Harry Targ
It is interesting to note that Indiana State Senator Spencer Deery who introduced Senate Bill 202 defends the bill by suggesting that distrust in higher education has increased. While this claim is of dubious merit and has come from politically conservative places such as ALEC and so-called “think tanks,” many citizens on and off campus are skeptical of ill-placed and self-interested investments in the privatization of higher education, collaborating with real estate and military contractors, and working to expunge from curricula any courses that promote critical thinking.
https://jacobin.com/2017/06/purdue-university-kaplan-privatization-austerity
No better reason for skepticism about Purdue University can
be found than in the recent Forbes magazine article, see below, indicating that
Purdue Global, a relatively new venture, is indebted by about $128 million.
The Forbes article and a summary of SB202 by Dave Bangert are
added below for more in depth reading.
*******************************************************************************
Forbes
Purdue Global Owes $128 Million To Its For-Profit Partner.
It May Not Be Able To Pay.
Nearly seven years ago, one of the oddest and most confusing education rearrangements became arranged – the sale of for-profit, mostly online, Kaplan University to the public, land-grant Purdue University. The resulting institution is Purdue Global, the online sister of the Indiana flagship.
There have been other similar deals in which a for-profit,
online college was sold to or consumed by a public school. For example, the
University of Arizona, bought
for-profit Ashford University. And the University of Idaho is
finalizing a
deal to buy the for-profit University of Phoenix.
Usually in these deals, as was the case with Purdue and
Kaplan, the school is sold for a token amount – Purdue paid $1 – but the
selling, for-profit company is then hired on a long-term contract to provide
support, infrastructure, and marketing services to the school. Those deals
usually include a revenue-share provision in which the seller and new manager
takes a share of the tuition revenue. In the Kaplan sale, Kaplan’s contract
provides them with 12.5% of the school’s proceeds, plus fixed payments for services.
In practice, the deals are very similar to the arrangements of online program
management (OPM) companies which have fallen under recent
heavy scrutiny and market pressures.
Generally, the Purdue Global management agreement has
avoided that spotlight. But according to recent financial reports and filings
from Purdue University and from Graham Holdings Company (GHC), the parent
company of Kaplan Higher Education, the market pressures that are roiling OPM
businesses may be squeezing both Purdue Global and Kaplan.
According to Graham Holdings Company’s recent
SEC filing, Purdue Global owes it a ton of money. “As of September 30,
2023, Kaplan had a total outstanding accounts receivable balance of $127.8
million from Purdue Global related to amounts due for reimbursements for
services, fees earned and a deferred fee,” GHC told the SEC.
It’s a bill that, according to the rules that established
Purdue Global, neither Purdue University nor the taxpayers of Indiana can pay.
They are not allowed to cover Purdue Global’s debts and losses.
But the real problem is that it’s a bill that Purdue Global
probably can’t pay either. According to the
most recent annual report from Purdue University, Purdue Global simply does
not have the money.
Purdue Global, the report says, had a “net operating
revenue” loss of $95 million, it has about $142 million in current
liabilities, and, according to the report from Purdue, “Cash and Cash
Equivalents at Purdue Global consist of funds held in checking, savings, and
money market accounts. Balances, excluding money market funds, at June 30, 2023
and 2022 were approximately $2,600,000 and $300,000, respectively.”
For comparison, the same report says of Purdue University,
“the bank balance of the University’s deposits (demand deposit accounts) as of
June 30, 2023 and 2022, was approximately $103,888,000 and $87,338,000,
respectively.”
A spokesperson for Kaplan noted that the “net operating
revenue” loss of $95 million reported by Purdue does not include non-operating
revenue, which he said was about $88 million. Though this would still create a
situation in which, according to Kaplan’s spokesperson, “the loss was $7.5
million.”
The same Purdue report shows that Purdue Global has a net
negative financial position of $38.8 million, despite reporting cuts in
spending and despite a reported 5% increase in enrollments at Purdue
Global, according to the GHC document.
The position of Purdue Global and the size of the debt may
make it unrecoverable, a reality GHC told its shareholders. “The Company will
continue to assess the collectability of the fee with Purdue Global on a
quarterly basis to make a determination as to whether to record all or part of
the fee in the future,” GHC wrote.
