Thursday, August 02, 2007

Revenue is Needed

August 2, 2007, 6:30, 9:00 a.m. (see "Putting a Dollar Value on Our Ethics: What Are the UI's Options?" below)

"Revenue is Needed"
Once "revenue is needed" is the Polestar for a university's financial decisions its moral compass begins to spin as if it was located on the North Pole.

-- Nicholas Johnson, "UI Loves Gambling" in "UI Held Hostage Day 410 - March 7," March 7, 2007.
Wall Street Journal and Wall Street University. The announcement yesterday that the Bancroft family would, after all, sell the Wall Street Journal and the rest of Dow Jones to media mogul Rupert Murdock is illustrative of the issues confronting the University of Iowa -- and virtually all other institutions of higher education in America.

Murdoch offered $60 a share for stock traded at closer to $37 -- a total of $5 billion. The family resisted: "several members of the Bancroft family -- Dow Jones's controlling owners -- opposed Murdoch's bid, fearing the tabloid king would wreck the integrity of the Journal and use it to further his business and political interests. In the end, nearly two-thirds of the Bancroft family voted for the merger." Frank Ahrens, "Dow-Jones Murdoch Merge in $5.8B Deal; Sides Agree to Create Editorial Board as Buffer Between Murdoch, Wall St. Journal," Washington Post, August 1, 2007.

What tipped the balance? Apparently, Murdoch's willingness to satisfy some family members' request that he pick up the additional $30 million tab for their lawyers and analysts. David Folkenflik, "Murdoch Clutches Dow Jones," "Morning Edition," NPR, August 1, 2007.

In other words, the Bancroft family, which has owned Dow Jones for 100 years, and is concerned that Murdoch "would wreck the integrity of the Journal and use it to further his business and political interests," is willing to cast aside its concerns for an extra $30 million in a $5 billion deal!

Now consider the University of Iowa's position. There is reluctance to sell off naming rights for the College of Public Health to Wellmark for $15 million. Why? Our integrity is at stake. It is virtually unprecedented among American universities to name colleges for corporations. It would create, if not the reality, at least the appearance of a conflict of interest and raise questions about the integrity of the faculty's research. We are concerned that Wellmark "would wreck the integrity of the [College] and use it to further [Wellmark's] business and political interests."

Unless . . .. Unless what? Unless Wellmark might be willing to offer $20 million.

Here is the earlier discussion regarding "revenue is needed:"
In some ways most disturbing is the observation, reported in the Press-Citizen this morning [regarding the UI athletic program's partnerships with the organized gambling industry] that some "note that UI athletics will be entirely self-funded next year and say the revenue is needed."

This is the rationale for keeping highly sugared soft drinks in high school vending machines -- notwithstanding their contribution to obesity, diabetes and what dentists refer to as "Mountain Dew mouth." "The revenue is needed."

It's the rationale politicians use for accepting large bribes from special interest pleaders. "The revenue is needed."

After public broadcasting was expressly established as a "non-commercial," alternative broadcasting service, that was its rationale for taking the commercials that now clutter these "non-commercial" stations' airwaves. "The revenue is needed."

Of course, the politicians call them "campaign contributions" and the public broadcasting stations call the commercials "underwriting." But no one is fooled.

If "revenue is needed" is the standard, why not a line of cigarettes, or handguns, with Herky emblazoned on them?

Why not change the rules and sell alcohol throughout the football stands (rather than just in the skyboxes)? Better yet, why not have coeds dressed like Hooters waitresses making the sales?

Why just take pocket change from the Lottery and Casino; why not set up our own little gambling casino outside Kinnick and have folks place their bets on the game right there? After all, "revenue is needed."

It may be that arguments can be found justifying a university's ties to the gambling industries -- why those associations contribute in positive ways other than financial to a university's mission -- though none immediately occurs to me. Offer such reasons if you can. All I'm saying is that I don't think "revenue is needed" is a morally sound argument with which to support a university's partnerships with the gambling industry.

Once "revenue is needed" is the Polestar for a university's financial decisions its moral compass begins to spin as if it was located on the North Pole."

