Pay to Play
The big business of higher education plays out at an elite golf resort.
The big business of higher education plays out at an elite golf resort.
By Pedro de la Torre, Campus Progress
Stories of companies handing over bundles of money in exchange for access and influence are old news. In 2001 arch-lobbyist Jack Abramoff charged two of his clients $25,000 for a meeting with the president. In 2004 business executives were charged $3,000 to play golf, eat dinner and help write a “Top Ten to-do list for Congress” with top conservatives from the administration, congress and state governments at the Arizona Biltmore Resort and Spa. So it seems that an updated crash course in American civics would teach this: too often, your bank account, not your voter registration card, can often determine whether you have a seat at the table.
Less well known is the fact that CraigMichaels Inc., a company that specializes in planning business events, is also offering meetings with university officials for tens of thousands of dollars. Unlike many of Washington ’s infamous deals, however, this is tolerated, and the officials in this case are university administrators attending the 2006 Higher Education Business Summit. This summit is one of many conferences that woo university administrators so that companies can spend large sums to peddle their services in what is now a huge higher education marketplace.
Business 101: Capital-Access Synergy
Beginning on April 30th “executive attendees,” as CraigMichaels calls summit-goers, are offered a three-day program at the lavish Scottsdale Resort & Conference Center. The summit seems to provide university officials from both private and public institutions an opportunity to learn about managing their institutions. Sessions focus on topics such as increasing alumni support in the face of dwindling state appropriations and improving privacy practices and IT security. CraigMichaels’ president, CFO, and co-founder Craig Lehmann explained during a phone interview that the summit offers a better opportunity for “networking” since it avoids the “carnival atmosphere” of most other “trade shows.” There are no vendor booths hawking products and services at this summit, and attendees will not be just one in a large and impersonal mass.
The company is able to offer these advantages by maintaining strict eligibility requirements, which ensure that only senior administrators attend, and by requiring these administrators to attend “private pre-scheduled face-to-face business strategy meetings” with vendors or “solution specialists,” as CraigMichaels prefers to call them. To be a vendor, companies shell out between $18,500 and $39,500, and receive “secure online access to executive attendee’s [sic] information” after the summit, as well as the use of resort amenities for “for informal networking opportunities.”
Lehmann explained that these meetings are arranged beforehand using scheduling software that matches corporate vendors to attendees based upon their respective preferences. Lehmann claims that his company puts university administrators who attend the conference “in control” by allowing them to “customize” their experience; no one, he says, is forced into these “business strategy meetings.” When asked whether attendees could simply choose not go, Lehmann seemed to sidestep the issue. He said he would have no problem with an attendee who thought that only five of the eight meetings would be beneficial.
One administrator who attended in previous years complained to Inside Higher Ed that CraigMichaels’ employees were aggressive about getting conference attendees to the meetings, which seems to contradict Lehmann’s claim. Others complained about being unaware of the meetings or the fact that companies paid a fee for their time, even as Lehmann claimed that all attendees were notified in the summit materials. Another administrator interviewed for the article said that he wanted no part in what he concluded was “a meeting designed primarily to expose me to commercial vendors .” Perhaps, as University, Inc.: T he Corporate Corruption of Higher Education author Jennifer Washburn warned in an interview with Campus Progress, “when the administrators themselves are balking at this aggressive corporate marketing, we should all be concerned.”
She added that “administrators are probably in a very tough position; they are being told by all of their superiors that they have got to find ways to cut costs. Then they go to this conference with some of the luminaries from the financial world of higher education who are speaking, and lending an aura of legitimacy to this whole event. Then they are required to have these one on one visits with vendors.” Washburn, who is also a fellow at the New America Foundation, worries that “there is too much room there for [the] manipulation of the administrators and not very sound judgments of what is best for their universities.”
Lehmann, of course, disagrees. He said that his company was concerned about both Inside Higher Ed’s article and my own blog post because they were far from objective, and even “slanderous.” Inside Higher Ed editor Scott Jaschik notes comments by attendees with both favorable and unfavorable views of the conference were included in the article, as well as a great deal of Lehmann’s own commentary.
Lehmann stressed that the summit’s “business strategy meetings” are nothing to worry about because “senior administrators” are capable of making their own decisions, and participating vendors are “responsible companies.” “If there’s a synergy, that’s fantastic,” he told Inside Higher Ed. “You can lead a horse to water, but you cannot make it drink.”
One of these “responsible companies,” according to Lehmann, happens to be Sallie Mae.
Sallie Mae’s participation as a vendor is problematic for some. To Jennifer Washburn “the fact that Sallie Mae has featured so prominently at the conference throws into doubt that the vendors there actually have something to offer higher education in the way of true solutions to the problems that they are having.” Sallie Mae has engaged in some questionable practices, including refusing to report on-time loan payments to credit reporting agencies until Congress threatened to take action, aggressively reducing competition in the student loan market, and allegedly using of aggressive and misleading sales tactics that have saddled students with double-digit interest rates at some for-profit schools.
Sallie Mae is no stranger to pay-to-play politics. In 2004 Sallie Mae’s lobbyist hosted a dinner for John Boehner (R-OH), who is now the House Majority Leader, where 34 Sallie Mae executives contributed to Boehner’s PAC. During the 2003–2004 election cycle, they contributed over $100,000 to Boehner’s campaign and his PAC. Sallie Mae CEO Al Lord reportedly used the company jet to transport Boehner to luxury golf vacations. Yes, this would be the same legislator that supported anti-student legislation making it much harder for parents and students to shop around for the lowest loan rates when it comes time to consolidate or reconsolidate their loans. As previously reported in Campus Progress, Boehner has been a strong supporter of the student loan industry and, in kind, Sallie Mae has been quite generous with Boehner and other politicians who help the organization grow its bottom line. It has also offered universities what many claim amount to illegal inducements to convince university administrators to grant Sallie Mae preferred lender status or to leave the direct loan system in place, despite the fact that it costs taxpayers billions of dollars a year.
