Tuesday, September 25, 2007

UI Rips-Off Students Because . . . "Revenue is Needed"

September 25, 2007, 3:15 p.m.

The Good News and the Bad News

Last Sunday, September 23, brought both good news and bad news.

Oh, you want the bad news first? OK.

"Revenue is needed" has reared its ugly head again in academia. It's the basis for one of the best investigative stories in any of the Iowa papers since this blog began 16 months ago. More -- actually much more -- on this story further down in this blog entry.

The Good News

. . . Shaner Magalhaes: MBAs, They're Not Just in For-Profits Anymore. The first good news story is selected because it illustrates (a) the application of MBA skills to non-profits, and (b) the selection of employment on the basis of doing what you love rather than what will pay the maximum income.

The Johnson County Historical Society has a new Executive Director. His name is Shaner Magalhaes. That's a story for the reasons it's important to him and his family, and those who support or otherwise care about the Historical Society -- and that the local papers found worth prominent mention. Rachel Gallegos, "Mixing Business with History," Iowa City Press-Citizen, September 23, 2007, p. A1; Emily Heiden, "All Work and All Play; New Historical Society Director Brings Wealth of Experience to the Job," the Gazette, September 23, 2007, p. J3.

I'm not disinterested in such factors. But it's not why I select this story as an example of "Good News."

It's because I've long advocated to public interest organizations and other non-profits on the one hand, and business students and business colleges on the other, that they get to know each other better. Non-profits need what MBAs have to offer. They're different from for-profits, of course, but both have far more in common than what differentiates them. Both need business plans, human resources, governance models, budgets and accounting, management information reporting systems, insurance, and so forth.

The late Molly Ivins once wrote about Texans for whom "too much is not enough." How many college graduates -- and not just MBAs -- select jobs on the basis of pay alone, or what they will "be" rather than what they will "do," without regard to what they're best at, most enjoy doing and gives them the most satisfaction?

Like the medical student who decides to specialize in "diseases of the rich," it's not uncommon for individuals to choose professional specializations that will permit them to bill the wealthiest Americans at the highest rates. This option is particularly difficult to resist among the MBAs who are offered jobs in the financial community that may ultimately pay millions of dollars a year.

It takes awhile, but many find that the old adage about money not buying happiness is true -- and that it is not necessary to have "too much" in order to have "enough" -- as they try to figure out where life went wrong. And so I've encouraged those with an aptitude for organizing and running institutions to think about the advantages of jobs with non-profits: looking forward to going to work every morning, an ability to sleep soundly at night -- and usually a salary that provides "enough."

As Magalhaes is quoted as saying, "My wife and I love this area. I really love history. I really believe in what the State Historical Society is doing. . . . I thought this would be a great thing to do."

The next Magalhaes story, a year from now, should be: "so what?" What difference did it make for the Johnson County Historical Society? Under the "but for" test, how different did it become from what it would have been without an MBA running it? Did he apply the John Carver -- or other -- approach to the activities of the board, and its relations with the CEO? Was there a better focus to the organization's day-to-day activities as a result of the board's equivalent of Carver's measurable "ends policies"?

Hopefully we'll get the answers to those kinds of questions a year from now if Gallegos and the Press-Citizen will do that interesting follow-up story.

Meanwhile, Sunday's story contains two lessons I consider "good news."

. . . Lonny Pulkrabek: Thinking Outside the Jail Cell. Rachel Gallegos has another story in last Sunday's (September 23) paper that is, by my standards, good news because it illustrates the possibilities when research, analysis and rational thought are brought to bear by public officials in the formulation and execution of public policy.

As with the
Shaner Magalhaes story, the Pulkrabek story is also one that is, among other things, important to him and his family, and those who support or otherwise care about the Johnson County Sheriff's office and the current sheriff and his re-election. That's primarily (I'm guessing) why the Press-Citizen assigned a good reporter to write it. Rachel Gallegos, "Pulkrabek announces bid for re-election; Says he has some unfinished business," Iowa City Press-Citizen, September 23, 2007, p. A3.