-- Nicholas Johnson, "UI Loves Gambling" in "UI Held Hostage Day 410 - March 7," March 7, 2007.
"Do as I say, don't do as I do" -- The Impact of Academics' Behavior on the Values of Students. There are many implications and consequences of the attitudes we adults communicate by our behavior as well as our words (especially when our actions don't match our words) with regard to the importance of money, and what we're willing to pay, and to sacrifice, in its pursuit -- up to and including our ethical, moral and religious values.

The point is as applicable to our naming of our College of Public Health as it is to our football program's partnerships with the organized gambling industry.

It's applicable to other aspects of our high school and college sports programs as well. Yesterday's "The Diane Rehm Show" focused on the impact of adults' standards, urgings and expectations on the unsportsmanlike conduct (and doping) by young athletes. Susan Page, guest host, "The Diane Rehm Show: Recent Sports Scandals," with guests, sports writers Christine Brennan, Sally Jenkins, Stefan Fatsis and Michael Josephson, August 1, 2007. Guest Michael Josephson's Josephson Institute of Ethics completed a study of the subject this year: "Survey of High School Athletes: What Are Your Children Learning? The Impact of High School Sports on the Values and Ethics of High School Athletes," February 16, 2007.

I don't know how the courses in our Departments of Philosophy, Religious Studies, College of Business -- indeed courses throughout the University -- treat the issue of selling out one's values for money, but I would hope and suspect they would not look kindly on the propriety of monetizing everything. See in this connection Nicholas Johnson, "'The Corporation' and the Search for Agreement," October 1, 2004 (commentary about the film "The Corporation" and a discussion of it at the UI College of Business).

Putting a Dollar Value on Our Ethics: What Are the UI's Options? The core of our present problem -- illustrated by the Wellmark naming controversy, but going far, far beyond it -- is the inherent conflict, and seeming hypocrisy, born of the ambiguity resulting from our failure to state with some precision just who and what we are. Clarification on that score is not a simple, total solution, but it would be better than what we have now -- regardless of how we come out on the issue. Here, it seems to me, are some of our choices:

1. The University as an oasis in a sea (or desert) of corporatization. Like national parks, we are set apart from the profit-maximizing, materialistic society in which we exist. Our mission is to provide a place where faculty can do research and teach, and students can exercise curiosity and learn, in a truly independent setting without need for concern about the impact of our ideas upon the financing of our institution. If that means we will be paid a little less, our buildings will be a little smaller, and we have to lobby the legislature a little more effectively, so be it. Whatever the contributions of corporate productivity may be to our society, there is also a societal value to maintaining places separate and apart from corporate values -- and values measured in a coin other than dollars.

2. "The business of America (and its universities) is business." We admit it. Education -- from K-12 through graduate school -- has always been about training our young for war and for employment by business. Over time the businesses have changed; we're no longer turning out high school graduates for assembly line jobs (though you wouldn't know it at some high schools) -- because there aren't any more assembly line manufacturing jobs now that we've shipped them overseas. But that doesn't change education's role in the economy. Why do students go to college anyway? Because they've been told precisely how many more dollars they'll be paid over the course of their lifetime if they do. Universities' research, as well as their graduates, have been supporting weapons programs and corporation's profit opportunities for decades. There's nothing new about this. And we've been taking their money forever -- Harvard, Duke, Stanford; numerous colleges and buildings, auditoriums and arenas, classrooms and professors' chairs -- are named for corporations and wealthy donors. Get over it. This is a non-issue. We're for sale. The only challenge is to get the maximum dollars we can from our donors. They want their name on a college or building? So, what's the problem -- so long as they pay enough for it, and pay by the year instead of for the life of the building?

