THE FINANCIALIZATION OF HIGHER EDUCATION Action on the Academy Conference

In a recent survey sponsored by the Carnegie Corporation, nine out of 10 adults and more than 95 percent of senior college administrators say higher education is in crisis. Forbes Magazine, Bain & Co, Moody’s Rating Services and many others have all warned that the system is under severe strain. 150 school received failing financial scores by the U.S. Dept of Education.

The crisis in Higher Education is not financial, brought on as result of institutional inefficiency or demographics of young people. The problem is political and the solution will be political. Schools do suffer from deficits – of democracy, transparency, accountability and leadership.

The crisis is systemic (industry-wide) and long- term but the popular market remedies are individual and short term. Knowledge is now a product to be Packaged and sold to a variety of customers.

We have one publically financed Higher Education system masquerading as three separate systems whose mission is maximizing revenue: Private Non-Profit Public Non-Profit For-Profit

The primary source of information on revenues and expenses are the IRS 990’s and the annual audited financial statements. It is extremely difficult to know the real financial health of private non-profit and privately held for-profits because there is no real financial transparency.

SOME SOURCES OF REVENUE Net Tuition; State & Local Appropriations; Private Gifts; Investment Returns; Endowment Income; State & Local Grants & Contracts; Federal Appropriations (Earmarks), grants, contracts; Auxiliary Enterprises (Food Services); Hospitals, Independent Operations, Misc.

The Impact of Austerity on Bargaining

Higher Education Food Pyramid (by potential revenue streams) TIER 1: FOUR YEAR NON-PROFIT PRIVATE and NON- PROFIT PUBLIC, RESEARCH INSTITUTIONS WITH ENDOWMENTS OVER 1 BILLION ; _________________ TIER 2: FOUR YEAR, NON-PROFIT, PRIVATE, TUITION BASED SCHOOLS WITH SMALL (UNDER 1 BILLION) ENDOWMENTS ______________________________ TIER 3: FOUR YEAR BOUTIQUE COLLEGES WITH and WITHOUT ENDOWMENTS _______________________________________ TIER 5: FOR-PROFIT TIER 4: TWO AND FOUR YEAR, NON-PROFIT PUBLIC and PRIVATE TUITION BASED SCHOOLS __________________________________________________

TOP TIER Examples: Harvard, Dartmouth, Princeton, Stamford, U of Virginia, U of Michigan, U of Texas; SECOND TIER Examples: Boston University, Northeastern, Boston College, Brandeis University; THIRD TIER Examples: Wentworth Institute (trade); Berkeley College of Music, Boston Conservatory of Music, Providence College, Rhode Island School of Design, Julliard; FOURTH TIER Examples: Salem, Lowell, & Westfield State, Bunker Hill Community College; FIFTH TIER: Examples: American Career Institute, ITT Technical Institute, Kaplan Career Institute; Mt Washington College, National Aviation Academy of New England;

Higher Education Profit Centers Charging higher rates for In-Demand Courses; Distance Learning Copyright and Patents Endowment Gains Branding Commercial Real Estate Consulting/Speaking/Conferences Athletics – branding, etc.