our methodology.

In alphabetical order, here are the 11 highest-ranked schools in the National Liberal Arts Colleges category:

The actual ranking and score of these schools will be available August 17 on usnews.com.

Amherst College (MA)
Bowdoin College (ME)
Carleton College (MN)
Claremont McKenna College (CA)
Davidson College (NC)
Haverford College (PA)
Middlebury College (VT)
Pomona College (CA)
Swarthmore College (PA)
Wellesley College (MA)
Williams College (MA)

___

Fast company. Congratulation to the faculty, students, and administration at Carleton.

At least someone in the state knows how to run a world class institution...

+++

What the candidates (don't) say about higher ed...

From ON CAMPUS:

You might think that with budget cuts and layoffs shrinking state universities, and with impending leadership changes influencing how they’ll do business, gubernatorial candidates would be speaking out about how to handle it all.

Hardly.

“The focus has been on K-12,” said David Schultz, a Hamline University business professor who also teaches political science. Politically, higher education “is a niche issue.”

Schultz said these are the issues that candidates should be speaking out on:

Future university leaders. With University of Minnesota President Robert Bruininks leaving next June, and Chancellor James McCormick of the Minnesota State Colleges and Universities expected to step down next August, “I would expect (candidates) to be talking about who’d they like to see” as replacements, Schultz said. He wouldn’t expect specific names, but “a sense of what they’d like to see” in the next leaders.

The university-business connection. “This is a natural opportunity for them to be discussing how they see higher education as it relates to business and economic development,” Schultz said. “But we’re not seeing them talking about it.”

Tuition. It has gone up dramatically, and Schultz said, “It has got to be on the minds of students and the parents who are sending them off to college. I’d have thought somewhere they’d be saying something about tuition, especially tuition at public institutions.”

The “green economy.” DFL candidates Margaret Anderson Kelliher and Matt Entenza have discussed their desire to create a “green economy” based on the environmental industry, Schultz said, “but what’s missing is how we’re going to train those workers. Are they talking about putting money into four-year or community colleges.

{For a new U of M president?}

I've mentioned before the trial balloon sent up by the Chairman of the BoRe at Minnesota to make another outrageous salary for the next president more palatable.

Don't you usually pay someone based on experience and qualifications?

Why is it that the new president must be paid more than the current one, before we even know who he or she is? The current president is one of the most highly compensated public university presidents in the country, so why is it that the next one should automatically be paid more?

From the Strib (of the red telephone):

Editorial: The price must be right

MnSCU and U face salary issues in searches for new leaders.

...President Robert Bruininks of the University of Minnesota, a smaller system, is paid a $455,000 base salary and earns a total compensation package of about $650,000.

As the searches progress for successors to both McCormick and Bruininks, who will also retire in mid-2011, Minnesotans should have a realistic assessment of what's required to compete for top higher-education executive talent. Filling these two positions wisely and well is crucial to maintaining Minnesota's best economic advantage -- its well-trained workforce. Minnesotans should not expect to do so at a bargain price.

The comments on this are particularly amusing, I'll just give one:


Ah... Good old Dr. Pangloss...
The illustrious U of M critic/Professor

Had to know that the first comment on here would be from him to criticize the U of M administration. Funny that they haven't found a way to get rid of you yet*. Pretty much any boss in the private sector would have found a way to put your butt on the curb for as much as you have a tendency to do nothing but show disrespect and loathing and your own bosses in public. And BTW, why would you want to lower the salary for the leader of the single biggest economic creator in the state that tax payers have an influence on? No other public institution has the economic impact through research, technology innovation, and private sector job creation than the U does. So why would you want to lower the bar and get less qualified people in to lead the most important public enitity in the state, during our worst economic crisis in half a century?

posted by holt0338

2 of 14 people liked this

____

*Apparently Mr. Holtz doesn't get over to the U much any more (except to go drinking with Futz?):

"Academic freedom must protect the integrity not only of scholarship and teaching, but also of the expression of views that may not be welcomed by bodies having power over the faculty. Even without such protection, many would speak out as they saw fit and necessary, but where such speech is not protected it can be muffled or silenced."