Those aspects of the story are also of interest to me. But the reason it came to my attention as "good news" is for what it reports of his creative thinking about crime and punishment.

The story reports one supporter as emphasizing "Pulkrabek's role in creating more solutions for working with people with substance abuse problems, rather than just locking them in jail," and continues, "If re-elected, Pulkrabek said he wants to see through the work on a joint dispatch center and continue tracking the jail alternative programs that have been implemented in the past three years, especially the mental health diversion program."

I wrote an op ed in the Press-Citizen a year ago, when he was under attack for such innovative ideas, suggesting that we need to encourage, rather than attack, that kind of thinking by public officials. Nicholas Johnson, "Shooting Our Messengers," Iowa City Press-Citizen, March 3, 2006.

(Not incidentally, this story shares something more with the Magalhaes story than the existence of "good news." Pulkrabek also enjoys what he's doing: "it is a job," Gallegos reports, "that he 'really, truly enjoys. I've just really enjoyed doing it.'")

I'm not writing about the merits -- either of any of Pulkrabek's proposals or, indeed, the whole of his performance in office. That's not the point of this blog entry. Frankly, I don't know the details of Pulkrabek's day-to-day performance in office, and it's not my area of expertise. I see by the story that he's still pushing a "new and larger" jail. Are there more alternatives that could still be pursued, or has he truly exhausted all of them? I don't know.

What I do know is that we have altogether too much "shoot from the lip" in public policy discussions and political decisions. Some officials who are quite willing to invest three days in a conference -- 72 hours away from the office -- are "too busy" to spend 72 minutes researching a local issue on the Internet.

As is often said, "We have more problems than we deserve and more solutions than we have ever tried."

It is highly unlikely that there is any challenge confronting our County, City, University or School Board (among other institutions) that has not existed elsewhere -- existed, been identified, researched, resolved, with the solution implemented, written up, and made available for us to read (at no cost for "consultants") on the Internet.

Whether it's the creation and preservation of Eastern Iowa's green spaces, deciding on the most appropriate number of Iowa City police officers (a "peak-load" analysis, among other things), the arming of campus police, students' binge drinking, the most appropriate way to help those children who have been "left behind" in our School District, for the City of Iowa City to deal with economic development, or alternatives to the ever-escalating building of "newer and larger" prisons as a national response to the "crimes" of mental illness and substance abuse -- there are answers out there.

Lonny Pulkrabek has found a couple of them. And that's why this story was, for me, an example of "good news."

. . . Richard Doak: Almost Always Good News. The Des Moines Register's Richard Doak, former editorial page editor and continuing columnist, sort of combines both of the two prior elements of "good news" -- he clearly loves his work, and he's committed to research and innovative thinking. So I just selected the latest in his life's work of columns: Richard Doak, "Iowa Isn't Enough; Sell the Best Region in the Nation: The Midwest," Des Moines Register, September 23, 2007.

This time, in addition to the suggestion in the title -- that we should emphasize promotion of the "Midwest" rather than going it alone as "Iowa" -- he also reminds us once again of Richard Florida's advice:

Florida recognized the emergence of a new driving force in economic growth, "the creative class."

This new class is made up of people who make their livings by thinking, creating, innovating and independent problem solving - people such as engineers, scientists, designers, architects, educators, artists, musicians, writers and others.

. . .

Florida's great discovery was that economic growth occurs in regions that are most inviting to creative people. That's what revolutionized thinking about economic development.

The old model of development was that you create jobs and the people will follow.

The new model is that you attract creative people and the jobs will follow.

. . .

Iowa has not entirely embraced the new thinking. There's still a strong element of bribe-the-companies-and-they-will-come in the state's development strategies.

Nevertheless, Iowa communities increasingly seem to realize that their best hope for growth is to become the kinds of places that creative-class people would find attractive.

. . .