3. The security of a slippery scale. We don't want to totally abandon our age-old cloistered role; and we don't want to totally abandon the money either. So we'll just be a little more precise about our rate card -- what's for sale, and what's not, and what the prices are. For example,
we'll accept "gifts" from anyone and any corporation, regardless of their public reputation or how they earned their money. We'll happily do research for the Defense Department or any major corporation -- so long as the money is right. The names of individual persons (even if similar or identical to their businesses) can go anywhere: named chairs, classrooms, buildings, colleges, even the University -- again, so long as they pay by the year, and pay what's on our rate card. However, the names of corporations (or names clearly identified with corporations, such as our "Ronald McDonald House"), as such, can only be associated with non-academic buildings, classrooms and professorial chairs -- not colleges or the University.
This is, as I say, only an example. All of these elements can be tweaked up or down. We could, for example, say we would not accept any corporate money that comes with strings, such as naming rights or even designation of purpose. In other words this is just an illustrative template. The point of this third option is simply that we acknowledge that we are, after all, for sale (so we're not caught in the hypocrisy of saying we're not when in fact we are) -- in the great American and corporate tradition -- but we can still claim to have our integrity and values when it comes to, say, our refusal to give corporations naming rights to academic programs.

Are there other options? Perhaps. But this might well be the basis for the beginning of that "full and respectful discussion" that President Sally Mason has called for.

Here are some prior blog entries on these subjects, in reverse chronological order:

Nicholas Johnson, "The Corporatization of America's Higher Education" in "Strange Bedfellows: Academy & Corporate America,"
August 1, 2007 ("Once a university gets in bed with corporate America is oral sex 'adultery' -- hell, is it even 'sex'? Are we still virgins if we don't 'go all the way'? We're already in bed, folks. Now we're just drawing lines and haggling over price."),

Nicholas Johnson, "Corporatizing Education and Other U-News Updates" in "U-News Updates: Corporatizing Education," July 31, 2007 ("it will be a shame if this is perceived as merely the 'Wellmark-UI College of Public Health Naming Issue' when it is so much bigger and can more usefully be addressed in the larger context of the corporatization of higher education generally, and at the UI in particular. Whatever President Mason's focus turns out to be, it won't be long before we'll get a sense from her statements and decisions as to just how much further the 'University of Iowa, Inc.' is going to slide into the for-profit sector during her tenure."),

Nicholas Johnson, "Wellmark Naming" in "Abuses: Wellmark, Insurance, Athletics, Media,"
July 22, 2007 ("the Register has turned around [with its 'roses and thistles' recognition]; having formerly given the College of Public Health faculty a 'thistle' for turning down the money this morning it took some tweezers and removed that thistle and stuck it in Pomerantz instead."),

Nicholas Johnson, "President Sally Mason's Revelation" and "Spotting the Issue" in "Wellmark, Mason and 'The Issue,'" July 21, 2007, ("The underlying, fundamental issue -- one that is going to continue to arise in hundreds of contexts over the years ahead -- is the extent to which we either want to continue to encourage or to resist, the rapid transition from an academy pursuing knowledge to one pursuing wealth, from a focus on 'we' to 'me,' from a 'Great Society' of social programs for all to a privatized and corporatized profit-maximizing marketplace primarily benefiting the wealthy few, from the values of education and culture to those of conspicuous consumption and hedonism, from a nation that mixes corporatized services with socialized schools, libraries, parks, police, fire protection and armies to one in which all is for-profit and for sale, from one in which many decisions are still made on Main Street to one in which all decisions are made on Wall Street."),

Nicholas Johnson, "Wellmark Naming; Wellmark Reorganization?; Eastern Michigan" in "Wellmark, Rape and Murder," July 17, 2007
("The case studies from the University of Iowa and the University of Eastern Michigan are each but sub-sets of a much larger issue: the ethical dilemmas created, and confronting university administrators, as formerly public universities' missions are transformed from (a) promoting students' education and professors' independent research into (b) more formal relationships as the subsidiaries of corporate America and the adoption of its profit-maximizing practices and acceptance of its funding."),