The University of Minnesota Revises its Academic
Freedom Policy

You probably want to have a look at the new Regents policy, Mr. Holtz, before you shoot your mouth off once again in this matter and embarrass yourself and the University of Minnesota.

From the document:

"Academic freedom is the freedom to discuss all relevant matters in the classroom, to explore all avenues of scholarship, research, and creative expression, and to speak or write without institutional discipline or restraint on matters of public concern as well as on matters related to professional duties and the functioning of the University."

You can never have too much sunshine...

Especially in Minnesota

From the Chronicle:

The University of Minnesota-Twin Cities was accused of conducting backroom activities during its last presidential search, in 2002, when it hired Robert H. Bruininks. The university decided to keep the names of its finalists private. Newspapers in Minnesota filed a lawsuit demanding the release of the names, and the Minnesota Supreme Court ruled against the university.

Ms. Reed [BoRe chair at the time of search] also asks: With public financing dwindling, now accounting for far less than half of some universities' revenue, how much does the public really need to know?

The public be damned, Dr. Reed?

+++

Mean Teaser from US News

Top 25 National Universities

To whet your appetite for the 2011 Best Colleges rankings, U.S.News & World Report is sharing a little information ahead of time. Each year, U.S. News surveys more than 1,400 colleges and universities and ranks them according to our methodology.

In alphabetical order, here are the top 25 highest-ranked schools in the National Universities category:

The actual ranking and score of these schools will be available August 17 on usnews.com.

Brown University (RI)
California Institute of Technology
Carnegie Mellon University (PA)
Columbia University (NY)
Cornell University (NY)
Dartmouth College (NH)
Duke University (NC)
Emory University (GA)
Georgetown University (DC)
Harvard University (MA)
Johns Hopkins University (MD)
Massachusetts Institute of Technology
Northwestern University (IL)
Princeton University (NJ)
Rice University (TX)
Stanford University (CA)
University of California—Berkeley
University of California—Los Angeles
University of Chicago
University of Notre Dame (IN)
University of Pennsylvania
University of Southern California
University of Virginia
Vanderbilt University (TN)
Wake Forest University (MC)
Washington University in St. Louis (MO)
Yale University (CT)

Hmm... There are three publics there and we're not on the list. Oh well, in just four years we'll be there. Right?

+++

Are College/University Rankings Useful?

Some thoughts of Richard Vedder, an economist at Ohio University and the Center for College Affordability and Productivity:

In a couple of weeks, I predict, the media will be filled with articles on rankings of colleges. Already, Princeton Review has come out with its effort, with attention focused on their party schools of America ranking. They are imperfect, but it is good for kids considering the University of Georgia and the University of Chicago to know that Georgia is a school that emphasizes academics far less than Chicago.

But the more serious rankings will soon be released.

I predict that many in the education establishment will trash the rankings as soon as they are released. They will be labeled as non-scientific, elitist, poorly constructed, etc. etc. etc.

People paying perhaps $100,000 or more over several years for college want to know what they are getting for their value, and they want that assessment to come from neutral third parties, not the promotional materials of the schools themselves. When you buy a house, usually you have a third party inspect it. When you buy a car, you read the rankings by J.D. Power or Consumer Reports. The same principle applies with colleges. The rankings give a sense of the relative quality of schools, imperfect as it may be.

I believe that the best rankings conceptually are "do it yourself rankings" that evaluate schools on the criteria important to the would-be student, not the variables adjudged important by some organization. Yet the publishers of rankings hit on factors most individuals think are important, so, in a rough way, they convey very valuable information. If you are paying $50,000 a year to send your kid to either Harvard or George Washington U., other things equal, the quality of education is likely to be superior at Harvard, assuming the student can gain admittance. So the complaints of colleges are completely bogus.

The main problem with the rankings is that colleges resist providing the kind of information that is important in assessing institutional quality:

Do students learn a good deal while in school? Do seniors know more than freshmen?

What is the probability that a freshman will graduate in four years?

Do graduates of the school get good jobs upon graduation, or get into good graduate schools?

Do students LIKE their institution --the classes and professors, the social dimensions, etc.

