[FoRK] wealth disparity amongst institutions of higher learning

dan at geer.org dan at geer.org
Tue Dec 8 14:27:18 PST 2015

Ken Meltsner writes:
 | Cynically, I suspect this is an attempt to justify changing the tax
 | code to grab or redistribute some of that wealth since they're running
 | out of less-politically sensitive sources.

It is.

 | Less cynically, it could be viewed as an attempt to bring universities
 | into the same framework as other non-profits where there are limits to
 | how much can be accumulated, how much needs to be spent on what sorts
 | of activities, etc.  This has already been done to churches -- they're
 | taxed on non-religious/charitable activities, I believe, although
 | defining which these are is an ongoing nightmare.

Discussed in the report.

 | A nit pick or two: endowment per undergrad is the wrong number.  It
 | should be, at the very least, endowment per student (grad +
 | undergrad), especially at institutions like Harvard University where
 | the total enrollment is several times the undergrad enrollment.  I
 | don't know if the numbers quoted were already corrected to include
 | only the part of the endowment associated with the undergraduate
 | institution.

See other tables in the report.

 | Agreed that 15% return is a historical outlier.  The long term average
 | of 1-3% over (some measure of) the inflation rate* is probably a
 | better one.

See the discussion of historical rates of return.

 | *  Inflation rate is problematic because IIRC a university has two big
 | costs: energy and people.  And these do not follow the same curves as
 | the CPI or other market basket numbers.

Can't be true, but with $20 oil that'd be a win.  Let's try another:



Meal Plan Costs Tick Upward as Students Pay for More Than Food
   By Stephanie Saul, New York Times, December 5, 2015

   KNOXVILLE, Tenn. -- Before his 35-mile commute through Appalachian
   hills to classes here at the [16]University of Tennessee, Michael
   Miceli eats a gigantic breakfast. It is his way of getting through
   the day without spending money on a campus lunch.

   Food deprivation is merely one trick Mr. Miceli uses to minimize
   his college debt, now creeping past $22,000. So the $300 bill
   he got from the university this semester -- for food -- sent him
   into a tailspin.

   "I was in near panic at the thought of having to borrow more
   money," said Mr. Miceli, 23, a linguistics major.

   For the first time this year, the University of Tennessee imposed
   a $300-per-semester dining fee on Mr. Miceli and about 12,000
   other undergraduates, including commuters, who do not purchase
   other meal plans. The extra money will help finance a $177 million
   student union with limestone cornices, clay-tiled roofing and
   copper gutters, part of a campus reconstruction plan aimed at
   elevating the University of Tennessee to a "Top 25" public
   university.  Photo

   Michael Miceli is among the 12,000 students who are being charged
   $300 per semester for a mandatory plan to use campus dining
   facilities at the University of Tennessee, Knoxville. Credit Joe
   Buglewicz for The New York Times

   Tennessee's contract with its dining vendor, Aramark, is just
   one example of how universities nationwide are embracing
   increasingly lucrative deals with giant dining contractors, who
   offer commissions and signing bonuses to help pay for campus
   improvements and academic programs. It is part of a new model
   of raising money through partnerships with private vendors,
   officials say, and with state funding for higher education still
   below [17]pre-recession levels, a way to replace lost revenue.

   Under its contract, which runs through 2027, Tennessee will get
   14 percent of all food revenues plus $15.2 million in renovations
   to dining facilities.

   In exchange for signing a 20-year contract that runs through
   2034, the University of Virginia recently got a $70 million
   contribution from Aramark, based in Philadelphia -- in addition
   to $19 million in renovations and annual commissions increasing
   to $19 million a year.  Texas A&M announced a 10-year deal in
   2012 with Chartwells, a subsidiary of the British-based Compass
   Group, that included a $22.7 million signing bonus and $25 million
   in capital investments.

   Universities frequently announce the windfalls with great fanfare,
   but critics say the cost gets passed on to students and contributes
   to the expense of college. Tom Mac Dermott, a dining consultant
   who works with universities, said upfront payments were built
   into the price of the meal plans. "When you keep tacking on this
   stuff, the cost of the plan goes up."

   President Obama [19]mocked gourmet college food in a speech in
   February at Ivy Tech Community College in Indianapolis, suggesting
   that it raised college costs. And meal plan fees are increasing
   annually at many schools, driven partly by demands that food be
   locally sourced, freshly made and hormone-free.