Back in 2017, when the deal was announced, many celebratory
forecasts and predictions were made. None of them involved Purdue Global losing
money and defaulting on its debt. For former Purdue President Mitch Daniels,
who invested his and Purdue’s reputation on the success of this venture, the
upside-down finances and unpaid debt aren’t flattering.
“Purdue Global continues to struggle financially, unable to
pay its bills to Kaplan,” said Dahn Shaulis, Editor of the Higher Education Inquirer and
early skeptic of the Purdue Global arrangement. “It hasn't been the money maker
that Mitch Daniels thought,” he said.
Asked to confirm or comment on the debt to Kaplan, a
spokesperson for the Purdue first directed the question back to Kaplan and GHC
but later said, “In the normal course of our business, we owe money to lots of
vendors, including Kaplan.”
Jerry Dervin, Chief Financial Officer of Kaplan North
America, disputed the characterizations of the financial position of Purdue
Global. Dervin wrote, in part, “the Purdue Global-Kaplan relationship calls for
PG to reimburse Kaplan for its expenses incurred on behalf of PG. Sometimes the
outstanding payable is at a seasonal high (as it was at September 30, the
highest period of the year), and sometimes it’s at a seasonal low. But
throughout the relationship the reimbursement of expenses by PG to Kaplan and
all its other providers has always been made, in full, as a matter of course
out of the cash flow of the institution.”
“Purdue Global has cut costs by closing campuses, campuses
that provided value to consumers. The problem now is how can they cut costs
even more?” Shaulis asked.
But if the school has a $128 million bill that it cannot pay
even after cutting cost and growing enrollment, it’s not a
sure thing that cutting its way out of debt will work. Or whether that’s even
the best plan. Educationally, cheaper is not better.
Dervin also wrote, “from the onset of its formation, Purdue
and Kaplan have been aligned in investing in Purdue Global’s mission to serve
adult learners, veterans, first generation students, all from different
backgrounds. PG has increased its investment in academic, student support and
awareness with a goal of building a long-enduring institution that delivers
quality outcomes for students and stakeholders.”
However Purdue Global and Kaplan square their debts and
receivables, the issues may run deeper. It may be that recycling, repainting,
and rebranding a subprime for-profit college may simply be a financial anchor
instead of the lifeline some believed it to be.
The University of Arizona, for example, is mired in a public
financial crisis where the University of Arizona Global Campus, the product of
Arizona’s purchase of for-profit Ashford University, recently reported an $18.5
million operating deficit – a bill the university itself will have to pay. And
while it’s not clear at all what caused Arizona to fall short in its budget
projections by some $250 million, more than a few suspect that outsized
investments in Arizona Global Campus/Ashford have been major contributors to
the debacle.
Even if that turns out not to be true, it is true that both
Arizona Global Campus and Purdue Global are losing money.
“The issues with Purdue Global, along with the Arizona
Global mess, should serve as a cautionary tale for Idaho, with its pending
acquisition of University of Phoenix,” Shaulis said.
Critics can and will say whatever they please about the
University of Idaho merger with the University of Phoenix. But if it does not
turn out as promised, no will be able to say it was a surprise.
Updated, Dec. 20: This article has been updated with
comments by the chief financial officer of Kaplan, Jerry Dervin, who sent an
email after the article was initially published. His comments have been added.
Updated, Dec 21, 22: A full description of the account
balances at Purdue University and Purdue Global, as well as a more context
regarding its operational losses, as provided in the University’s annual
report, were added for further clarity.
***********************************************************************************
Deery defends tenure reform bill as blowback grows at
Purdue, IU
FEB 14, 2024
After Indiana University President Pamela Whitten cast doubt
on a sweeping bill aimed at countering negative connotations about higher
education, particularly among conservatives, state Sen. Spencer Deery took a
swing back this week, defending a measure he authored.
Whitten, in a statement released last week, said Senate Bill
202 – one that reforms the faculty tenure rules on state campuses and gives
General Assembly leaders more control over the makeup of university boards of
trustees – “risks unintended consequences that threaten not just the stature of
Indiana University, but the economic and cultural vitality of the state.”
