Education is big business these days. This can be said for both public prek-12 and higher education. However, what is of concern today is greed. This greed can be characterized and translated into various forms such as, educational greed, public prek-12 educational greed, higher educational greed, or corporate greed. A central question of this article is, how are all of this “corporate greed” affecting education today?
Numerous critics have reported on the “corporate greed” that is taking over education during our present times. Corporate greed take over in education can occur in a multitude of different forms, and in a variety of different ways. As stated earlier, corporate greed takeover occurs on both the public prek-12 and higher education arenas. Two of the central issues concerning public prek-12 education are, standardize testing and the privatization of schools.
The testing industry today is a $20 -30 billion a year industry. Companies such the Gates Foundation is assisting Pearson and other textbook companies to develop standardized testing materials, which in turn, will allow these companies to profit from a large stake in education accountability on many fronts. These many fronts include the providing of testing materials including books etc., and the administration and implementation of common core curriculum standards within school districts across the country. With these companies being in line to profit upwards of billions of dollars, United Op Out or UOO, is an organization founded on the auspices of creating a drive to end the standardized testing and corporate education reform movement, and halt this corporate greed takeover. A fallacy that is not only affecting persons of the United States but learners worldwide, standardized testing and the corporate education reform movement has faced critical critique as an education engine that has done more harm than good.
Present day school privatization has taking on the task under the umbrella of turning failing schools around. However, through these conquests, these now new charter schools are spearheaded by businesses and corporations, who according to scholars, benefit billions from tax payer dollars by operating charter schools under a lower operating budget than regular public schools. According to Yes! Magazine, in Michigan, charter schools cut instruction money, raise administration costs, and come out ahead, profiting per student about $355. In Ohio, charter school teachers make about 59% of what public school teachers make. This equates to about a profit of about $20 billion and $118 billion in Michigan and Ohio respectively. With all of this profit, there still remains no significant show of improvement in student test scores in reading or math. Can we say “corporate greed” is at play again?
In addition, public education in some instances have diverted from the more traditional methods of teaching with real people inside brick and motor classrooms, to virtual classrooms taught online by virtual instructors. Rocketship schools, a virtual classroom, boasts $15 an hour instructors for totally online instruction, in addition, K12 Inc. another virtual education tech, is the largest online for-profit educational management organization in the United States, which receives 86% of their profits from taxpayers, and where many of their top executives receive salaries between $10 and $21 million a year. In both cases, only up to 27% of the companies’ schools meet educational state standards. In addition, corporations such as Apple and Google are expected to profit with the need of technological testing and upgrades, as states begin to implement new common core standards.
For profit colleges are also benefiting from tax payer dollars. Upwards to 90% of their revenue comes from federal financial aid, a result of tax payer dollars. Also, corporations are profiting from online classes, as students at these colleges and universities are failing those courses offered, while corporations are charging high additional fees for course re-offerings. This brings into light another concern. There is a growing concern that colleges and universities are raising the cost of their tuition in excess of the rate of rising inflation.
Tuition has been on the rise against the increase rate of inflation since the 1980s, as reported by William Bennett, former U.S. Secretary of Education. Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. William Bennett states that the increases in tuition are due to the increase availability of federal financial aid and not inflation. He draws the correlation of the increases in colleges and universities tuition since the onset of the increases of higher education subsidies, which started roughly in the 1980s.
There is little doubt that the increases in federal subsidies for higher education have not contributed to the increase in college and university tuition rates, according to scholars. This is coupled with the fact that despite these increases in federal subsidies, the success rate at these institutions remains the same, or even in some instances, are of subpar status. This form of “higher education greed” has caught the attention of some well-known scholars. In his 1987 New York Times article, Mr. Bennett states that higher education is not as industrious as it could be. “Higher education is not underfunded. It is under-accountable and under-productive. Our students deserve better than this. They deserve an education commensurate with the large sums paid by parents and taxpayers and donors.” Seemingly, greed or the desire to gain a dollar has overshadowed the true purpose of attaining a degree in higher education. Should this be so?