Economics 101: NON-PRICE COMPETITION
Lehmann believes that, compared to most conferences for higher education administrators, CraigMichaels’ summits do not present a “pay-to-play” issue. He noted that, unlike many higher education “trade shows,” CraigMichaels’ summits don’t allow vendors to “buy” spaces in the programming, nor do the summits pander to companies that are willing to shell out tens of thousands of dollars for the ability to set up a booth or table.
He also argues that bigger companies have the advantage at other industry conferences because of what are sometimes very high prices, the many different levels of sponsorship and participation and advantages such as better locations in the exhibit hall available to companies based on their ability to pay. Bigger companies can also afford better signage. Lehmann believes that his system levels the playing field, since all vendors use the same signs and pay the same prices, and because vendors cannot purchase larger spaces. Even if the big fish and little fish are visually equal at the Higher Education Business Summit, they aren’t equal where it counts: Using numbers provided by an Inside Higher Ed article, a company can outspend another by up to $21,000 in exchange for more meetings with university administrators at the Summit .
Vendors do spend large amounts of money to have a presence at other higher education summits. The National Association of College and University Business Officers (NACUBO) bluntly entices vendors with the prospect of meeting “business officers and decision makers in a $400 billion market.” For $1,750 – $1,900, depending on membership, vendors at the 2006 Student Financial Services Conference were able to exhibit at the conference, and gained access to a “list of preregistered attendees one month before the event.” Educause, an association that promotes the “intelligent use” of information technology in higher education, offers the demographics of conference attendees online, presumably so that vendors can better target their desired audiences. A table top display at most Educause conferences seems to cost about $1,300–$1,500 depending on whether the vendor is a member. Prices will be even steeper at a conference called The Campus of the Future: A Meeting of the Minds, a conference in Hawaii being organized by NACUBO, among others. Some corporate sponsors like Aramark, Sodexho or UNICCO, are contributing as much as $40,000, and even have the option of sponsoring a specific hole in the golf tournament. Sallie Mae, a “silver” sponsor, contributed at least $10,000. Exhibitors pay $3,000-$4,000 for a 10 by 10 space, and receive a list of all attendees and their contact information, as well as various forms of recognition.
“The business world has realized that universities are very large operations,” Washburn explained when asked why companies are willing to spend tens of thousands of dollars to be noticed by conference-going administrators. They have also realized that “there is a lot of public money being poured into higher education; there is increasing frustration about rising tuition costs; [and] there is increasing pressure on universities to become more lean mean and efficient like other sectors of the business world.”
Sociology 101: The Principles of the Higher Education Market
The result of this pressure, combined with a decades-long decline in public funding, has led to a dramatic rise in the functions that universities outsource to private companies, increased importance of private sources of funding and some fundamental changes in the ways that universities carry out research. These factors are some of the driving forces, along with an increased need for technology, behind the size of the “higher education market” that attracts the high-spending vendors like Aramark to conferences.
Outsourcing (or contracting), often allows universities to cut costs and provide better services, since it can rely on the employees of companies who have experience with a particular university function, like food service. This practice may also lower some costs when several universities buy merchandise or supplies at once and thus benefit from bulk prices. Outsourcing and other forms of privatization can also cause problems, however, and students are often left out of the decision-making process.
At Portland State University , for example, the administration signed an agreement with food services giant Sodexho that included a “sole source” provision for catering at university events, including those that are held by student organizations. Those who would look to Aramark, one of Sodexho’s main rivals, for more student-friendly practices will be disappointed. The University of Alberta’s contract with Aramark contains provisions requiring that students who live in some university dormitories purchase expensive meal cards, even as students complain about their cafeteria’s prices, the quality of the food and the compatibility of the menu with their dietary needs. There have also been persistent concerns about the impact of outsourcing on the on-campus labor force, since part of the cost savings from outsourcing often come from job cuts, lower wages and fewer benefits for employees.
“Labor costs are really the biggest costs of higher education,” Washburn noted, but “no one has figured out a way to eliminate the professors because they are the most important part of delivering a high quality education.” However, professor spots aren’t exempt from the trend for lack of trying by administrators ; there have been numerous cases of academic and administrative functions being privatized by universities. The Kentucky Community and Technical College System, for example, instituted a pilot program last fall to outsource grading to a company called Smarthinking in freshman composition courses. Although professors still assign the final grade, student essays are assigned scores based on a standardized evaluation system. In another instance of outsourced academic functions, Delaware State University came under fire last spring for outsourcing a master’s program, which is offered online, without faculty approval or oversight. The City Colleges of Chicago even outsourced its finance department to American Express Tax and Business Services in 2001, and made Abe Eshkenazi, an American Express employee, the chief financial officer of the system.
The sale of administrators’ time to private loan providers at golf resorts is symptomatic of a larger trend: the increasing influence of money in higher education. Students, lawmakers, faculty and staff should keep a wary eye on the nascent Abramoffism of university administrators’ social scene, and ensure that all university decision-making is made in an open, inclusive and responsible manner.
Illustration: Matt Bors