Tragedy and Farce at the Statehouse

Lincoln -- The sad stories of two Nebraska state agencies suggest that, as the old saying goes, history repeats itself... first as tragedy, then as farce.

The continuing troubles at the Department of Corrections are the tragedy. Nebraska's correctional institutions are not safe for either guards or inmates. The farce is newly uncovered mismanagement at the Nebraska Tourism Commission, in the form of nepotism, cost overruns, exorbitant speaker fees, and wildly excessive employee moving expenses, all being done under the noses of oblivious tourism commissioners.

Two governors, immediate past and present, were quick to call for the firing of the director of the Tourism Commission, as if she were the cause of all the trouble, not the gubernatorially appointed commissioners. Could be. Others around the statehouse suggested the independent Tourism Commission should execute a contract with the state's Department of Administrative Services (DAS) to help it with financial management. Others said the Tourism Commission should be placed back under the Department of Economic Development, where it was until made an independent state agency by the Nebraska legislature in 2012.

A deep breath and a little history are in order.

None of this should have happened at the Tourism Commission in the first place had state government been functioning properly. Long ago, to his credit, Governor Tiemann led an effort to modernize Nebraska state government by creating clear lines of budget and accounting authority from the governor on down. The idea was to give the governor executive budget authority to make spending recommendations to the legislature for all agencies and to centralize in one department, under the governor, responsibility for executing the legislature's ultimate budget and accounting for the state's expenditures under that budget. In this way, all state agencies, whether directly under the control of the governor, independent as created by the legislature, or separately created by the state constitution, would be under the same general rules for budget preparation, execution, and accounting.

Under the Tiemann-led effort, the Department of Administrative Services was created to provide these functions, its director to be appointed by and responsible to the governor. Within DAS, a budget division was created with a small staff of budget analysts to work with all agencies to help train their personnel in fiscal administration, keep track of their spending to make sure it was authorized by law, and generally to monitor the agencies to keep them focused on their missions and out of trouble. When troubles came up, as they always do, it was the responsibility of the DAS budget analysts to recommend solutions to the governor and to the legislature. Sometimes that entailed agency cutbacks; sometimes the analysts would recommend, through the governor, supplemental appropriations as the best solution. Likewise, a DAS accounting division was created to handle the actual mechanics of central bill-paying and financial reporting. These DAS divisions were created to serve all of state government.

Under Tiemann's successor, Governor Exon, this system was put to test by the State Department of Education, an agency with a constitutionally established, independently elected board. Although the legislature in 1973 created a new program to assist in the education of handicapped children, the Education Department wanted to distribute the millions in new funds the same way it always had without regard to the new legislation. The DAS budget division, monitoring the situation, consulted with the attorney general's office, which agreed that the Education Department's distribution plan would violate the law. The Education Department persisted, citing its independent, constitutional status. Governor Exon personally went before a special session of the State Board of Education and persuaded it to direct its staff to follow the law. The system worked; the misappropriation of funds was caught in time; the program director at the Education Department who caused the dust-up soon moved on to other employment.

(Sidebar: Governor Exon's appearance before the State Board of Education was facilitated by its chairman, Gerald Whelan of Hastings. Exon and Whelan met at the Cornhusker Hotel for coffee before the meeting to go over the issues. For the next election, Exon chose Whelan as his lieutenant governor running mate.)

All of which raises the question of how the current Tourism Commission got so far off track. Yes, perhaps its director was not up to the management challenges; yes, perhaps the tourism commissioners were not paying attention. But these kinds of problems should be anticipated and even expected. Nebraska governors have long since been given the tools to train agency personnel and to monitor agency fiscal performance, even in cases where the governor does not have policy control.

Governor Ricketts came into office touting his business acumen. But in his rush to re-organize the top levels of state government, creating offices and titles to match up with his private business experience (only to quickly disestablish or by-pass them), Govenor Ricketts seems not to have familiarized himself with the existing structure and tools at his disposal to stop state government from making a farce of itself. Which is not to say that his ideas for reorganization might not have had merit or that the old ways of doing things were perfect. But his finger-pointing is a little too much, unless he also is willing to point occasionally in the mirror.

It strikes me as a bad, bad idea to have an agency "contract" with DAS. All agencies should be working with DAS already. DAS should be reaching out to train personnel and to understand the issues, large and small, that all agencies confront, to help them with solutions and to bring major problems to the attention of elected officials early enough to prevent both tragedies and farces.

Nice to Have Company, But...

