Memo to LSU: Fire Your Lawyers, Fire Your Executive Search Firm, and Apologize to Judge Clark

When I practiced law years ago, my senior partner gave me three good pieces of advice.

1. Always comply with a court order.
2. Never hide relevant documents that are the subject of a legitimate request in civil litigation.
3. Admit your mistakes and do everything you can to repair the damage.

LSU has acted contrary to all this good advice, and it will pay the price.

Bill Funk
LSU should fire him

This morning, Judge Clark ordered the Sheriff of East Baton Rouge Parish to go to LSU and retrieve documents pertaining to LSU's search for a new president.  Judge Clark ordered LSU to make the documents available to the Baton Rouge Advocate last April. According to Judge Clark, those documents are subject to Louisiana's open records law and LSU cannot lawfully conceal them.  LSU refused to comply and has been in contempt of Judge Clark's order for about four months.

This afternoon, two sheriff's deputies went on campus to get the documents and came away empty handed. LSU claims it has no documents to turn over and that all relevant documents pertaining to its presidential search are in the hands of William Funk and Associates, an executive search firm located in Dallas.

In short, LSU has contemptuously defied Judge Clark's order, acting no doubt on the advice of its

Say you''re sorry, Bobby

attorney, Jimmy Faircloth.  And who is LSU protecting by hiding its presidential search documents?  Bill Funk and his executive search firm, whose business runs more smoothly if candidates for executive jobs can keep their identities confidential.  And you can bet your last dollar that Mr. Funk was paid handsomely to produce LSU's new president, King Alexander.

This is going to end badly for LSU. It made a huge mistake toying with Judge Clark.  What can it do to begin repairing the damage?

First, it should fire Jimmy Faircloth, who gave LSU such bad advice.

Second, it should fire Bill Funk and never again use an executive search firm that insists on secrecy in an LSU executive search.

Third, Bobby Yarborough, the chairman of the LSU Board of Supervisors, should go to Judge Clark's court without an attorney and turn over the documents Judge Clark demanded.  Then Mr. Yarborough

Oh yeah. Fire this guy too.

should personally apologize to Judge Clark, to the students of LSU and to the people of Louisiana.

Imperious, Arrogant and Defiant: LSU Plays the Scofflaw and Refuses to Compy with a Court Order

I sat in Judge Janice Clark's courtroom this morning, curious to see how she would deal with Louisiana State University's continued defiance of her court order. 

The Baton Rouge Advocate and the Times-Picayune sued LSU several months ago under Louisiana's open records law, seeking to obtain the records of LSU's search for a new president. The search ended last March when the LSU Board of Supervisors selected F. King Alexander as LSU's new chief executive.  At least 35 other people applied for the job, but LSU refuses to release these applicants' names.

Last April, Judge Janice Clark issued an order directing LSU to turn over the records of its search, including the names of the other applicants, but LSU refused to comply.




Judge Janice Clark

Instead it tried to get the Louisiana Supreme Court to issue a stay of Judge Clark's order while LSU pursues a leisurely appeal.  The Supreme Court declined to issue a stay, but LSU still won't turn over the records.  LSU accrues a fine of $500 per day for each day it refuses to comply with Judge Clark's order and currently owes about $60,000.

This morning, Judge Clark increased the pressure on LSU to turn over the records. In an order issued from the bench, she directed the Sheriff  of East Baton Rouge Parish to seize the presidential search records and indicated she would issue the appropriate writs and warrants necessary for the sheriff to carry out her order. 

LSU would like Judge Clark to issue a final judgement in the case so it can start the long process of appealing it, a process that could take years.  It wants to continue withholding the records while the appeal is pending.  By the time the appeal process is over, President King Alexander will probably be gone--having left LSU for an even more lucrative job.  LSU could then argue that the whole dispute over its presidential search is moot.

But Judge Clark said today that there will be no further proceedings in the case until the disputed records are turned over.  Meanwhile, LSU continues in contempt of Judge Clark's April order and risks even heavier sanctions being imposed on it--including jail time for recalcitrant members of the LSU Board of Supervisors.

