For profit colleges pay CEOs based on profits, not student success

Top executives at major for-profit colleges make millions of dollars in annual compensation -- primarily from taxpayer subsidies -– yet most of their pay is unrelated to student achievement, according to preliminary findings from a congressional investigation.

Chris Kirkham reports in the Huffington Post that a report from Rep. Elijah Cummings (D-Md.), the ranking member of the House Oversight and Government Reform committee, found that publicly traded college corporations calculate executive compensation "predominantly on the profitability of their companies rather than the success of their students."

"This is especially troubling given the billions of taxpayer dollars flowing into these institutions and the serious financial risks to students who go through these programs," the report concluded.

For-profit colleges receive much of their revenues from federal financial aid: student loans, Pell grants and military educational benefits. Yet students often fare poorly, dropping out in large numbers and defaulting on federal loans at double the rate of their counterparts at public institutions.

Cummings sent letters in December to 13 for-profit college corporations, seeking information on how the quality of education and student performance are tied to what he termed "lavish" executive pay at the schools. Chief executive officers at several for-profit education companies take in much more than presidents at some of the most prestigious U.S. private universities.

Todd S. Nelson, the former chief executive and now chairman of Education Management Corp., the nation's second-largest operator of for-profit colleges, took in more than $13.1 million last year. The highest-paid Ivy League president, Richard C. Levin of Yale University, received $1.6 million in compensation, according to tax filings.

In a preliminary report sent to Democratic members of the House Oversight and Government Reform committee on Friday, congressional staff found that "the single most significant measure for determining executive compensation at these schools is corporate profitability, including factors such as operating income, earnings, profits, operating margins, earnings per share, net cash flow, and revenue."

The report found that 10 of the 13 companies considered profitability for at least 70 percent of executive pay. The other three companies did not provide enough information to determine how student success factored into executive pay, according to the report.

For-profit colleges have increased revenues over the years by rapidly expanding their enrollments.
From 1999 to 2009, the number of students attending for-profit colleges more than tripled, far outpacing the growth of traditional higher education, which grew by a fifth, according to an analysis of federal data from the Education Trust, a student advocacy group.

Although about 12 percent of college students nationwide attend for-profit schools, the sector is responsible for more than 45 percent of federal loan defaults.

In many cases, companies had executive compensation documents that made only "vague references" to student performance and "failed to indicate the specific extent to which these measures affect executive compensation," the report said.

 Career Education Corp., which owns the Le Cordon Bleu chain of culinary schools, 75 percent of executives' bonus pay was based on meeting profit goals, according to the report. The remaining 25 percent of executive compensation was based on "individual executive performance factors."

There were several optional criteria to determine an executive's performance at the company, including student graduation rates and career placement rates. But the company provided no details on whether those student performance goals were actually considered, according to the congressional report.

Nonetheless, all executives at the company reached 100 percent of their individual goals in 2010, the report found. Last year, the chief executive of Career Education Corp., Gary McCullough, resigned after an internal investigation found that the employees were artificially inflating job placement rates at some health and arts programs to remain in good standing with college accreditors -– and continue to be eligible for federal aid dollars.

Representatives from Career Education Corp. and 11 other companies mentioned in the report did not respond to requests for comment Friday.

A spokeswoman for DeVry Inc., Jennifer Dooley, wrote in an e-mail that "our first obligation is to our students, and our shareholders understand this." She continued: "They know that only by focusing on serving our students, and on delivering value over the long term, will we ensure our economic viability."

Kirkham's article is linked here.

Republicans "let them eat cake" proposal raises taxes on poorest families

It turn outs that there are some tax increases that Republicans support. Not the modest increases proposed by President Obama on America's richest families whose incomes have exploded over the past two decades creating the greatest income inequality since the roaring Twenties.

No, Senate Republicans are proposing to extend tax cuts for the nation's affluent families scheduled to expire Jan. 1, while at the same time allowing a series of tax cuts for the working poor and the middle class to end.

In all, the Republican plan would extend tax cuts for 2.7 million affluent families while allowing tax breaks to expire for 13 million on the bottom of the income spectrum. Some might call this "class war."