Greed in higher education has ran rampant during the last few decades. Ken Szulczyk, blog writer wrote, “One sign of greed is the rapid tuition rises for higher education. Tuition increases have greatly outpaced inflation. For example, I graduated with a bachelor’s degree from a small liberal arts college, Northern Michigan University, in 1993. I paid roughly $2,000 tuition per year. In 2011, this university charged about $8,000 per year. If the university increased the tuition at the end of the school year, then the administrators increased tuition 7.5% per year. On the other hand, the average U.S. inflation rate ranges from 2 to 3% per year, far below the tuition increases.” Also, he discussed changes in funding statistics being under reported by the universities to further elicit additional funding from the state governments. Also, different restaurants, beverage companies, corporations, and businesses set up house and operations on college campuses that help generate additional revenue for the school through lease and other operating agreements, Mr/ Szulczyk reported on this as well. These colleges and universities are receiving funding from a variety of sources, however, are still increasing tuition rates. Universities also receive additional funding from research grants acquired by their staff, scientists, researchers, and professors. Oftentimes however, these funds are forced or shanghaied out of these persons. The situation is not any better with the high salaries being paid to university presidents, provosts, and coaches in the sports and athletic departments. He, Szulczyk, makes the assertion that higher education is a profit making business, where many institutions are hiding behind the “non for profit” status.
This past May, the U.S. Security and Exchange Commission filed a law suit against ITT Educational Services for engaging in fraudulent activity of hiding their losses incurred from loans given to students. A for-profit institution, ITT Educational Services is not the only one of these types of educational entities under scrutiny for their high attrition rates, over increased number of persons defaulting on their student loans, and high prices. These institutions, it is said, were in the business of gaining revenue with little efforts of showing accountability by providing successful educational services for students.
The Washington Monthly posed the question, were colleges looking to increase their revenues through the process of increasing their tuition rates? This could be a viable answer as analysts noticed only two of the last 10 years were there a need to increase tuition levels based on economic outcomes, including state or federal subsidy losses. However, tuition at colleges and universities rose steadily and progressively every year during the past ten years.
The effects corporate greed creates in the education arena trickle downs to the families of the students at these schools, whether it be higher education or the public prek-12 education. In an article written in 2012 by Education Votes, public school children stress levels increased due to their increase financial hardships at homes, which in turned caused a decrease in motivation and academic success. Resources are loss at schools, and educator jobs are being terminated due to less taxes being paid by big corporations. Those affected the most are the students. This shows how “corporate greed” affects education indirectly, as well as directly. Citizens for Tax Justice (CTJ) revealed that the 280 most profitable U.S. corporations got tax subsidies of nearly $224 billion between 2008-2010. “That’s the money we need to invest in schools, protect Medicare, create jobs, do all those things for the social good that we can’t do now,” said CTJ Director Robert McIntyre. The national investment in public education share of the gross domestic product is down from the 1970s.
State and local taxes make up about 90% of the funding for U.S. public education. With big corporation contributing to the greater end of this fair share, many public prek-12 schools districts across this country has had to endure cuts because of loss of revenue from tax breaks these companies were offered and them not having to contribute to state and local educational budgets. It can be said these corporations avoided about $14 billion per year in state income tax requirements. Due to decreases in taxes paid by big corporations, cuts across all sectors of the education system were experienced. K-12 cuts total to about $13 billion in 2012. Higher education cuts total to about $17 billion.
Higher education has made up for the decrease in local, state, and federal appropriations by raising tuition, where estimates tinker around 600% increase in tuition rates over the past 25 years. These tax breaks thwart monies away from local, state, and federal education subsidies. In addition, privatization is on the rise as companies are not contributing to the funding of public prek-12 and higher education, causing schools to result to charting and other forms of privatization, for-profit institutions, to compensate for the lack of quality education. Companies then turn around and gain control over such entities as investments to further capitalize on.
There have been financial management concerns at several colleges and universities, particularly at HBCUs. Some of the consequences have resulted in the undertaking of extreme measures, such as the merger of Albany State University with the local state college, and the closing of the historic Morris Brown College in Atlanta, GA. Recently this form of higher education/corporate greed has caused issues for Pain College out of Augusta, Georgia, and Cheyney University out of Pennsylvania.