Is the campus a safe environment --is there a lot of crime?

In a perfect world, "accreditators" would become "information providers", sort of like Consumer Reports or Underwriters Laboratories, giving potential users of college services good information that is consistent across institutions that would allow consumers to make informed choices. In the mean time, I, for one, applaud the rankers for doing their best to fill a real human need.

Tony Judt...

has died.

Historian Tony Judt dies aged 62 (from the Guardian):

Author of Postwar and New York University professor dies after two-year fight with motor neurone disease.

His academic career began with a history degree and PhD at Cambridge and took him eventually to New York University, where he was the Erich Maria Remarque professor in European studies, director of the Remarque Institute and a renowned teacher.

His finest work was widely thought to be Postwar: A History of Europe since 1945, published in 2005 and an enormous critical success. It was described by the Yale historian Timothy Snyder as "the best book on its subject that will ever be written by anyone".

Judt was awarded a special Orwell prize last year for lifetime achievement for his contribution to British political writing. Penguin published his latest book, Ill Fares the Land, a passionate call for a re-engagment in politics, in March.

But Judt's willingness to voice, as the New York Times recently put it, "impolite truths" brought attacks from fellow intellectuals. He was called cantankerous, which he probably took as a badge of honour.

From University Diaries:

I don’t think there’s anything particularly courageous about what I’ve done… I’m a tenured professor at a university. It’s a peculiarly privileged and advantageous position to find yourself in. And it’s precisely for that reason that it confers upon you certain kinds of duties. Because you can speak out, you should.

+++

Paul Krugman on Flimflammery

And the Audacity of Dopes

I like Paul K. I really like him. He has good arguments and does not mince words. He also doesn't seem to be paid by the word. What he has to say here is applicable to people running the University of Minnesota as well as the gubernatorial candidates in Minnesota currently jockeying for position.

From How to Spot a Flimflammer:

Long ago — basically when I started writing for the Times — I decided that I would judge the character of politicians by what they say about policy, not how they come across in person. This led me to conclude that George W. Bush was dishonest and dangerous back when everyone was talking about how charming and reasonable he was. It led me to conclude that Colin Powell couldn’t be trusted, back when everyone said his UN speech clinched the case for war. It led me to conclude that John McCain was unprincipled and self-centered, back when everyone said he was a deeply principled maverick. And yes, it led me to conclude that Barack Obama was a good man, but far less progressive than his enthusiastic supporters imagined.

Mr. Krugman yesterday disemboweled a specific flimflam artist, our Wisconsin neighbor Paul Ryan, in a post entitled: The Flimflam Man.

Which brings me to the innovative thinker du jour: Representative Paul Ryan of Wisconsin.

The Washington Post put a glowing profile of Mr. Ryan on its front page, portraying him as the G.O.P.’s fiscal conscience. He’s often described with phrases like “intellectually audacious.”

But it’s the audacity of dopes.

_________

To see this idea more fully developed, you'll have to go to the full article. To my reading Krugman does a good job of exposing Ryan's supposed "fresh food for thought" as "leftovers from the '90s drenched in flimflam sauce."

How do these ideas relate to the U? See the results of cooking endowment investments in flimflam sauce.

Gubernatorial race? Krugman destroys Ryan's ideas about cutting our way to economic growth that are remarkably similar to the no new tax crowd in Minnesota. These include the current absentee governor as well as his darker version, Tom Emmer, who is trying to avoid revealing what is in the flimflam sauce bottle for as long as possible.

+++

source: http://bit.ly/dvZcXK

The 20 Worst Managed Endowments:

1) Harvard, down 30% and $10.9 billion

2) Yale, down 29% and $6.5 billion

3) Duke, down 28% and $1.7 billion

4) Brown, down 27% and $730 million

5) Syracuse, down 33% and $327 million

6) University of Minnesota, down 27% and $312 million

The Daily has quite an amazing story about how badly the University of Minnesota endowment has tanked, see:

U Endowment takes a dive

In this article the fellow pictured above is quoted as saying:

"This was a perfect storm of bad circumstances,"

While the University of Minnesota lost more than nearly all other Big Ten universities, it fared better than Northwestern and other large, private institutions.