Nicholas Johnson, "More on 'The Name Game'" in "Name Game & Other Moral Dilemmas,"
July 4, 2007 ("Today, an ever increasing number of faculty are (a) employed without thenure, and (b) required to personally raise part or all of their own salary and supporting expenses. There's not much talk about Greek and Latin requirements in that environment. But these are changes for which many faculty -- and those among them functioning as deans -- are ill prepared. Not only do they not have experience, or hold degrees in, 'business,' they (like the public-policy-driven aspiring young politician) probably did not spend their early years honing a passion to become, and then spend a significant portion of their lives as, a major fund raiser."),

Nicholas Johnson, "Wellmark's College of Public Health" in "The Corporate College of . . .," July 3, 2007 ("We've long since decided we're willing to sell off the University's good reputation. If you haven't yet guessed, that troubles me. But accepting the reality of where we are at the moment, shouldn't we at least, as George Bernard Shaw suggested, start 'haggling over price'? Don't we have the same obligation to the people of Iowa that we would if we were selling off the state's top soil -- to make sure we get the most for it we possibly can? When we take a lump sum to name a building after a corporation -- forever -- isn't there a great likelihood we're selling out too cheaply?"),

Nicholas Johnson, "Greed, Conflicts, Cover-ups and Corruption" in "Conflicts, Cover-ups and Corruption," June 26, 2007 ("Universities are not immune from the pressures that in corporate American can produce an Enron, or the political pressures that produce a U.S. Congress that simply can't 'afford' to stand up to the pharmaceutical industry. Mason has been advised that as much as one-third of her time should be spent in fund raising. Clearly it's a major part of what she has been hired to do, a major part of the 'performance' that can produce an extra $50,000 a year under her contract. As such, she -- like every other big university's president -- will be subjected to similar pressures as the editor who must decide whether s/he can 'afford' to run an essential story that will cause a loss of advertising revenue, an athletic director who must weigh the advice (and standards) of the NCAA against the revenue that can come from the gambling industry, or a politician in need of campaign contributions deciding how to vote on a measure that will clearly help her constituents but cause a special interest group to cut off her funding."),

Nicholas Johnson, "UI Loves Gambling" in "UI Held Hostage Day 410 - March 7,"
March 7, 2007 ("(1) The Iowa Lottery commercial. Essentially everyone has come to agreement -- after they were caught, and the media was all over it -- that the specific commercial involving the Iowa Lottery and the Iowa Fight Song was a mistake. (The fact that the owner's lawyer pointed out to the litigation-shy University that the commercial was also a copyright violation contributed to reason's ultimate triumph with this one.) (2) UI-Lottery Ties. However, beyond the commercial, views shift. The Interim President and Athletic Director think there's nothing wrong with gambling that sufficient UI revenues won't cure. But yesterday the University's Faculty Council unanimously voted its disagreement. See Diane Heldt's story this morning, linked below. (As Heldt reports, AD Barta thinks 'the relationship with the lottery should continue.') (3) And the Gambling Casino? As I've repeatedly observed, and The Gazette headlined as one of its 'Gomers' Monday, the Iowa Lottery is not the only 'devil's bargain' -- as Professor Michael O'Hara characterized a UI-gambling partnership at the meeting yesterday. There's also the Athletic Department's partnership with the Riverside Gambling Casino. Why would the Faculty Council be so upset over the Lottery and fail even to mention the Gambling Casino contract?"),

Nicholas Johnson, "UI Football Promoting Gambling?" September 16, 2006 ("The Hawkeyes won the game today, and a good one it was. And they've made a lot of money from the gambling industry. But in the process they've certainly fallen far from the educational and moral high ground to which they profess to aspire.").

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Anonymous said...

You are absolutely dead on right about this. Revenue is paramount at the Univ of Iowa.

For instance, at the UIHC, revenue drives everything. There are no professors, doctors, or nurses. There are FTEs (Full Time Equivalents). The FTEs must enhance revenue by either grabbing grants, or seeing patients (even though the business offices cannot collect as much as 50% of what is billed).

There is lip service to teaching, and even less to community service. The real issue is revenue.

Lab space is rented out like a shopping mall. Patients are herded through like paying sheep.

And in the issue of revenue, the FTEs are kept frightened (always the threat of job loss), and demoralized, which is perfect for the administration to control.