Deery, a West Lafayette Republican who was part of Mitch
Daniels’ staff at Purdue, said Whitten is bowing to faculty and proving a point
behind the bill.
“In a single statement,” Deery said, “President Whitten has
highlighted for all Hoosiers the failure of leadership that has led to the
decline in trust and support for American universities.”
Meanwhile, the University Senate at Purdue is scheduled
Monday to discuss a resolution that stands against Senate Bill 202 as a measure
that would turn tenure into “a political weapon to leverage” and a snitching
culture built on “an atmosphere of suspicion and mistrust on university
campuses.”
The bill, which cleared
the Indiana Senate last week on a 39-9 vote, will get a hearing in the
House Education committee at 10:30 a.m. Wednesday (Feb. 14). (To watch the
livestream of the hearing, here’s
a link.) Efforts to rally faculty members from Purdue and other
universities to testify were going on early this week.
“It’s breathtaking in its overreach,” Alice Pawley, a
professor in Purdue’s School of Engineering Education, said of Deery’s bill.
“It’s troubling that something like this is coming from someone with so much
experience on our campus. … This is a disaster waiting to happen for Purdue and
disaster for our state’s universities.”
Here’s where things stood on SB 202, heading into that
hearing.
What’s driving/what’s in the bill
Deery said the bill was prompted by what he called “the
hyper-politicalization and monolithic thinking of American higher education
institutions.” He’s pointed to a series of national commentators –
including Daniels,
who hasn’t been shy about his problems with the tenure system –
national polling and recent state-compelled surveys of students on Indiana’s
campuses.
A 2022 Gallup survey, commissioned
to satisfy a General Assembly measure, found that of the students who
responded, 46% of students who identified as politically conservative
considered they could openly express their opinions in classrooms and on
campus, compared to 79% of those who said they were liberal. That same poll, when
asking Purdue students about classes related to “political, historical or
cultural topics,” found that 7% of liberal students said their professors
discourage them from sharing political or social views, while the number was
21% for students who considered themselves conservative.
Deery contends those views are keeping some students and their families from considering college.
Among its provisions, Senate Bill 202 would:
Establish a process where university trustees evaluate
faculty up for tenure – a status that gives professors indefinite job security
in most cases – or promotion with “criteria related to free inquiry, free
expression and intellectual diversity.” During Senate debate, critics derided
the measure as an effort to kill tenure and make it easier to fire faculty
members. Deery contends the measure would codify tenure and protect faculty
“against retaliation for the content of their research, for criticism of university
leadership or for sharing political views outside the classroom.”
Requires trustees to review a faculty member’s tenure status
every five years. Deery said some U.S. universities already do five-year
reviews. He said SB 202 gives trustees “a little bit of a prod and cover … to
make sure it’s still working.” Deery said one intent is to flag faculty members
pushing political view in the classroom that are unrelated to the professor’s
expertise. Deery said he sees those reviews going through a similar process,
sending 20% of the tenured faculty a year through a post-tenure review that
eventually lands with the trustees to ratify. Purdue lists 1,973 tenured and
tenure track faculty on the West Lafayette campus.
Requires state universities to establish procedures that
allow students and employees to submit complaints that a faculty member isn’t
meeting certain criteria related to free inquiry, free expression and
intellectual diversity.
Requires trustees to adopt a “policy of neutrality” that
limits universities from making official positions on “political, moral or
ideological issues.”
Allows the Indiana House Speaker and Indiana Senate
president to appoint a trustee to a university’s board. Those would replace
selections made by alumni boards and ratified by the governor. Deery said there
was a move in the General Assembly looking to do something similar, only adding
two trustees to university boards. He said this was a compromise when drafting
the bill. “I heard from colleagues who said, ‘You know, we spend a lot of money
on higher education. We want to have a legislative voice in who we appoint in
doing so,’” Deery said.
Make universities account for spending on diversity, equity
and inclusion efforts on campus and add to those programs to include
“intellectual diversity.”
“This isn’t revolutionary,” Deery said. “This is an
opportunity to say that you may not like the institution of higher education as
a whole, but in Indiana we do things differently.”