Washington -- It's nice to see a like-minded author write on higher education finance in a prominent Capitol Hill publication. Ingrid Schroeder, director of fiscal federalism initiatives at the Pew Charitable Trusts, makes a strong case for a better understanding of how higher education funding streams interact in her article "Footing the Bill for Higher Education." An excerpt:

Both states and the federal government contribute significant funding to higher education — similar to transportation, K-12 education and other policy areas. However, higher education is unlike these other areas, where there are generally federal-state funding matches or states are required to maintain a certain funding level to receive federal dollars. In higher education, states can, for the most part, cut spending without a loss of federal support.

But it's disappointing, so far, that those in Congress with committee jurisdiction over higher education have yet to put forth changes to the Higher Education Act that reflect an understanding of these increasingly painful realities of fiscal federalism. Although the federal government continues to pour billions into higher education, states and institutions have been reducing their support in the very area -- college affordability -- where the federal government has been increasing its spending. One result is student loan debt that now exceeds $1.3 trillion nationwide and is a drag on the economy, not to mention how student loan debt gone wrong is taking a devastating toll on millions of individuals and families.

Instead of using the tools of fiscal federalism to keep federal, state, and institutional funding streams in balance, Congress over the years has been killing off or strangling the programs in the Higher Education Act that contain matching and maintenance of effort provisions. It's not as if the federal fiscal effort needs huge increases; what it desperately needs is re-balancing among the various spending and tax expenditure programs to draw the states and the institutions back into "cooperative federalism."

To the credit of several past and present presidential candidates of both parties, their proposals for higher education affordability acknowledge the role that states and institutions must play. Where is the Congress?

Auditing the UNL Athletic Department

Lincoln -- Back in the 1970s, when Woody Varner became president of the University of Nebraska (actually chancellor under the old organization), he asked for an audit of the institution so he would know what he was getting into. It had never been properly audited, he said.

Now President Hank Bounds is asking for an audit (program review) of the UNL athletic department. The occasion is the upcoming turnover of the UNL chancellor. The new chancellor should know what he is getting into, the thinking goes.

Actually, this is not a bad idea and should be extended to other parts of UNL, if not the entire institution. While it is true that the athletic department has seen its share of turmoil under the outgoing chancellor and the people he chose to staff it, there is more to UNL than athletics. Big questions remain as to why UNL was voted out of the Association of American Universities, the organization of the country's premier research institutions, and whether membership can be restored. The Nebraska Innovation Campus has had more than its share of troubles; surely it is of equal or greater importance to the future success of the state than is the athletic department. The continuing drama at the U.S. Meat Animal Research Center needs a thorough review; its federal funding is on the Congressional chopping block for certain.

The question always arises as to whether such audits and program reviews should be made public. The fact that they might be is often a reason for not doing them. Hence, problems are allowed to fester and get worse.

The Kansas Board of Regents asked for an audit of K-State in 2009, on the occasion of a chancellor turnover. It was performed by the Grant Thornton company, which found many problems both in the athletic department and among the university's separate legal entities. The Kansas Press Association knew of the audit and demanded that it be made public. It was. Although many people were embarrassed by what the audit found, the institution emerged from it stronger in the end.

The conclusions of the K-State auditors bear repeating on the occasion of chancellor turnover at UNL:

The Foundation, the Alumni Association,.. and the Athletics Department view themselves, and are viewed by others, as part of or associated with the institution of KSU. However, they are all separate legal entities apart from the University. They all have as a common goal the advancement of KSU and have at times entered into transactions with one another in support of that goal. However, as separate legal entities, any transactions among them should be appropriately disclosed, approved and documented allowing for transparency of intent and substance. The failure to do so raises the question of the legitimacy of the transaction. Our report details numerous instances where transactions between the various entities did not meet this standard.

The issues that exist at UNL are too often covered over by a Go Big Red enthusiasm that is also a strategy to divert attention from real problems. But it must be remembered what Woody Varner did after getting his audit and making it public. He waved it as a "clean bill of health" across the state and in the halls of the State Capitol. He went on to build both state and private support for the University as never before.

ACE and "Siphoning Off" Federal Student Aid

Washington -- The American Council on Education (ACE) is getting so defensive about college pricing that it has published a misleading monograph to try distract attention away from recent research on the subject. ACE is clearly uncomfortable with many new studies that show federal aid to students is not always helpful in reducing net college prices, because of the way colleges respond to student aid by manipulating both their list and net tuition charges.

The thrust of the ACE paper is to try to downplay the situation. Early on, the paper highlights this sentence as a featured pull-quote:

The higher education system as a whole siphons off a rather small fraction of the federal aid.