So what's LSU's next move? With the sheriff poised to search LSU's administrative offices (and perhaps even the offices of LSU's attorneys), I think LSU has run out of options. Surely it will turn over the records sometime this week.

LSU Prez King Alexander
Hey, I'm just a bystander

Or maybe not.  But if LSU continues to defy Judge Clark's order, it will only enhance its image as an imperious, arrogant scofflaw.  What a message to send to LSU's students and the people of Louisiana.

As for LSU President King Alexander, he is sitting on the sidelines. He did not appear in court this morning with LSU's attorney. President Alexander could show real leadership if he would tell the LSU Board of Supervisors to obey the law like everyone else in Louisiana is required to do and comply with Judge Clark's order.



References

 Joe Gyan, Jr. Judge: LSU board could face jail time in records case. The (Baton Rouge) Advocate, September 10, 2013, p. 1.

The Rats Are Deserting A Sinking Ship: Banks Are Getting Out of the Private Student Loan Business

JP Morgan Chase Bank recently announced that it is getting out of the student loan business.  The bank said it was responding to a trend by students toward taking out federally back student loans, but in fact it has been scaling back its student loan program for several years.  This year the JP Morgan Chase only loaned about $200 million, down dramatically from 2008, when the bank loaned an astonishing

I'm getting out of the student loan biz

$6.9 billion to student borrowers (according to USA Today).

There was a time when the banks considered student loans to be very profitable. In 2008, they loaned a total of $20 billion. The student-loan market must have looked very lucrative at the time.  After all, a majority of these loans have a co-signer--usually a student's parent; so mom and pop are on the hook for them.  And the banks got legislation through Congress in 2005 that made private student loans almost impossible to discharge in bankruptcy.

In fact, for several years prior to 2008, private loan volume increased every year such that one commentator predicted that private student loans would exceed the federal student loan program by 2030.

But the banks are backing out of the private student loan business. After 2008, loan volume began dropping precipitously and only amounted to $6 billion in 2011.

Private student loans generally have higher interest rates and less favorable terms than loans offered through the federal student loan program. So who took out these loans?  The usual suspects. According to a report to the Senate Banking Committee, 46 percent of undergraduate students in four-year programs at for-profit colleges took out private loans in 2008 compared to only 14 percent of comparable undergraduates at public colleges.

The Project on Student Debt also found that students attending for-profit colleges were most likely to take out private loans and that African American students were more likely to take out a private bank loan than other students.

Why are the private banks reducing their student loan portfolios?  My guess is that the banks are bailing out of the student loan business because it has become unprofitable. In spite of the fact that these loans are almost impossible to discharge in bankruptcy and a majority of them are co-signed, the banks are still seeing a high default rate in their private loans.

In short, the rats are leaving a sinking ship. They are retreating from a sector that is no longer profitable.


References

JP Morgan Chase to stop making student loans. USA Today, September 5, 2013. Accessible at:
http://www.usatoday.com/story/money/personalfinance/2013/09/05/jpmorgan-chase-student-loans/2772509/

Private Student Loans. Finaid web site. Accessible at:  http://www.finaid.org/loans/privatestudentloans.phtml

Private Student Loans. Report to Report to the Senate Committee on Banking, Housing, and Urban Affairs, the Senate Committee on Health, Education, Labor, and Pensions, the House of Representatives Committee on Financial Services, and the House of Representatives Committee on
Education and the Workforce. August 29, 2012. Accessible at: http://files.consumerfinance.gov/f/201207_cfpb_Reports_Private-Student-Loans.pdf

Private Loans: Facts and Trends. Report updated in July 2011. Project on Student Debt. Accesible at: http://projectonstudentdebt.org/files/pub/private_loan_facts_trends.pdf

Playing For Time: Who Benefits When A University Keeps Its Executive Searches Secret?

As of today, Louisiana State University has been in contempt of a court order for 115 days, incurring a fine of $500 a day for each day it is in contempt.

As I wrote in an earlier blog, The (Baton Rouge)Advocate sued LSU, seeking to get the university to comply with the Louisiana open records law and turn over the names of people who applied for the LSU president's job. Judge Janice Clark directed LSU to turn over the records almost four months ago.  LSU refused and appealed Judge Clark's order to the Louisiana Supreme Court.  The state's highest court refused to review the order.