[Our 24.2 vs. their 24.8? Wow!]

"Those were the smart guys, I mean the really smart guys," Mason said, referring to Ivy League investment officers whose funds lost as much as 29.8 percent.

[You mean like Larry Summers, Mr. Mason? No, those were the arrogant guys - the lotus eaters who were enthralled by swallowing Mr. Swensen's endowment model. ]

After the University took money out of the stock market, the market began to trend upward. As a result, many universities will see endowment gains around 12 percent, while the University’s endowments are expected to grow by 6 percent.

[Another situation that happened?]

Allen [Regent Board Chair] said, however, that the timing of a move back into the market is left up to the "professionals."

[And who would that be, presumably?]

"We are optimistic," Mason said. "We’re happy with the way we are positioned and think that the way the portfolio is set up that we’re set to receive good returns in future years."

__________

Fortunately, past performance does not predict future returns, but I'd be a little more comfortable if we had someone at the helm who had a better track record. 6% less return on investment than normal is a lot of money when we are talking about a several billion dollar endowment.

I've tweeted on some past history that might be of interest to people concerned with investments going under water...

wbgleason

If #UMN could invest in secret, could pull down 30% on some great deals, at least we were told that in 3/09 http://bit.ly/167uLg #Minnesota

wbgleason

Speaking of endowments tanking, #UMN Google Endowment piece is still worth reading... http://bit.ly/bHNWQ1 #Minnesota

New Conflict of Interest Policy at

University of Minnesota

Academic Health Center

Strib article - states the policy went into effect - yesterday!

Link on U's web site

Down loadable pdf of policy:

New_AHC_COI.pdf

___

Cui Bono?

Congressional Spotlight on

For Profit Higher Ed

“Education is too important for the future of this country,” he [Tom Harkin] said. “Facing the budget problems we have in the next 10 years, we just can't permit more and more of the taxpayers' dollars that are supposed to go for education and quality education … to be going to pay shareholders or private investors.”

From Inside Higher Ed

At a hearing on the “student recruitment experience” at for-profit colleges that began Wednesday morning and carried on through the mid-afternoon, Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee, outlined plans to hold more hearings on the sector, to collect broad sets of information from for-profit colleges, and to begin drafting legislation aimed at cleaning up the sector.

Much of Harkin’s motivation came from the findings of a Government Accountability Office “secret shopper” investigation of recruiting practices at 15 for-profit campuses, the results of which...were officially released at the start of the hearing. The probe identified “fraudulent, deceptive or otherwise questionable marketing practices” at all 15 institutions, and inducements to commit fraud on the Free Application for Federal Student Aid at four institutions. Coupled with a former recruiter’s account of his experience on the job, the evidence presented at the hearing depicted an industry aggressively and universally going after “leads” and “starts” with the institutional objective of securing federal financial aid dollars.

"GAO's findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight,” Harkin said. The evidence was collected from some of the nation's largest for-profit colleges, including the University of Phoenix and Kaplan College.

Sen. Johnny Isakson (R-Ga.), reinforcing what has become Republicans’ standard way of addressing problems uncovered at for-profit colleges, said: “I know we’ve got people doing bad things, but I know we’ve got a lot of people doing it right and they’re going to be under a cloud unless we begin to separate the wheat from the chaff.”

Joshua Pruyn, a former recruiter for a Westwood College, who testified at the hearing, said he didn’t think the kind of dishonest behavior that he saw and was encouraged to emulate while working at a Colorado campus resulted from a few “rogue” employees violating his institution’s code of ethics, but rather a pattern of behavior encouraged by corporate leaders.

Harkin, too, said he believed the encouragement to aggressively and dishonestly pursue students came from higher up. Showing a recruitment training PowerPoint slide from the University of Phoenix with the header “Creating Urgency: Getting Them to Apply NOW."

Harkin said he thought inducements to recruit aggressively were coming from company executives. “That doesn’t come from some employee,” he said. “That comes from the top.”

The fallout from the hearing isn’t likely to be positive for the for-profits.