But the first question should be, why is any of the aid being siphoned off? The paper explains the siphoning as a tax on student aid to benefit colleges. Where is this tax authorized in federal statute? Nowhere, of course. Some of us believe the Secretary of Education should stop the siphoning by removing schools from Title IV federal student aid participation if they tax aid that is meant for students.

Another question must be, what is meant by "a rather small fraction"? Federal student aid, in all its grant, loan, and tax expenditure manifestations, is a huge annual dollar figure in the scores of billions. A small fraction, therefore, is at least a few billion, maybe several billion, maybe even many billion. This is in fact the dimension of the siphoning estimated by, among others, Turner (2012,2014) and the New York Fed (2015), the latter of which puts the college taxation of Pell grants at 55 cents on the dollar. Based on my own work (1997), I think that's somewhat high, but the point is that we are not talking here about de minimus amounts. We are talking in terms of billions of federal taxpayer dollars annually.

What is infuriating about the ACE paper is that it does not consider the human costs associated with the siphoning. In many if not most cases, when a college taxes student aid in any form, students wind up with higher student loan debt. While economists debate whether or not there is a full-blown national student loan crisis, actual flesh-and-blood people are suffering from being forced to drop out of college and from getting behind on their loan payments. The national default rate, by any of several measures, is unconscionably high.

The next pull-quote:

The Pell program is irrelevant for the list price, and it has no effect on the net price many middle- and upper-income families actually face.

The ACE paper does not back this up, other than stating it twice. I looked at this question (2002) and found that in many cases, the amounts of Pell siphoned off by colleges (away from the low-income) were then spent on recruiting students from middle and upper income families, affecting their net price. Three papers by Burd ("Undermining Pell, Volumes I, II, and III") substantiate a movement of institutional aid out of help for the low-income in favor of the higher-income. Burd's theoretical framework is the same as ACE's but he comes to a much different conclusion.

The next pull-quote:

There is no general support in this enrollment management process for the idea that federal aid automatically pushes up list price tuition.

Not to nit-pick this paper to death, but these kinds of sentences should be flagged before they discredit the whole publication. What does "no general support" mean: that there is some other kind of support? Well, there is. Many colleges have increased list price tuition in order to have more institutional aid to use as a tool to tax federal aid. Please, who's kidding whom? And what does "automatically" mean? Of course the process is not automatic, it is intentional. Colleges pay good money to hire enrollment management consultants to siphon off federal aid.

Then there is a section on What Does the Evidence Tell Us?, wherein appears this passage: "This review tells us a number of things. First, there is no clear answer that has emerged. If you look around, you can find any result you want."

Yes, how true, and how this paper proves the point. My objection to this section is that it dredges up old studies that (a) were not all that good in their own time and (b) were written before the advent of the enrollment management movement, all in order to claim some kind of equivalence with newer, much better research. Actually, there is a clear answer that has emerged, and ACE just doesn't like it.

There is something redeeming about this paper, however. It provides a good discussion of how modern enrollment management works, how colleges actually accomplish the siphoning. This is a step forward for ACE, whose position for years has been that these things just never happened.

It is once again time to reflect on what might have been had the billions of siphoned aid been spent more wisely by Congress on programs that were less susceptible to abuse. Had Congress put these funds into SEOG and SSIG, student grant programs that require institutional and state matching and maintenance of effort, we would have better institutional and state support for the cause of college affordability and much less student debt. It is not too late to reverse course. Perhaps this ACE paper will raise enough disgust to make that happen.

Research Integrity and Chancellor Choice

Lincoln -- It was only a matter of time before an academic researcher blew the whistle loudly on attempts to suppress his research. The case of South Dakota-based entomologist Dr. Jonathan Lundgren, whose work on pesticide dangers to pollinators was not welcome at the USDA, is quickly getting the national attention it deserves. USDA has essentially ruined his career. He has been forced to leave the Agricultural Research Service.

This hit home for me in three ways:

First, we raise bees on our prairie property northwest of Lincoln and would like the benefit of Lundgren's taxpayer-supported research. Federal agencies violate their own missions when they do not permit the public to see the research that we have paid for.

Second, I have a soft spot for whistleblowers, being acquainted with many personally: Michael Winston (Countrywide); Sherron Watkins (Enron); Jesslyn Radack (DOJ); Tom Drake (NSA); Frank Casey (Madoff); and Lincoln's own Kathy Bolkovac (UN). Typically, whistleblower stories don't end well. The sacrifices of these individuals are much too unappreciated.

