[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.
| 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
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 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
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 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 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 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 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
$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
Students can get refunds if they do not eat the food, but
experience at other schools shows that most succumb to the
Mr. Miceli, a senior from Dandridge, Tenn., intends to ask for
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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