The stocks of most publicly traded for-profits, including those visited by GAO investigators, closed down for the day on Wednesday afternoon.

Indeed...

St. John's Caves

Dumps Nick Coleman

at Request of Major Donor

Sad, indeed, when one of the institutions you have admired does something despicable...

From MinnPost:

Brother, I suspect St. John’s University will be able to ride it out, but could a big institution look much worse than it does...

“In September, Len Busch, who has given $20,000 to the St. John's theology department each of the last three years, authored a handwritten message [to the school] about Coleman. ‘As long as St. John's has this man on the payroll, I will no longer give my money to St. John's,’
Busch wrote. 'I will not support lies and false statements and half truths about anyone.'"

“He hated [Coleman’s] December 5 column, which criticized 3M after company execs asked employees to send letters to Congress about health care reform. ‘You've got a company, if the company doesn't exist, the workers don't get a damn thing,’ Busch says. ‘They don't have a job, they don't have anything. This anti-corporation is terrible. They provide jobs. They provide everything. And someone takes their money and invests in them — but let's badmouth the hell out of any corporation.

[I owe my soul to the company store?]

Busch was similarly offended by Coleman's February columns, which criticized Gov. Tim Pawlenty for abandoning Minnesota to travel the country to further his presidential ambitions. ‘His tone is negative, negative, negative, negative.’ ”

[A lot of people have been kinda negative about Pawlenty's neglect of his duties as governor. Shades of Spiro Agnew and the nattering nabobs of negativity...]

Obviously, someone was caught unaware that Nick Coleman comes with a point of view slightly different from your average general sales manager.

As they say in the church basement: "Bingo!"

+++

We're Number One in the Big Ten

For Lowest Out of State Tuition

From the NYT:

That Iowa has emerged as one of the nation’s more popular public universities this year is a function, in part, of its aggressive marketing in other states and abroad. Its tuition for out-of-state students — $23,700 this year — also makes it more affordable than many private colleges, particularly those that have scaled back scholarship offers in an unstable economy.

The University of Minnesota, in Minneapolis, the only Big 10 institution with a lower out-of-state tuition than Iowa’s, also saw a jump in out-of-state applicants this year.

Is this a good thing?

I don't think so...

See: Maximizing Tuition Revenue at the University of Minnesota

or A Medallion or a Yugo?

+++

University of Wisconsin cancer researcher quits

amid conflict of interest investigation

From the Wisconsin State Journal

A prominent UW-Madison cancer researcher has abruptly resigned after university officials began investigating a potential conflict of interest involving his outside business interests.

The case involving Dr. Minesh Mehta, an internationally recognized expert on human clinical cancer trials, comes amid heightened national scrutiny of doctors' ties to industry and the university's own attempts to better monitor such relationships.

In April, the UW-Madison committee responsible for protecting the rights and welfare of participants in research studies became aware of a potential conflict involving Mehta and his paid consulting work with TomoTherapy Inc., a Madison company that makes cancer treatment devices, according to documents obtained by the State Journal through an open records request.

For most of the last decade, Mehta has been the lead researcher of a federally funded clinical trial of a specialized radiation treatment for cancer patients known generically as tomotherapy. The device used to administer the radiation to a majority of participants in the study is made by TomoTherapy.

UW-Madison initiated a formal investigation, and participants in the clinical trial subsequently were told of the potential conflict, said Lisa Brunette, a UW Hospital spokeswoman.

In the notification letter to participants, a copy of which the State Journal obtained, UW-Madison says "information about this type of potential financial conflict of interest is ordinarily included in the consent form presented to potential research subjects."

Mehta's ties to TomoTherapy became much more public last November when Dr. Eli Glatstein, a University of Pennsylvania School of Medicine professor and a revered figure in oncology research circles, chastised Mehta in an editorial in the International Journal of Radiation Oncology Biology Physics.

Glatstein was irked that Mehta didn't reveal his ties to TomoTherapy when criticizing a TomoTherapy competitor in the pages of the same scholarly journal. In an e-mail message to the State Journal, Glatstein said his beef was not just with Mehta but with "a generation of people who don't seem to recognize a conflict of interest when it smashes them in the mouth."