Third, not long ago I wrote a post about the need for the next UNL chancellor to have research skills and to stand strong for research integrity. The four candidates recently interviewing for the job appear to qualify on the former but how they view the latter is an appropriate and unanswered question. Research universities like UNL must not act like federal agencies, which are customarily captured over time by the interest groups they are supposed to regulate. Do the four chancellor candidates have a record of standing up for research integrity, even when the research is not popular with powerful lobbies?

The inspector general at USDA will review the Lundgren case, but inspectors general in the federal government have a spotty record when it comes to cracking down on their own agencies. For one thing, an agency secretary is not required to act on inspector general findings and recommendations; many go ignored. The integrity of the research process at universities, conversely, has traditionally been safeguarded by peer-review across institutions. But in recent years this too has been threatened by universities so eager to get research dollars from interest groups that they might as well hang out a Research For Sale sign. Does anyone doubt that the interest groups offended by the Lundgren research are plying universities with money to counter his findings? Does anyone doubt that university researchers, under great pressure to bring in research dollars, are usually able to come up with findings that comport to interest group wishes? If there are doubts, take it from a former federal researcher and research administrator: these things happen across the research spectrum.

Much has been made of a recent bill in the Nebraska legislature, introduced on behalf of the university board of regents, that would allow the regents and the president to conduct chancellor searches behind closed doors, so the public does not know who might be applying and who might be in contention. There are plausible arguments in favor of this approach but the passage of the bill would further limit the public's ability (let alone the faculty's) to ask questions about the views and records of candidates on challenges to research integrity. Those in the legislature skeptical of further excluding the public from the selection process might at least propose, in return, a beefing up of the state's enforcement of other disclosure, accountability, and auditing standards with regard to higher education, which currently is woefully inept.

Switcheroo Algorithms

Washington -- Last Tuesday at a public hearing at the Maryland statehouse in Annapolis, legislators were taken aback to learn that the scholarships they award to their financially needy student constituents may actually leave the students no better off when paying for college. And they were surprised to find out that it's the same way with private scholarships awarded by organizations such as the Baltimore Foundation and Central Scholarship.

It seems the colleges and universities back out their own grant aid in a like amount and then redistribute it to other, more favored students, or use it for other purposes. This is known as scholarship displacement. Actually, it's been going on for a long time, and not just in Maryland. It happens everywhere. But in Maryland, several state senators and delegates have now introduced legislation to stop the practice.

Opponents of the bills -- Maryland colleges and universities -- threw up smokescreens at the hearing to blame federal regulations for their actions, or to say they don't do scholarship displacement, or to say if they do it, it is because they know better than the donors who needs aid. They were especially opposed to any new law requiring disclosure of the practice, saying that if the practice were disclosed, who would donate to scholarship funds?

It was a shameful performance by the opponents. There are no federal regulations requiring scholarship displacement as it is practiced. It is a rare instance where a student would have so much grant aid that loans and work-study could not be reduced to comply with any federal regulations against grant overaward situations. Of course donors would stop giving if these displacement practices were widely known, so why not change the practices rather than jeopardize scholarship giving? It is as if colleges want to see everyone possible burdened with loans.

One opponent conceded that the scholarship displacement practice is widespread and gave a reason why colleges do it. Colleges must send students financial aid packages in time for students to make a decision as to whether they can afford to enroll. Often the packages include institutional grant aid that the colleges plan on withdrawing if the student later brings scholarship awards to help pay the bills. The colleges are therefore taking a risk with their own money to get a student to enroll. In exchange for taking this risk on behalf of students, the colleges feel entitled to pull their institutional funds back whenever they can. But to manage the risk that students won't be bringing in a local civic club or a charitable foundation scholarship, colleges develop complicated algorithms to predict how much money they can recover through their now-you-see-it-now-you-don't displacement practices. (Before anyone is tempted to conclude that the colleges should be entitled to a risk premium for their actions, they should consider that these risks are also typically covered by the same shell-game used to displace federal student grant funds, especially Pell grants, which research has shown are also vulnerable to displacement.)

Moreover, these algorithms are typically part and parcel of elaborate enrollment management plans to improve the prestige rankings of the institutions, which often are a much higher priority than holding down student debt. The plans use techniques such as "aid-gapping" less desirable students to discourage them from enrolling, shifting institutional aid to "merit" awards to enroll more desirable non-needy students, and the latest technique, "drowning the bunnies," one college president's description of his effort to get weaker students to drop out before they can be counted in retention rate statistics favored by those who award coveted prestige. Dare we ask how much these switcheroo algorithms are contributing to growing socioeconomic and racial inequalities that are identified by researchers as being linked to student debt?