But the litigation is not yet over. Apparently, the university is going to pursue a lengthy appeal process, hoping that a Louisiana appellate court will eventually reverse Judge Clark's order. I think this is a forlorn hope.  Ultimately, LSU will have to turn over the records

Why does LSU insist on keeping its presidential search secret?  And more importantly, who benefits from this secrecy?

Executive search firms. First, executive search firms charge tens of thousands of dollars to administer university searches for executive leaders. These firms keep a stable of potential job applicants who are happy to throw their names in the hat for a university executive job so long as their current employers don't find out.  Keeping names secret helps the search firm keep a tidy pool of job candidates on hand for the many searches they coordinate.

University executives. Second, many university presidents and senior executives--provosts, deans, etc.---are constantly on the prowl for new jobs, and they don't want their current employers to know that they are ready to jump ship if a better opportunity appears.  Undoubtedly, some of the 35 semifinalists in the LSU presidential search will be embarrassed when their names are eventually released.

Lawyers. Finally, attorneys make their fees by helping universities skirt the letter of state open records laws.  In LSU's current dispute with The Advocate, the accumulated legal fees will certainly be much larger than the fine that LSU ultimately pays.

LSU plays musical chairs with its chancellors and provosts. LSU maintains that secret executive searches are essential in order to attract the best talent. But how has that worked out for it? LSU has been plagued by a constant turnover of top leadership for the last 15 years.  The university has changed chancellors and provosts so many times that it appears like the Board of Supervisors is playing musical chairs with its executive leadership.

And of course it is the secrecy of the executive searches that enables a little gang of mobile administrators to hop, skip and jump around the United Staes, getting ever higher salaries with every move.

Yes, LSU's secrecy benefits an executive search firm; it benefits a small group of suitcase administrators; and it benefits the attorneys.  But who are the losers?  The people of Louisiana, who are paying for this charade through their taxes.

References

Editorial. 109 days in contempt. The (Baton Rouge) Advocate, September 1, 2013, p. 6B.

The For-Profits "Are Making Out Like a Bandit": Will Sheriff Obama Round Up those Bad Boys?

In a question-and-answer session with college students at SUNY at Binghamton, President Obama made clear that he understands what's wrong with the for-profit colleges.

 [T]here have been some schools that are notorious for getting students in, getting a bunch of grant money, having those students take out a lot of loans, making big profits, but having really low graduation rates. Students aren’t getting what they need to be prepared for a particular field. They get out of these for-profit schools loaded down with enormous debt. They can’t find a job. They default. The taxpayer ends up holding the bag. Their credit is ruined, and the for-profit institution is making out like a bandit. That’s a problem.

President Obama also said he understands that some for-profits are exploiting our military veterans:

[T]hey’ve been preyed upon very badly by some of these for-profit institutions.... Because what happened was these for-profit schools saw this Post-9/11 GI Bill, that there was a whole bunch of money that the federal government was committed to making sure that our veterans got a good education, and they started advertising to these young people, signing them up, getting them to take a bunch of loans, but they weren’t delivering a good product.

 Indeed, Senator Tom Harkin's Senate Committee report on the for-profits found that the for-profits soaked up a huge share of the money made available to military veterans under the Post-9/11 GI Bill, a law designed to extend educational benefits to veterans of the Afghanistan and Iraq wars.

Some for-profits are "making out like a bandit"

According to the report, the for-profits trained 25 percent of the participating veterans but received 37 percent of the Post-9/11 GI Bill money during the first two years the program was in place.  Eight of the top 10 education providers during that two-year period were for-profits, including the owners of the University of Phoenix, DeVry University, and Kaplan University (pages 27-28 of Harkin report).

Among the top ten participating institutions in this veterans program, the eight for-profits had the highest student withdrawal rates.  Apollo's student withdrawal rates for bachelor's degree programs was more than 50 percent. Kaplan Higher Education Corporation (owner of Kaplan University) had a 68 percent withdrawal rate for its four-year programs (page 29 of the Harkin report).