+++

The Business Tax Climate in Minnesota

and Innovation in Biotech

Very Important Post

From Med City News and Bill Hoffman

This post should be read by every research administrator at the U, every state legislator, the gubernatorial candidates and every biotech CEO in the state.

From Med City News:

Minnesota’s bioscience community benefits little from state’s high taxes

Hoffman listed the country’s top ten biotech states, as ranked by Business Facilities. Then he noted in parenthesis how those states fared in favorable business tax environments, according to the non-partisan Tax Foundation.

Here’s what he came up with (I confirmed the data):

1. CALIFORNIA (48)
2. TEXAS (11)
3. PENNSYLVANIA (27)
4. MASSACHUSETTS (36)
5. KANSAS (32)
6. NEW JERSEY (50)
7. NORTH CAROLINA (39)
8. ILLINOIS (30)
9. MARYLAND (45)
10. OHIO (47)

So what can we conclude from this data? Well, for one thing, high taxes doesn’t always stunt economic growth, especially when it comes to high tech innovation. With the exception of Texas, all of these states don’t enjoy a particularly favorable business tax environment.

But more importantly, the evidence says the strength of the biotech industry is a direct result of taxes, which, when coupled with generous bonding and strong state economic development authorities, allows states to invest billions of dollars of public money into these technologies.

For example, Massachusetts recently launched a $1 billion to back research and start-ups over a decade. California pledged $3 billion towards stem cell research while Kansas created a $581 million biotech investment fund. Ohio boasts the Third Frontier program and Pennsylvania has the Benjamin Franklin Technology Partners.

In other words, contrary to fiscal conservatives’ zealous faith in private markets, building a viable biotech industry takes public money, a lot of it. And where do we get this money? You guessed it…TAXES!!!! Not just tax credits but actual state dough.

“State investment in public science makes a difference,” Hoffman said. “The low tax mantra may serve retail and basic manufacturing well, but if you want knowledge-intensive industries in your state, you pay to play, including taxes.”

Which brings us to Minnesota. The state ranks 43rd in business tax environment, almost dead last, and fares relatively poorly in building a viable biotech industry.

When it comes to high tech innovation, Minnesota taxpayers get relatively little in return for their money. That’s because the state spends next to nothing on economic development. About 86 percent of the state’s annual budget goes to social services like healthcare, local government aid, higher education, and public schools.

Read a little deeper and the data proves a point I’ve long argued: Minnesota is mooching off the success of its past, preferring to rely on legacy Fortune 500 companies like Medtronic Inc. to pay its bills instead of helping to create the companies (and taxpayers) of the future.

Conservatives and liberals alike need to wake up. Cutting state budgets and vaguely “reducing bureaucratic red tape” won’t create a bioscience industry. Neither will jacking taxes on the wealthy. The question is about priorities: you have x amount of dollars. So how are you going to spend it?

Angel credits and science and technology authorities are great but unless we get real serious in spending state dollars, bioscience in Minnesota will remain nothing but a pipe dream.

Well said, Thomas and Bill. And Thomas has at least been hinting at this situation for some time. The question is: Will anyone listen this time?

+++

Third Greatest Public Research University

In the World?

2009 Rankings of Top American Research Universities

Top Public Research Universities (1-25)

Institutions in order of top 25 score,
then alphabetical

Institution/Number of Measures

Berkeley 9
UCLA 9
Illinois 9
Michigan 9
North Carolina 9
Pittsburgh 9
Wisconsin 9

tOSU 8
Penn State 8
Florida 8
Minnesota 8
U. Washington 8

Lots of data. Big pdf available for download at link above.

Executive Summary:

There are seven public research institutions in the US who appear to be ahead of us in the rankings game done by this outfit. Our administration likes this rating scheme because it is weighted in favor of larger schools as careful inspection makes obvious.

Unfortunately for the hubris of Morrill Hall, it is pretty clear that we will not even be in the top seven public research universities in our own country, even if we manage to hold on to our seats as we go over the waterfall ahead. And it should be no comfort at all that some of our competitors - places we clearly used to excel - are now rated with us. I am thinking in particular of Penn State and Ohio State.