At Paine College in Augusta, Georgia, a private institution, there have been concerns that endowment funds have been used against the donor wishes, and used to help maintain operational expenses. There are many stipulations and rules associated with the use of endowment funds. A college can be cited for not using the funds as they have been appropriated for. This was the case of Pain College. Issues seem to be centered on miscommunication between board members and the college president, and the on taking of loans and investments that are not profitable for the college due to an already strained financial position. This can be characterized as greed, or more appropriately, a lack of sound leadership practices. With Paine College being a privately run institution, if financial stability does not improve soon, closure may be in its future.
Operating out of soaring deficits, in upwards of $19 million, cuts in state appropriations, and a student body that has decreased by nearly half in the past eight years, Cheyney University the nation’s oldest existing HBCU is plagued by this “corporate greed” on many fronts. With no endowment, the college operates under severe deficits. Many fear whether or not the college can rebound after such a plummet in operational esteem. Notwithstanding, the Pennsylvania State System of Higher Education, or (PASSHE), the supervising operating entity for higher education in the state Pennsylvania, thus, Cheyney University, has one of the lowest levels of per-student funding in the nation out of all state higher education systems. The main question is, why is Cheyney, a historically black university, struggling with financial stability and decrease enrollment when it is spearheaded by a state higher education operating entity and system where oversight is supposedly constantly available? In contrast, other institutions of the state system are operating under better financial stability, increased enrollments, and diverse program and education opportunities available throughout campus.
Ramifications run rampant for the Cheyney University. Student enrollment decreases have contributed to fiscal operating deficits to increase from $213,000 in 2011 to $5.9 million in 2014. Many have cited the state higher education system and the state of Pennsylvania for historic neglect for funding for this historically black institution, thus, contributing to its dilapidated infrastructure. Others note mismanagement internally and the lack of oversight by both university officials, as well as, state officials in correcting the problem before it got out of hand. However, unlike Paine which is a private institution, Cheyney University operates under a state run system, so alternatives if operating procedures do not change may not be as dire. Leadership and policy talks have included collaborating with a local university. Cheyney interim president Frank Pogue issued a statement saying, “Key administrative workers who were involved in processing financial aid in the award years in question, 2011-2014, are no longer employed at Cheyney University. We have put in place a number of corrective measures with the assistance of Pennsylvania’s State System and FAS [Financial Aid Systems] to address the identified problems. We continue to improve our processes to comply with the financial aid regulations and to better serve our students.”
In a recent union study by APSCUF, a report funded by faculty from the universities of the state of Pennsylvania, stated that the Pennsylvania State System of Higher Education, or PASSHE, has be aware of mismanagement of funds, and moreover, have atrociously allowed and promoted it to happen. The Association of Pennsylvania State College and University Faculties (APSCUF) released a report a couple of years back stating that the universities of the PASSHE were being allowed “to mismanage their budgets by hiding debt in affiliated corporations, funding new construction based on questionable assumptions, and misleading the public about their financial difficulties,.” It was a very bad report that stated such information about a system that is in place to govern and run the institutions of higher education in the state, with the Chancellor of the PASSHE Frank T. Brogan making this statement in response. “I wanted to correct the record, not only on the report’s content, but also on the unsubstantiated statements and mischaracterizations contained in the news release issued by APSCUF leadership in relation to the report,” said Brogan.
“It cannot be overemphasized how seriously PASSHE leadership — which includes the Chancellor, Board of Governors, university presidents and the members of the individual university councils of trustees — takes its responsibility to be good stewards of all of the taxpayer-supported funds we receive from the Commonwealth, as well as those derived from student tuition and fees,” said Brogan.
Accountability is an issue, where APSCUF cites PASSHE as not being held accountable, or holding their institutions accountable for fiduciary concerns, and operational and strategic management of their institutions. Weighted on both ends, sound judgment and practices to ensure institutions of higher education, as well as, public prek-12 institutions run smoothly, is of paramount concern. Greed in education whether it is on the early childhood, secondary, or post-secondary levels, or through “corporate takeover” is not warranted. Many examples exist, the task now is undertaking the solution to the problem.