Auditing the UNL Athletic Department

March, 2016

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

March, 2016

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

March,, 2016

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.