Ratings is a game for losers.

I hope the Morrill Hall Gang, or their successors, realizes this fast.

+++

(Ouch!)

Putting it to Provosts

(From Inside Higher Ed)

George L. Mehaffy, a vice president of the American Association of State Colleges and Universities, opened a meeting of provosts here late last week by projecting on the video screen overhead the bold commercial that Kaplan University has used to promote itself -- in large part by not-so-subtly dissing traditional colleges and universities like those that belong to AASCU ("It's time for a different kind of university," the professor at the lectern tells students apologetically. "It's your time.")

"It is our time," Mehaffy told the public university provosts when the commercial ended, "time to get serious about the process of change in American higher education. It is important that we resolve to make substantive changes -- major changes, not changes around the margins -- and that we do so with a fierce sense of urgency."

But collaboration will be key, said Sally M. Johnstone, provost and vice president for academic affairs at Winona State University, in Minnesota. "One big lesson that seems obvious is that anything that I think of is not going to be anywhere near as good as that that we can come to collectively."

"If we don't think we're going to have to reinvent ourselves, we are delusional," said Liz Grobsmith, provost and vice president for academic affairs at Northern Arizona.

[Gak - how I hate that phrase...]

As is true of many meetings of academic administrators, discussions about bringing about change on campuses frequently turned to the faculties, and in some cases provosts described instructors on their campuses as being stereotypically, almost preternaturally predisposed to oppose any kind of progress or change.

Johnstone of Winona State described her efforts to get leaders of the university's faculty union "really up to speed" on the "constraints that are going to be facing the entire university," and getting their advice on "how I can move forward at a pace this campus has never seen before."

"They get it," Johnstone said. And where a few years ago, the faculty was an obstacle to change, "now it has really become an opportunity, a way to move forward," she said. And that's essential, she added, because "changes have got to come from the faculty. You cannot change the campus without changing the culture."

Added Abe Harraf, provost and vice president for academic affairs at the University of Northern Colorado: "Faculty want to come along. They just want to be participants instead of just being told" what they have to do.

Time matters, said Selase W. Williams, provost and vice president for academic affairs at Southern Connecticut State University. Given the rapidly changing demographic pool of the students who will be entering higher education in coming years, dominated increasingly by those who are academically underprepared, "if we're failing American higher education today, we will fail even more miserably then."

"The challenge will be greater then than it is now," he said. "We've got to get this right."

___________

And how NOT to do it has been demonstrated more than once by our own provost at the University of Minnesota.

See:

Let's Make Her An Offer She Can't Refuse...

Faculty Senate Disapproves Engulfment of the Graduate School by Office of the Provost

Trust Me, I'm a Lawyer

Hiring Pause, Thinking Freeze

Bauerlein on the Hacker Dreifus Book

"Higher Education?" (Wall Street Journal Book Review)

There's a new sheriff in town... In the form of a book that will be very influential in shaping a dialogue about what is wrong with higher education entitled "Higher Education?"

Selections:

Higher education may be heading for a reckoning. For a long time, despite the occasional charge of liberal dogma on campus or of a watered-down curriculum, people tended to think the best of the college and university they attended.

Recently, though, a new public skepticism has surfaced, with galling facts to back it up. Over the past 30 years, the average cost of college tuition and fees has risen 250% for private schools and nearly 300% for public schools (in constant dollars).

Meanwhile, tenured and tenure-track professors spend ever less time with students. In 1975, 43% of college teachers were classified as "contingent"—that is, they were temporary instructors and graduate students; today that rate is 70%. Colleges boast of high faculty-to-student ratios, but in practice most courses have a part-timer at the podium.

At the same time, the administrator-to-student ratio is growing. In fact, it has doubled since 1976. The administrative field has diversified into exotic specialties such as Credential Specialist, Coordinator of Learning Immersion Experiences and Dietetic Internship Director.

In "Higher Education?" Andrew Hacker and Claudia Dreifus describe such conditions in vivid detail. They offer statistics, anecdotes and first-person accounts— concerning tuition, tenure and teaching loads, among much else—to draw up a powerful, if rambling, indictment of academic careerism. The authors are not shy about making biting judgments along the way.