Solutions are available. One is to pass the Maryland legislation. Another is for Maryland legislators to provide more state money for need-based student aid, so colleges do not have to rob Peter to pay Paul under the table. Another is for the federal government to re-balance more of its student aid spending toward SEOG and other matching programs, so that colleges that do not displace scholarships but use their institutional aid to reduce student debt would be rewarded with more funding. Yet another is for the Secretary of Education to require colleges to disclose their financial aid distribution practices under the Student Right to Know Act. Making the colleges honest would be doing right by all scholarship donors who only want to help relieve needy students of debt, a most worthy cause.

Recalling an Old Budget Controversy

Lincoln -- My last two posts have dealt with current issues in postsecondary education finance at both the national and state levels. While writing them I remembered a couple of old budgeting and finance issues that have been dormant for many years, but which deserve a final visit for the historical record. Discussing them may also shed light on current issues and conflicts in Nebraska.

In 1995, Professor Robert Knoll of the University of Nebraska-Lincoln's English department wrote a history of the university, appropriately titled Prairie University. It's a wonderful book, full of facts and overflowing with engaging people. Best of all, Professor Knoll does not shy away from making judgments; he praises and he punishes. From what I know based on my own fairly close association with the university over many decades, and having dealt personally with many of those in university leadership positions, Robert Knoll almost always gets it right.

There is one episode, however, that needs elaboration if not outright correction. It deals with the contretemps between NU President Woody Varner, State Senator Richard Marvel, and Governor Jim Exon in the mid-1970s.

Varner did not like Marvel's legislated earmarks that tied the university's hands on how it spent appropriated funds. Varner convinced the Board of Regents to take the matter to court to give the university more expenditure flexibility. But procedurally, the university could not sue the legislature, so the Regents sued Governor Exon and those in his administration who administered the budget earmarks. Varner told Exon personally that the suit was not against him, it was just that he had to be named in the suit to get the issue before the courts. Exon, for his part, did not like the earmarks either. He was of the philosophy that appropriated funds should be made available to the university in a lump sum.

Meanwhile, the university budget proposals that Varner submitted to the governor and legislature were full of their own problems. For example, the university would underestimate enrollment and tuition revenue in any one year so as to make a case for more state tax support. After the legislature appropriated the tax support (general funds) and tuition support (cash funds) based on the university's tuition estimates, the university would come back to the legislature later, in mid-academic year, for a supplemental appropriation to spend the additional tuition revenue based on higher enrollment than projected. Varner would say with a straight face that the additional cash fund monies must be immediately appropriated by the legislature, conveniently forgetting that less than a year before he had leveraged additional state tax support for the university by low-balling the original estimates of cash funds available.

Exon pointed this out through his own budget proposals. Marvel was not pleased that his Appropriations Committee seemed to be played for fools and chastised Varner publicly at committee hearings, albeit on somewhat different grounds than Exon. (Marvel and Exon were not close, Marvel having run for governor himself in 1974 against Exon, who defeated him easily.)

Knoll records part of this in a chapter on Woody Varner. Knoll writes,

When the governor presented his budget, he and his fiscal officers used data about cash balances which University officials thought inaccurate. "I don't know the origin of his figures," Varner told...the Lincoln Journal.... "I wouldn't argue that such figures could be found, but the conclusions he reaches are simply wrong. It is a bad use of data." Exon reacted angrily. (p. 171)

Woody Varner resigned not long afterward, to become president of the NU Foundation, taking everyone by surprise. As his reason for resigning, he cited bad relations with the statehouse. In 1977, the Nebraska Supreme Court ruled in favor of the Regents, technically against Exon but essentially against the legislature. The controversy over the cash funds was addressed in a concurring opinion by Justice Harry Spencer, who summed it all up nicely in one sentence, slapping down both Marvel's earmarking and Varner's now-you-see-it-now-you-don't treatment of cash funds:

I concur with the majority opinion herein, with the understanding that the opinion holds that the Legislature cannot control the use of cash funds generated by University activities, but that it can consider them in the making of appropriations.

Robert Knoll can be forgiven for not telling the whole story, which he may not have known. Or perhaps he did not want to put Woody Varner in a bad light, being the "D.B. and Paula Varner Professor of English." Before publishing, Knoll ran his book by State Senator Jerome Warner, Marvel's successor as chairman of the appropriations committee. Warner, a man with his own agenda, likely was only too happy to leave the last word with Varner's version of events.