The smart thing to do would be to take all the money wasted on business incentives and plow it into education and quality-of-life improvements. . . .
Doak is right. "Money can't buy love," and bribing businesses can't buy economic growth. The good news is that Iowa can have both: economic growth and improved quality of life. Indeed, that's the only way we can have either.

The Bad News

I may not have seen it all, but I've seen much of it in my lifetime.

And yet even I was simply not prepared for the page-one story in last Sunday's Des Moines Register. Clark Kauffman, "U of I, Iowa State use student data to sell credit cards," Des Moines Register, September 23, 2007, p. A1. (You might also want to take at look at the 42 comments -- as of the afternoon of September 25 -- entered by readers of the story, most of whom, it turns out, responded as I did.)

(To remind: Last week was also when UI professors were told they could no longer refer to students by name in class out of respect for the students' privacy, and the laws and regulations protecting it. (The suggestion was subsequently rescinded.) Now it appears the UI thinks it's perfectly appropriate to sell students' personal information -- and that of their parents -- to banks for the purpose of marketing credit cards!)

As I have written before, "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.

"Revenue is needed" is why politicians accept the bribes called "campaign contributions;" why "non-commercial" educational radio stations run commercials; why K-12 schools subscribed to "Channel One" and continue to sell sugared soft drinks to their students, knowing they will increase obesity, dental caries, and diabetes; why the UI's athletic program becomes a partner with the organized gambling industry's casino in Riverside; and why universities provide advertising on their buildings, and in naming their colleges, that promotes their corporate "donors."

But the Regents' universities have really set their moral compass to spinning with this one.

You have to read the full 2300-word Register-copyrighted story to become totally outraged, but these fair use excerpts will get you started:

Iowa's two largest public universities are aggressively marketing credit cards to their students as part of an arrangement that generates millions of dollars for the schools' privately run alumni organizations.

Publicly, the University of Iowa and Iowa State University have expressed concern over the debt of their students, many of whom graduate with $25,000 to $30,000 in bills to pay. The schools say they are trying to reduce that debt load.

At the same time, however, the two schools have signed deals with their alumni associations in which they have agreed to endorse, promote and profit from Bank of America credit cards marketed directly to students.

Records obtained by The Des Moines Register also show that the U of I has agreed to give the bank access to databases that include the mailing addresses, telephone numbers and e-mail addresses of students, parents and people who buy tickets to Hawkeye football and basketball games. The university has also promised to provide its biggest-spending cardholders with exclusive access to university facilities, coaches and even student athletes.

. . .

In Iowa and most other states, the financial details of those partnerships are often shrouded in secrecy, despite the involvement of public universities that rely on taxpayers to provide a substantial portion of their operating revenues.

. . .

Consumer advocates . . . contend the schools are also facilitating on-campus marketing aimed directly at students who have limited income and are struggling with debt from student loans. They say public assets are being used to enrich corporate lenders . . ..

. . .

U of I alumni officials declined to say how much they are paid through their arrangement with Bank of America. Also, the bank declined to comment on its partnerships with Iowa schools.

But federal records show the University of Iowa Alumni Association was collecting $550,000 per year from MBNA, now Bank of America, through 2005.

Under the terms of the association's newest contract with the bank, the school is guaranteed at least $200,000 per year - all of which is to go to the athletics department.

. . .

Chris Bavolack, vice president of the U of I alumni association, declined to comment on the revenue-sharing deal that results in the association collecting additional money as cardholders' debt loads increase. . . .

The sales pitch that arrives in students' mailboxes in Iowa City is written on alumni association letterhead that includes the trademarked logo of the U of I.

The letter is signed by Vince Nelson, president of the U of I Alumni Association.

It begins: "Imagine the convenience of being able to purchase supplies for your classes without worrying about carrying a lot of cash. You could pay for your books - or get quick cash in an emergency - and put it on one easy-to-use account. That's the kind of flexibility every student can appreciate and it can be yours with the University of Iowa credit card."