Is it perception or reality, what he reports from the
surveys and polls? In other words, is he fixing a real problem or changing
structures as a means of applying salve to people’s feelings, no matter how
they come by them?
“Ultimately, both matter if it's keeping somebody from
enrolling in higher ed, whether it's perception or reality,” Deery said. “I
don’t believe that you can fully dismiss them as just being perception. I do
think that there are some who feel like it's maybe worse than it is or fear
that it's worse than it is. But most of the people that are telling me that
it's not an issue are not people who have ever been a conservative on a college
campus. And you don't need to go very far to talk to conservatives on college
campuses to understand that this is more than just perception.”
Pushback among Purdue faculty
On Monday afternoon, the University Senate will
consider a
resolution that rejects Senate Bill 202. The proposed measure calls the
bill vague, unnecessarily threatens current tenure process, adds new layers of
bureaucracy on campus and “while claiming to stand for intellectual diversity …
would constitute a significant reduction in academic freedom.” The proposal
calls on Purdue administrators to condemn Senate Bill 202 and the General
Assembly to back away.
“The bill says it’s for academic freedom, but it’s the
opposite,” Pawley, a University Senate member, said. “It says institutions need
to create a new process for students to be able to report faculty or employees
for violations of protections of freedom of speech, freedom of expression or
intellectual diversity. That's the thought police. It’s Orwellian.”
Pawley said the bill stands on vague concepts of
intellectual diversity that would be judged by trustees who would be
increasingly politicized, given the new appointments by the General Assembly.
“I'm sure he thinks that he's targeting the humanities
professors who talk, say, about critical race theory and Marxism, but he's also
targeting business faculty who are teaching about capitalism, who all of a
sudden will have to start talking about socialism,” Pawley said. “It's not
specified, so it will cut both ways.”
Stephanie Masta is an associate professor in Purdue’s
College of Education and was on the committee that drafted the proposed
University Senate statement.
Masta said the Indiana
Campus Free Speech Report 2023, the survey Deery used to justify the bill,
had 18,559 students respond statewide. That survey went to more than 300,000
full-time undergraduate students at all Indiana public institutions, including
part-time students at Vincennes University and Ivy Tech Community College,
according to the report. That’s roughly a 6% return rate.
“Bills like these are a coordinated, national effort to
eliminate diversity, equity and inclusion efforts in colleges and
universities,” Masta said. “SB202 is vague and open to a great deal of
interpretation, making it easy for politicians to weaponize against faculty and
staff. Their goal is often to create a ‘chilling effect" where faculty,
staff and students will start to self-censor rather than risk their actions
being misinterpreted by a review committee.”
What the universities say
Purdue President Mung Chiang and other administrators
haven’t publicly taken a position on SB 202. “As this bill goes through the
legislative process, we are working to fully understand its details,” Tim Doty,
a university spokesman, said.
Whitten released a statement last week, aimed at what she
called “unintended consequences” embedded in the bill’s language:
“While we are still analyzing the broad potential impacts of
SB 202, we are deeply concerned about language regarding faculty tenure
that would put academic freedom at risk, weaken the intellectual rigor
essential to preparing students with critical thinking skills, and damage our
ability to compete for the world-class faculty who are at the core of what
makes IU an extraordinary research institution.
“We all share the common goal to maximize the university's
capacity to make scientific breakthroughs, attract talented students and
faculty, drive economic development and create better outcomes for all
Hoosiers. As crafted, my concern is that SB 202 risks unintended consequences
that threaten not just the stature of Indiana University, but the economic and
cultural vitality of the state.”
Deery said this week that he’d been working on the bill and
sharing drafts with higher education leaders across the state for months.
“This bill is not a surprise to any institution,” Deery
said. “It’s telling that the first time the school’s leaders elected to
characterize the bill in that way was through the media and in response to
pressure from a faculty advocacy group that wants the school to continue to
operate in a way that leads to its decline. … IU’s leadership also knows that
post-tenure reviews are common in higher education and that without them, some
tenured faculty stop meeting basic performance expectations and waste tuition
dollars.”