I rather liked Woody Varner and do not disagree with Robert Knoll's placement of him as among the best NU leaders of all time. Varner was a prodigious fund-raiser. He was the man behind the Lied Center in Lincoln. He made many friends for the university and for the whole state. He had his faults. He would try to come between people to create rifts, which he would then try to exploit. His reorganization of the university, making himself president of all the campuses under a central administration, would later backfire. Creation of a separate UNL and UNMC eventually, in 2011, cost UNL membership in the prestigious Association of American Universities, a huge blow which he could not have forseen. But I'll wager Woody could have kept UNL in the AAU had he still been around; he would have have charmed AAU presidents to no end and come away with UNL membership in AAU intact.

The moral of this story, if it has one, is that when it comes to budget and finance, it's better to be transparent in the first place and not to engage in flim-flam. In the end, it really doesn't pay off. That was true in the 1970s (it brought down an excellent university president) and it should be even more apparent today, if anybody's paying attention.

Postscript: I know this history because I was an eyewitness to it as well as an active participant. When President Varner and Governor Exon met to discuss these and other budget matters, I was customarily present. I was intimately familiar with the Governor's budget numbers and knew the care with which they had been worked up and reviewed. When Senator Marvel went after President Varner in open hearing, I was in the hearing room and felt the tension. Marvel himself was still miffed about his loss in the previous gubernatorial race. He had tried to position himself with voters as a friend of the university through his earmarked appropriations, only to lose the election and then have the university object to his way of writing appropriations bills. It was salt in the wound. When the university prevailed in its lawsuit, unfortunately it was not only Marvel's appropriations bills that were found to be unconstitutional, but several longstanding statutory provisions dealing with procurement and personnel as well. In a sense, the university became a law unto itself. This is an unfortunate legacy of the ambition and overreach of Richard Marvel.

More Transparency Needed in Higher Education Finance, Again

Lincoln -- The question reverberating around the State of Nebraska this morning, surely, is why the Omaha World-Herald, owned by Warren Buffet, is calling into question the business practices of fellow Omaha civic leader Walter Scott, Jr. The articles at issue -- fine ones at that -- are by Kate Howard and prominently featured in the newspaper.

Some of us had nearly given up on reading any real news in Nebraska papers, unless we were looking for stories about Nebraska football, which are legion. By the way, can it be that my fellow Nebraskans are really that interested in this continual football prattle? Can't we at least save it for the football season, so we can read real news the rest of the year?

The OWH news articles, which show that investigative reporting still has at least a pulse in Nebraska, point out how many Scott foundation charitable contributions come with strings attached and how University of Nebraska officials are only too eager to keep the details hidden when the donations are to one or more of the NU campuses. Much action seems to take place within various facade entities featuring interlocking and overlapping directorships. Whether all of this is legal depends on whom you ask. Former Attorney General Robert Spire didn't think so, but he left office many years ago.

It might well be that the Scott foundation is doing such wonderful things that the Scott family should be enshrined in a new civic temple created especially for them by grateful Nebraskans. Based on what I know, I'm inclined to think so, or at least to give them the benefit of the doubt.

Not so with others, whose jobs are to protect us from bad things going on behind closed doors. Here are some concerns:

1. Where are the auditors? I've written before on how the behavior of university officials anywhere can be distorted based on what is or is not auditable public information. Such officials can be tempted to act improperly in situations where they think their actions will never come to light. Auditors should be careful to report dealings between public and private entities in sufficient detail to allow the public to know how tax dollars are being used, and if they are being used in conjunction with private dollars to permit kickbacks and circumvent open records. Auditors themselves are sometimes drawn into this trap. In a Kansas State case, about which I have previously written, Grant Thornton auditors should not have agreed to a confidential audit, good as it was.* The Kansas state auditor should have required appropriate public audits in the first place. Good for the press association in Kansas to have forced the Kansas Regents to release the Grant Thornton audit exposing money-juggling to cover up a kickback scheme. Auditors are too often beholden to those paying the bills for their services, and left too unsupervised by officials elected to oversee them. Where does the Nebraska state auditor stand on such matters? Two years ago I wrote this:

The need for greater transparency in higher education auditing has never been greater, inasmuch as state cutbacks in tax support for many institutions have left them more dependent on proprietary entities and foundations, to include large corporate donors eager to move in on, and to control subtly or otherwise, university research and outreach. Agreements of dubious legality, conflicts of interest, attached strings, and ethically challenged behavior that strike at the heart of universities' integrity are correspondingly on the rise.