Nelson's pitch also includes this postscript: "Bank of America helps support the University of Iowa with every account opened, and for every purchase made with the card. All at no additional cost to you."

[T]he alumni association . . . has signed a contract with the school committing the university to "creatively and aggressively" marketing the Bank of America card.

As part of that agreement with the association, the university has promised to provide Bank of America with lists of all people who purchase season or single tickets to athletic events - a list that would include students, parents and other supporters [as well as] for Bank of America's use, electronic lists containing the phone numbers, e-mail addresses and mailing addresses of students and their parents . . ..

In return for every new account opened as a result of the university's sales pitches, the school collects $50.

The agreement obligates the university to help sell the credit cards through public-address announcements during games at Kinnick Stadium and Carver-Hawkeye Arena. Card applications are mailed to buyers of sporting-event tickets, and the cards are promoted in advertisements during the coaches' weekly TV shows.

. . .

The [Iowa State] athletics department agreed to exclusively endorse the credit card program at athletic events and agreed to give the bank, free of charge, the names and contact information of season- and single-game-ticket holders.

. . . The company could set up booths and tables [at athletic events] to sign up cardholders at football and basketball games. To help with the "Charge it to Cy" campaign, the school authorized the bank to give T-shirts, hats and bobbleheads as gifts to new card applicants.

. . .

Robert Manning, a professor of consumer finance at the Rochester Institute of Technology, has testified before Congress [that] such programs increase the likelihood of students failing to complete school. He faults school administrators for having a "greater interest in increasing credit card royalties than in fulfilling their responsibility to ensure the graduation of their students with the lowest possible level of financial debt."

Using a credit card to pay for textbooks and class supplies can be risky, too. The U of I card offered to students has an interest rate that can balloon to 29.99 percent in the event of a single late payment. . . .
Governor Bill Richardson says he has been nominated four times for the Nobel Peace Prize. Well, I think this story of Clark Kauffman's should be nominated at least four times for a Pulitzer Prize.

It's eligible for any one of the first five (of fourteen) categories "for excellence in journalism work."

This is the kind of "investigative reporting" that serves to remind us of what newspapers used to be and should continue to be today.

That's the "good news."

The bad news is what he found, and needed to report.

What a sad commentary on what happens "Once 'revenue is needed' is the Polestar for a university's financial decisions."

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Anonymous said...

There is a point all people reach where they cease to understand the world they live in anymore.

Anonymous said...

That credit card scam is incredible. However, you will see any number of revenue enhancing scams all across the academic landscape these days.

Simplistically stated, the problems occur because of revenue needed for several reasons:

- Salaries are very high at the top
- The mortgage needs to be paid; the new alumni assoc BLDG (read revenue seeking BLDG), the new Kinnick, renovations to CHA, and Art, Physics etc (thank god some of the new building actually goes to students)
- State support is eroding some
- The bureaucracy grows out of control (administrative bloat)
- Health care costs are up

This is a very complicated issue, why the academy has become a revenue machine.

Could someone stop the clock to go back to 1975?

Jeffrey Horne said...

I appreciate your comments regarding MBA's in non-profits, but I would like to expand that to include government. We have many discussions in our Iowa City County Management Association meetings about how you bring young people into the field of city administration. I am 41 years old, and I am in the lowest 10% age wise in our state association the Iowa City County Management Association (IaCMA). Traditionally city managers come from MPA backgrounds, but I do think MBA's can bring some different principles to the field that add to it.

I worked in the private sector for 9 years after I got my undergrand degree, and I was fortunate to have a chance to return to Johnson County as Budget Coordinator and serve the people in my home county. That led me to city management as a career. It can be tough some days, but the chance to make a positive impact on people's lives is much more gratifying to me than making six figures. Not that I don't want to make a good salary; I have 4 children and my wife stays home for them. It is not an easy thing to balance, but I could not imagine a career without some meaning beyond just a paycheck.

Anonymous said...

I agree with this completely, thanks for the post.