Thursday, June 23, 2011

UC Regents and For-Profit Education

The UC regents are, how can we put this, totally corrupt. Take Richard Blum, one of the most prominent regents and the husband of U.S. Senator Dianne Feinstein. Among the shady holdings that he suspiciously directs the UC to invest in are two of the country's largest for-profit universities, Career Education Corporation and ITT Educational Services. As investigative reporter Peter Bryne wrote last year in his detailed exposé,
As someone who oversees investment policy decisions for UC’s $63 billion portfolio, and as the largest shareholder in two for-profit corporate-run universities (in which UC invests), Mr. Blum had a unique perspective to share. He advised public universities to attract business-oriented students with clever advertisements, just as vocational schools do. “It’s like anything else,” he told the crowd. “It’s how you market it.”

Marketing strategy aside, Mr. Blum has taken on two seemingly disparate roles— one as an advocate for a nonprofit university, and the other as an owner of two for-profit educational corporations. As a regent, Mr. Blum has approved cost-cutting policies for UC that appear to have enhanced the profitability of his vocational schools. And in 2007, Mr. Blum’s spouse, Sen. Dianne Feinstein (D-CA), wrote federal legislation that benefited the for-profit college industry.

For several years, Mr. Blum’s firm, Blum Capital Partners, has been the dominant shareholder in two of the nation’s largest for-profit universities, Career Education Corporation and ITT Educational Services. As of May, firm’s combined holdings in the two chain schools was $923 million—nearly $1 billion. As Blum Capital Partners’ ownership stake has enlarged over time, so have those made by UC investment managers, who have invested a total of $53 million in public funds into the two educational corporations.
Today we hear about another regent venturing into the for-profit arena. The San Francisco Chronicle reports that chairperson Sherry Lansing (who we profiled here) is joining forces with millionaire Republican entrepreneur Steve Poizner and the sports and talent agency Creative Artists Agency in a for-profit project called the Encore Career Institute. Backed by Silicon Valley venture capitalists (full Board of Directors here), Encore will offer a curriculum specially designed for unemployed Baby Boomers to help them "rewire" instead of "retire." (Like that's going to help them find a job in this economy.) And get this -- courses will be designed by and taught through UCLA Extension. The certificate program will cost between $5,000 and $10,000.
Lansing, the former CEO of Paramount Pictures, originated the idea and approached Poizner for help as he left his post as state insurance commissioner this year. Her goal, Poizner said, was to "deliver some of the fantastic intellectual property that UC has" to students in the state and the world, with Boomers as a key market.
The public university is being retooled, quite literally transformed into an appendage of private capital. And the ones responsible for it are managing both.

[Update, Tuesday 6/28 8:39am]: The Chronicle of Higher Education's brief take is here. Key quote comes from Cathy Sandeen, the dean of UCLA Extension: "In order to take what we’re doing and expand it dramatically, we will need to partner with a private entity."

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