2. Where is tax law enforcement? If you or I give a charitable contribution to a public television station and get a mug and tote bag in return, we get a tax statement noting that the tax deduction value of the contribution is net of the premiums we received. Are contributions to a university that involve a premium back to the contributor, in the form of a no-bid contract, treated similarly? According to the OWH, the no-bid premiums were explicit; in one case they were even delivered before the contribution was made. Perhaps there is a small army of accountants at work in the facade entities calculating and reporting the premiums involved. If not, I will still reduce my tax deduction by the value of the mug and tote bag, but I won't feel as good about it.

3. What about conflicts of interest? I can't help but note the OWH's mention of the Tetrad company, headed by a Scott family member, and how it was chosen without public input to develop the Innovation Campus in Lincoln. This is the same Tetrad company that is building a large anhydrous ammonia plant in Geneva, Nebraska. Had the Innovation Campus selection process been open to the public, perhaps someone would have asked how friendly Tetrad would be to prospective innovators on the Lincoln campus who want to decrease reliance on chemical agriculture to supply our food. There is a growing movement in the country to bring back cover crops to cut back on products like anhydrous ammonia. This could be seen as a threat to Tetrad. Likewise, Tetrad owns large livestock operations. Would it be open to innovators who see grass-fed beef as the future? Perhaps Tetrad could have defended itself against conflict of interest charges, but the point is that when these decisions are made behind closed doors, no one has a chance to point out potential conflicts of interest and to deal with them.

I have had a career in public budgeting and finance. Many years ago, I was the director of administrative services in the state capitol in Lincoln. DAS was charged statutorily with making certain that distributions of state funds were legal before my name and that of the state treasurer were attached to state warrants of payment. If we in DAS had a question as to the legality of a distribution, we would ask the attorney general. This applied to all state payments, including those on behalf of constitutional bodies such as the state board of education and the state board of regents. Certainly payments for no-bid contracts would have attracted our attention. Maybe we would have been advised to approve them. In any case, all state entities knew that someone was watching out for the state fisc, which deterred tomfoolery with state funds. Why do I get the feeling that no one's been minding the store for many years? Perhaps we are all supposed to be reading those stories about Nebraska football, rather than paying attention to what's going on behind closed doors.

* From the Grant Thornton audit of KSU:

The Foundation, the Alumni Association,.. and the Athletics Department view themselves, and are viewed by others, as part of or associated with the institution of KSU. However, they are all separate legal entities apart from the University. They all have as a common goal the advancement of KSU and have at times entered into transactions with one another in support of that goal. However, as separate legal entities, any transactions among them should be appropriately disclosed, approved and documented allowing for transparency of intent and substance. The failure to do so raises the question of the legitimacy of the transaction. Our report details numerous instances where transactions between the various entities did not meet this standard.

An Enforcement Office to Combat College Fraud, At Last

Washington -- "Long overdue..." "Better late than never..." Those are my sentiments exactly upon learning that the U.S. Department of Education is finally going to estblish an office to crack down on college fraud. What took so long?

Some of us have been making suggestions along these lines for a long time, especially with regard to for-profit schools. I've previously written to ask the Secretary to use his program review teams to look at fraud, waste, and abuse at any and all institutions -- regardless of ownership -- that misuse "enrollment management" techniques to subvert the purposes of student aid programs under Title IV of the Higher Education Act. If the program review teams find evidence of intentional financial aid "gapping" of low-income students to discourage their enrollment, or intentional displacement of federal student grant funds to fund other institutional priorities, or any number of similar gimmicks that have become a cancer on enrollment management and cost taxpayers billions of dollars, he should use his statutory powers to give institutions notice to change their ways or be dropped from Title IV participation.

Federal funds must be used at colleges for the statutory purposes for which they are appropriated. It is also axiomatic that colleges cannot do indirectly what they cannot do directly with federal funds. College manipulation of federal funds amounts to misappropriation. The Secretary has clear statutory authority under his Limitation, Suspension, and Termination powers to send signals to institutions to cease misappropriation practices.

A question arises about where in the Department of Education the new office should be located. If it is located at the office of Federal Student Aid (FSA), there must be safeguards to protect against a conflict of interest, inasmuch as FSA has organizational lines of authority reflecting orientation toward so-called partnerships with institutions at the expense of enforcement. Unfortunately, FSA has given its blessing (or looked the other way) more than once to practices that are wasteful and even fraudulent. I know from first-hand experience; I have witnessed suppression and misuse of program review team findings on more than one occasion within FSA.