Administrative bloat and huge salaries of the bosses demand more revenue. The rent on incredibly luxurious offices like John Colleton's (ask to see it someday) demand more revenue.

More and more universities are like corporations...demand revenue...huge salaries and perks for the management...sweat shops for the help....and keep the FTEs fearful, and demoralized.

What is great about the university's approach, is that in many areas it doesn't even need to answer a board of directors or stockholders. It simply sets up a feudal system of dukes and serfs. No meaningful information is ever published to justify the FTEs and the revenue. Just like top corporations, poor decisions of leadship amount to more pressure on FTEs to produce revenue.

The operating model these days is a business model; the operating governance is a feudal governance. Great combination.

Anonymous said...

There are untapped resources out there:

The Linda Lovelace Department of Ears, Nose, and Deep Throats

The Ron Jeremy Department of Urology

and the

Jenna Jameson Division of Gynecology.

Why not? If the money is donated can anyone object to who gets naming rights?

Anonymous said...

Here is an interesting thought from Arizona State does naming a building after a Corp change the tax status:

Situations may arise in which the university wishes to name a building, or a room or an area within a building, in recognition of the support of an individual or corporate benefactor. The purpose of this policy is not to discourage such situations, which can be in the university’s best interests.

However, many ASU buildings are debt financed through tax-exempt bonds. To maintain the tax-exempt status of these financings, the university must avoid situations that create private use or private benefit that exceeds limits imposed by federal tax law. Private use could result in the university having to refinance bonds from tax-exempt to more costly taxable interest debt.

Private use is generally not created when a building, or a room or an area within a building, is named for an individual or individuals when the name is not that of a company or a commercial name, e.g., the John and Mary Doe Building.

Private use could result under the applicable Internal Revenue Service regulations when a naming situation involves a company or commercial name, such as the XYZ Bank Building.

Anonymous said...

Investigating the law mentioned above (which further investigation reveals naming rights of above either 5% or 10% then are seen as advertising), and looking at this statement from the Gazette:

"Public Health, the UI's newest college, is raising money for a new building whose preliminary budget is $44.7 million. The UI has commitments of $20.7 million in state money and has pledged to raise $6 million privately. The UI also plans to commit $18 million in university funds to the building."

A gift of 15 million or 20 million from Wellmark Inc. clearly means no tax-exempt bonds could be used in financing this new public health building, and could even change current tax-free bonds of the UIHC.

Has that been discussed?

Anonymous said...

Too much whining

I don't see a lot of people stepping up to pay more income or property tax to fund the operations of the University.

Would people rather cut the University down?

The other alternative here is to specialize the three schools; ISU for sciences and engineering, UI for Liberal Arts, Business, and Law and UNI for education.

In other words; Bye Bye UI Engineering, Education, and Science Programs.

Something has to give folks. Its either more taxes, fundraising (from big bad corporations), or cutting costs.

Anonymous said...

State taxes pay a small percent of the Univ of Iowa. Tuition is close to over taking that amount. The state's support shrinks each year and isn't likely to dramatically change.

Specialization as suggested isn't going to work. The U of Iowa, with nursing, pharm, and medicine is not going to cut out sciences.

Inflated costs of college can be attributed to several items:
-administrative bloat
-health insurance
-financial aid
-increased salaries

Something talked about here could help -- a national health service. The 1 billion dollar surplus over at Wellmark comes from places like the U of I paying health care insurance.

Another issue is administrative bloat. Part of this is Gov't regulation. All the red tape costs in terms of staff, and staff who are not teaching. (for instance the bogus 'inspection' at the UIHC this week costs the U of Iowa) Cut the red tape.

Financial aid drives up costs as more people want college who can't afford it. No hot GI Bill these days to pay.

This cost might be mitigated by using the 2 year campuses in a more creative way. Their costs are less than the U of Iowa. Say make first years available at Kirkwood with automatic transfer to U of Iowa.

The people at the top have seen their salary increase. Whether that should be addressed is an issue.

There is much more to do than simply cut programs or raise taxes. Both are self defeating and not the real issue (inflation of costs)