For more detail read the New York Times article that is linked here.

Two year colleges are solution to nation's economic woes

We recently learned that Wisconsin had the 42nd worst job creation record in the nation last year. Unemployment and underemployment remain unacceptably high.

At the same time, area employers are facing a skilled labor shortage. They simply cannot find the middle skilled workers they need to grow their businesses.

According to New York Times columnist Joe Nocera investing in two year colleges like MATC is the solution.

He writes: "Community colleges can be our salvation...and approvingly quotes Eduardo Padrón, the President of Miami Dade, the nation's largest two year college, “'Community colleges are the great American invention in terms of education. Their raison d’être has always been to help grease the wheels of social mobility...with the skills gap such a pressing problem — and a high school education so clearly inadequate for the modern economy — the task of teaching those skills is falling to community colleges. There really isn’t another institution as well positioned to play that role.'"       

Unfortunately Nocera says: "Many state governments have ravaged the budgets of their community college systems..." Wisconsin, for example, slashed technical college funding by 30% in its last biennial budget. the largest cut in the Wisconsin Technical College Systems' history.

Nocera concludes: "Given what’s at stake, it would be hard to imagine anything more shortsighted than paring back support for community colleges."

His entire column is linked here.      

Soaring college costs promote inequality

Nicholas Lehman of the New Yorker has written an important column about how the soaring costs of higher education are perpetuating growing inequality.

Lehman writes:

"In higher education, the United States may be on its way to becoming more like the rest of the world, with a small group of schools controlling access to life membership in the élite. And higher education is becoming more like other areas of American life, with the fortunate few institutions distancing themselves ever further from the many. All those things which commencement speakers talk about—personal growth, critical-thinking skills, intellectual exploration, breadth of learning—will survive at the top institutions, but other colleges will come under increased pressure to adopt the model of trade schools. Student loans open access to students, and give colleges more freedom. Obama and Romney will have plenty to disagree about, and it’s good that the interest rate on student loans isn’t on the list. For the federal government to pump extra tuition money into the system, in the form of low-cost loans, in order to spread opportunity more widely, and to allow more schools to provide more than skills instruction, seems like a small price to pay for the kind of society it buys." -

The entire article is linked here.

Walker’s “Beer and Brat Summit” – a state-sanctioned campaign event

Following his successful victory in Wisconsin's recall election, Governor Scott Walker called on Wisconsinites to "work together" and announced a beer and brat summit.

Badger Democracy's review of the events' sponsors reveals that the Walker Administration is holding a camapign event disguised as a cookout. 

 Check out the list of the Summit's sponsors. It is a who's who of Walker campaign contributors.

The Badger Democracy link is here.

For the sake of public education (and Wisconsin's future) vote to remove Walker on June 5th

Conservative education expert and former private school voucher advocate, Diane Ravitch, writes:

If you are concerned about the future of public education in Wisconsin, vote to oust Gov. Scott Walker.

Since his election in 2010, he has proved himself to be a steadfast enemy of the public schools. In the world according to Walker, the best way to reform public education is to demoralize its teachers, attack the teachers' union and hand over more taxpayer dollars to privately managed charters and voucher schools...

Walker thinks that he will improve education by getting rid of the union, which is the collective voice of the state's teachers.The nation's highest performing states-Massachusetts, New Jersey, and Connecticut-have strong unions, while the lowest performing states-in the Deep South-have weak unions or none at all. Very likely, what Walker really wants is to remove the teachers' voice when legislators are cutting the schools' budget. The best way to silence the strongest voice for public education in Madison is to weaken the teachers' union.

...No high-performing nation in the world demoralizes its teachers and creates alternatives to public education. The best performing nations in the world have built a strong public education system. They respect their teachers. They do not judge them by student test scores. They do not launch public campaigns against their unions (in high-performing Finland, all the teachers and principals belong to the same union). The most successful nations recognize the importance of having teachers and principals who are dedicated professionals, not a revolving door of young college graduates. They understand that successful schools establish a culture of collaboration, not a culture of competition.

The entire op ed is linked here.