   Yet the particulars of the contracts reveal that much of the
   meal plan cost does not go for an individual's food. Colleges
   use the money to shore up their balance sheets, create academic
   programs and scholarships, fund special "training tables" to
   feed athletes, and pay for meals for prospective students touring

   Like many such deals, Texas A&M's agreement with Chartwells comes
   with a catch, Mr. Mac Dermott said. If Texas A&M wants to cancel
   the deal, a pro rata portion of the money must be repaid.

   "Suppose the operator isn't doing well over time?" Mr. Mac Dermott
   said. "The university can't get rid of them. The investments are
   made on the guarantee that if the contract is terminated by
   either party, the client will return the money. That's not a

   But Phillip Ray, A&M's vice chancellor for business affairs,
   said there was no clawback if the contract were terminated for
   cause. "People say, `You've signed this big deal, now they own
   you,' " Mr. Ray said. "Not at all. We call the shots."

   In 2013, the year after A&M entered its agreement, several dining
   facilities there were temporarily closed by the county health
   department, which found rodent droppings and a roach infestation.

   Other colleges have deals that offer sweeteners -- renovations
   to the president's house, private parties catered for employees,
   free meals for athletic officials in exchange for free football

   These arrangements, which auditors have criticized, can create
   revenue streams outside the normal budgeting process for funding
   pet projects, raising the potential of abuse.

   At South Carolina State University, a historically black
   institution, a 2014 audit found that students paid $343 a year
   in "hidden costs" for food. The money was rebated to the institution
   by its vendor, Sodexo, a French company, partly to pay for a $5
   million wellness center, which was never built. The university,
   under new leadership, said it has ceased the practices described.

   Students line up for meals at the presidential court dining
   facility on campus. Credit Joe Buglewicz for The New York Times

   An audit this year at the University of Louisiana at Lafayette
   found that the food vendor catered free parties for children of
   a university employee while inflating bills to the university.
   In a response to the audit, the university said the employee had
   repaid the fees.

   For food vendors, one of the critical components in turning a
   profit is a guaranteed revenue stream.

   Hofstra University on Long Island announced in 2013 that it would
   require a minimum buy-in from all residential students. Brandeis
   University in Waltham, Mass., will require participation by even
   seniors who live in dormitories with kitchens next year, said
   Skyler Golann, chairman of the student dining committee.

   "There's definitely been a backlash," said Mr. Golann, a sophomore
   from Hinesburg, Vt. Brandeis said the requirement would help pay
   to renovate dining halls without increasing tuition and other

   This is how mandatory meal plans have become a political issue,
   both on campus and off. The New Jersey General Assembly last
   year adopted a ban on mandatory meal plans, although it was never
   approved by the Senate.

   "Some colleges were particularly egregious in requiring high-cost
   meal plans," said Assemblyman Joseph P. Cryan, who sponsored the
   legislation. Meal plans at some private schools cost more than
   $3,000 a semester.

   The mandatory meal plans that have created the biggest controversies
   are those imposed on students who live off campus. One of the
   first protests arose in Alabama, where students at several
   universities sued to block the plans, but the [21]Alabama Supreme
   Court ruled against them in 2011.

   Danny Evans, a Birmingham lawyer for the students, said that
   since his lawsuit, the idea has "gone viral," spreading to other
   colleges. This year, in addition to the University of Tennessee,
   colleges ranging from Loyola New Orleans to [24]Suffolk County
   Community College on Long Island -- a commuter school with no
   dormitories -- have announced mandatory commuter meal fees.

   Responding to complaints, administrators said dining was important
   for commuters because it fostered campus community, citing studies
   showing that students with meal plans stay in school longer.

   Administrators here at the University of Tennessee, where a
   [25]$1,899-per-semester meal plan is mandatory for freshmen who
   live on campus, first floated the requirement that other students
   buy a $300-per-semester meal plan at a meeting two years ago.
   Grant Davis, a student who attended the meeting, at which Aramark
   served lobster ravioli, said, "We knew we were being greased."

   Students protested the plan, garnering more than 1,000 signatures
   practically overnight on a petition titled "Don't Force Feed

   Phase 1 of the new student union building, heralded as the
   cornerstone of a campus transformation, opened this year, with
   a Chick-fil-A, Subway, Qdoba Mexican Grill, Starbucks and several
   other restaurants.

   Students can get refunds if they do not eat the food, but
   experience at other schools shows that most succumb to the
   fast-food temptations.

   Mr. Miceli, a senior from Dandridge, Tenn., intends to ask for
   a refund.

   Even so, he said, he regards the money as a loan to the university
   that he could not afford.


  17. http://www.cbpp.org/topics/state-budget-and-tax 18.
  21. http://caselaw.findlaw.com/al-supreme-court/1581659.html 22.

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