As for one of the most prestigious universities in the world, "the mediocrity of Harvard undergraduate teaching is an open secret of the Ivy League." Much of the research for scholarly articles and lectures is "just compost to bulk up résumés." College presidents succeed not by showing strong, imaginative leadership but "by extending their school's terrain." Indeed, "hardly any of them have done anything memorable, apart perhaps from firing a popular athletic coach." For all the high-minded talk, Mr. Hacker and Ms. Dreifus conclude, colleges and universities serve the people who work there more than the parents and taxpayers who pay for "higher education" or the students who so desperately need it.

A lot of criticism of academia hasn't stuck in the past, Mr. Hacker and Ms. Dreifus imply, because people have almost unthinkingly believed in the economic power of the degree. Yes, you didn't learn a lot, and the professors blew you off—the reasoning went—but if you got a diploma the job offers would follow. But that logic may no longer be so compelling. With the economy tightening and tales of graduates stuck in low-paying jobs with $50,000 in student loans, college doesn't look like an automatic bargain.

We need some hard cost accounting and comparisons, Mr. Hacker and Ms. Dreifus argue, and so they end "Higher Education?" with capsule summaries of, as they put it, "Schools We Like"—that is, schools that offer superior undergraduate educations at relatively low cost. The list includes Ole Miss, Cooper Union, Berea College, Arizona State and Western Oregon University. "We think a low cost should be a major determinant in any college decision," the authors wisely conclude, for "a debt-free beginning is worth far more than a name-brand imprimatur."

Mr. Bauerlein, the author of "The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future," teaches at Emory University.

Perhaps Hacker/Dreifus, Bauerline, and Eva von Dassow should be invited to hold a Great Conversation (adminspeak) with President Bruininks?

Our nimble President is currently flacking Jonathan Cole's book, the "Great American University," because it says what he would like to hear. He has invited Cole to have a Great Conversation with him this fall. (I wonder if Dan Wolter will be there to speak for him?) Cole is a former administrator at Columbia, a private university with a large endowment. Hard to fathom what relevance his views might have at our public land grant institution that is deep in financial difficulties.

As a Harvard [sic] economist said of Cole's book:

But a 150-page inventory like the one Cole provides here tells us as much about why some universities are “great” as a list of names of accomplished people in a large family shows us why their family is “great” relative to others. Moreover, it does nothing to illuminate whether universities did it alone and what kind of incentives were used to enhance researcher productivity.

and

Today, the greatest threats to American higher education probably do not concern any of the things Cole discusses. Rather, they relate to the openness of the system and the academic preparedness of its students, who, as Cole acknowledges at the outset, play almost no role in this volume.

But I guess there is always the Strategic Propaganda Initiative beast to feed.

Fiddle on, Bob.

+++

BYOP

Many Thumbs Up For Movie of the Week

From a great blog: The New Faculty Majority

This week, who else but... Eva von Dassow, professor of Classics and Near Eastern Studies, our new film star. Move over Mary Beard...

The MN Regents meeting "movies of the week" come in long and short versions, plus a full transcript of Eva's comments. Hear the dean of the Carlson School, the usual admin sycophants, and a few speakers that voice criticism of the administration (in particular, AFSCME's Cherrene Horazuk and FRPE's Eva von Dassow).

An earlier encounter of President Bruininks and Professor von Dassow is also available on YouTube - The Gospel According to Robert, Part II. And now, just a few of the many, many fan links (to which we add our names)

A Critique of the Cuts ~ Inside Highered

My new hero ~ More or Less Bunk

It's the faculty who define a university ~ Pharyngula , Science blogs

She's on fire ~ Thorstein Veblen blog

Speaking Truth to Power ~ The Periodic Table

Drop Kick me Jesus ~ University Diaries

I'm pleased to note that FRPE, Faculty for the Renewal of Public Education, is on our reader, posts tweeted, before movie fame... knew them when. FRPE participated in the March 4th Day of Action (and will no doubt be there for October 7). It would be an honor to join them.