It is noteworthy that Congress has seen fit to keep the research and evaluation function (such as it is at the Institute for Education Sciences, where I used to work) separate from both FSA and from the Office of Postsecondary Education. Researchers and evaluators must be independent, of course, to be credible. Why not the new enforcement office as well? Should it not be somewhere outside of FSA?

Nominations Open for Nebraska Hall of Fame

Lincoln -- The state Hall of Fame Commission is taking nominations, until the end of 2016, to add a 26th member to Nebraska's officially recognized list of its most outstanding citizens. This link provides more information about the process.

To be eligible, nominees must have made great contributions to society and been deceased for at least thirty-five years. So who are some possible nominees this year?

• Howard Hanson died in 1981, making him eligible for the first time. The internationally famous composer and conductor was born in Wahoo of Swedish heritage. He won the Prix de Rome, a Pulitzer Prize, and was the director of the Eastman School of Music for forty years. His music, much of which was inspired by his upbringing in Nebraska, is still played in concert halls around the world. His boyhood home in Wahoo is now a museum on the National Register of Historic Places.

• Rachel Lloyd, who died in 1900, is the subject of a new book about her contributions to Nebraska, especially to agriculture. She was the first American woman to earn a Ph.D in chemistry and was on the University of Nebraska faculty from 1887 to 1894. Her laboratory work to establish Nebraska's sugar beet industry was untiring; she had a remarkable effect on her students and the university; she worked herself to a premature death on behalf of the state and must be considered a worthy nominee.

• Lawrence Bruner would make a good addition to the Hall of Fame. He was born in Cuming County and became a world-famous entomologist at the University of Nebraska. He undertook international missions on behalf of the federal government. His work in Argentina was appreciated so much that the country held a 50th anniversary celebration of his arrival to combat an insect plague. A governor's commission once named him Nebraska's most distinguished citizen.

Elizabeth Dolan was one of the country's greatest fresco artists and should be recognized with a nomination. Her works in two of the state's most noteworthy interior spaces, the State Library in the Capitol and Elephant Hall on the UNL campus, have inspired Nebraskans for decades. She studied art in Lincoln, Chicago, New York, and Paris, but spent most of her working career in Lincoln.

At least four previous nominees should be considered in this round.

• Two recent biographies of Louise Pound recount her remarkable career and accomplishments. Her selection to the Hall of Fame would recognize her leadership on behalf of women's athletics, as well as highlight her academic contributions to the American language.

• Leta Stetter Hollingworth is the subject of a 2002 biography, A Forgotten Voice. Selection of Dr. Hollingworth (who indeed has been much too forgotten since her honorary degree from NU in 1937) would recognize her pathfinding contributions to psychology.

Frederic Clements was the founder of the discipline of plant ecology and gave the world the Clementsian theory of nature. It is still the benchmark against which all other such theories are measured. Frederic Clements' contribution to theory is matched only by his heroic work, in spite of his failing health, to save the Great Plains from the Dust Bowl.

Edith Schwartz Clements was the wife and full professional partner of Frederic Clements. Their work is inseparable. She was the first woman to receive a Ph.D from the University of Nebraska. She was the force behind the Alpine Laboratory, where the Clementses trained Nebraska botanists and ecologists from 1900-1940.

A question inevitably arises about the fact that, so far, only twenty-five Nebraskans have been included in the state's Hall of Fame. Is Nebraska so lacking in people who have made notable contributions to society that only twenty-five – soon twenty-six – can be duly recognized? Surely not. One reason why deserving Nebraskans will never be sufficiently recognized by the Hall of Fame is that the governing state statute allows only one person to be inducted every five years.

In the last round, I nominated Edith and Frederic Clements as a team – indeed, they had once been called the greatest husband-and-wife scientists since the Curies. Of course they could not be considered under the existing statute, which should be changed. If nothing else, the statute should be amended to allow the Commission to select a small number of new honorees that have been overlooked.

Another solution would be to give more recognition to those who reach the "finalist" stage of consideration. The Commission appropriately winnows out nominees who do not meet the admittedly tough qualification standards, suggesting that those who make the final cut are, in its opinion, worthy of honor. The Commission already has a web page of honorees; it could also permanently maintain a web page of finalists, which would be an honor in itself.

This is already happening to some extent. A new Wikipedia web page on Edith Clements notes that she was nominated for the Nebraska Hall of Fame. This new web page employs and cites her nomination materials. I hope the Commission discusses a permanent finalist web page option during its upcoming deliberations, so more people can become acquainted with Nebraska's greatest citizens whether they are in the Hall of Fame or not.