Walker embraces union busters and their union busting strategies

Wisconsin Governor Scott Walker has adopted a Southern strategy—touting the “accomplishments” of the most conservative governors from the states of the old Confederacy—as he enters the critical final weeks of the historic Wisconsin recall election. Walker, who has aggressively challenged Wisconsin’s progressive tradition, is bringing in Southern governors who promote union-busting policies and economic-development strategies that raid Northern states and move jobs to states where organized labor is restrained and wages are kept low. Next week, the Wisconsin governor who last year led the fight to strip collective-bargaining rights away from public employees and teachers, will campaign with South Carolina Governor Nikki Haley, who proudly describes herself as “a union buster.” In an interview with Greta Van Susteren on Fox News Wednesday (following an interview with Walker), Haley proudly declared: “There’s a reason South Carolina’s the new ‘it’ state. It’s because we’re a union buster.” Haley has been the chief proponent of so-called “right to work” laws that undermine the collective bargaining and organizing rights of unions. She dismissed union members as “thugs” and said: “I’m not going to stop beating up on the unions.” That’s a big deal in the Wisconsin recall race, as Walker has been under pressure to explain his appearance in a video where he and a wealthy donor are seen discussing strategies to make Wisconsin a low-wage “right to work” state. Walker says that he does not plan at this point to promote the sort of “right to work” legislation that he once championed as a state legislator—and that his chief legislative allies are currently talking up. But he has not said he would veto a right-to-work law. And Walker has shown no qualms about campaigning side-by-side with the nation’s most ardent advocate of right-to-work laws. Haley has gone out of her way in recent months to identify herself as the nation’s leading champion of right-to-work laws—and, arguably, it’s most prominent and militant critic of organized labor. She says: “Unions are not needed, wanted or welcome in South Carolina.” The South Carolina governor recently promoted a package of “reforms” that will give South Carolina the toughest right-to-work laws in the nation. And Haley wants to take right-to-work national: “Barack Obama doesn’t appreciate right-to-work states. Mitt Romney appreciates right-to-work states,” she said after endorsing Mitt Romney for the Republican presidential nomination. “I need a partner in the White House.” In fact, Haley needs a lot more than that. Her “it” state has experienced a 4 percent decline in wages since she took over—no small matter in a state that has historically had some of the lowest wages, weakest public services and most dismal education scores in the United States. Indeed, South Carolina Democratic Party Chairman Dick Harpootlian says of Haley: “Rather than campaigning with Walker or Romney, she ought to sit in a classroom in an under-performing school.” Haley has opted to skip the school visit and campaign in Wisconsin. And that raises some questions for Scott Walker. The governor of Wisconsin—who told Congress and the people of Wisconsin he’s not anti-union—ought to be asked what he thinks about Nikki Haley’s “unions are not welcome” rhetoric. The Wisconsin governor should also be asked about the lengths to which a state should go to become what Haley describes as an “it” state. Should unions be busted? Should education funding be cut? Should public services be shut down? And should economic development be based on raiding other states? That question came into stark relief Wednesday, when Walker scheduled stops in Wisconsin with Louisiana Governor Bobby Jindal. Jindal has been a leading proponent of “corporate raiding” strategies that are used to move jobs from Northern states to the South. And Jindal’s Louisiana has raided Wisconsin. In 2009, Gardner Denver closed its manufacturing facility in Sheboygan, Wisconsin—where the company and its predecessor (Thomas Industries) had produced pumps and air compressors for seventy years—and left 366 workers, International Brotherhood of Electrical Workers union members and non-union employees, without jobs. Where did there jobs go? Monroe, Louisiana. Why? Because Louisiana state government gave away massive tax breaks and other benefits to the company. “Gardner Denver said Louisiana would reimburse the company for most of the cost of moving equipment and staff to Monroe, provide yearly payroll and sales tax rebates and help the company with recruiting and training,” reported the Milwaukee Journal-Sentinel in 2009. “The City of Monroe also plans to help with the construction of a 124,000-square-foot factory adjoining the company’s plant.” Jindal, who will be in Wisconsin to raise money for Walker’s campaign, won’t be visiting Sheboygan, which took a hard hit when Louisiana raided its industrial base and continues to experience higher-than-average unemployment.