Will the Obama administration and Arne Duncan's Department of Education rein in these bad boys? I'm not sure. President Obama made it abundantly clear that he is willing for the federal government to continue funding for-profit colleges--the largest of which are publicly traded corporations or institutions owned by private equity groups.

 "For-profit institutions in a lot of sectors of our lives obviously [are] the cornerstone of our economy," President Obama said at the Binghamton gathering. "And we want to encourage entrepreneurship and new ideas and new approaches and new ways of doing things. So I’m not against for-profit institutions, generally."

President Obama's approach to for-profit colleges is basically in harmony with the Harkin Committee's viewpoint.  Like President Obama, the Harkin Committee acknowledged a place for the for-profit sector in higher education.  The Committee expressed the view that the public sector and nonprofit private colleges do not have the capacity to educate all the postsecondary students who want to be educated.

Personally, I disagree.  Why should the federal government pump $30 billion a year into the for-profit colleges in the form of federal student aid, when it is absolutely clear that the for-profit colleges have an overall poor record of performance and catastrophically high student-loan default rates? Shouldn't that money be going to the public institutions--particularly our community colleges?

So far, President Obama has been unwilling to take aggressive action to clean up or close the for-profit college industry.   For the time being at least, the for-profits will continue to "make out like a bandit," and President Obama will continue to critize them but do little or nothing to bring them under control.

References

Paul Fain & Scott Jaschik. Obama on Non-Profits. Inside Higher Education, August 26, 2013. Accessible at: http://www.insidehighered.com/news/2013/08/26/obama-speaks-directly-profit-higher-education-noting-concerns-sector

United States Health, Education, Labor and Pension Committee. For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success. July 2012. Accessible at: http://www.help.senate.gov/imo/media/for_profit_report/PartI.pdf

Note: All quotes come from the Inside Higher Education article cited above.

An Exercise in Cynicism: The Obama Administration Mucks Around in Louisiana's School Voucher Program

Let's try to put ourselves inside the mind of Attorney General Eric Holder as he tried to decide whether the federal government should intervene in Louisiana's school voucher program.



With friends like Eric Holder, Louisiana school children don't need enemies.

"Let's see," Mr. Holder might have said to himself, "if I impede Louisiana's voucher program, I will please the teacher unions, because they hate all school vouchers."  Since the teacher unions are a core constituency of the Democratic Party, interfering with Louisiana's voucher program would be a big plus for President Obama.

"Second," Mr. Holder might have mused, "if I harass the Louisiana voucher plan, the federal government will make it more difficult for poor children to attend religious schools." So, that would be another big plus.

"Finally," Holder may have thought to himself, "sidetracking a Republican governor's school reform initiative is never a bad thing to do."  So that would be another plus in favor of federal intervention in Louisiana's voucher program.

Hey, what's not to like? 

And so the Obama administration has intervened in an old school-desegregation lawsuit, seeking to persuade a federal judge that a federal court must decide whether children residing in districts covered by desegregation orders may participate in Louisiana's school voucher program for poor children.

I have to agree with Governor Bobby Jindal on this one.  What Eric Holder and the Obama administration has done is shameful.  As Governor Jindal put it, Obama and Holder "are trying to keep kids trapped in failing public schools against the wishes of their parents."

Let me be clear. I am not an uncritical cheerleader for all of Governor Jindal's school reform initiatives. I think the tenure reforms he rammed through the Louisiana legislature are deeply flawed. And Governor Jindal's school voucher program is not perfect either.

But at least Louisiana is trying to improve its failing school systems, and I think it is making some progress.  I remember visiting New Orleans schools during the mid-1990s, before Hurricane Katrina came and basically wiped the New Orleans school system off the map.  The New Orleans schools were terrible during the pre-Katrina years; and no one--liberal or conservative, Democrat or Republican, white person or black--would want Louisiana's then largest school system to return to those days.

Today, more New Orleans students attend charter schools than public schools, and most New Orleans schools are slowly getting better.  Are they perfect? No they are not.  But Eric Holder's attempt to impede Louisiana's school voucher program won't help a single impoverished school child get a better education. 

If the Obama administration truly wants to do something to improve education in this country, it should take on the for-profit colleges that have exploited millions of Americans who just wanted to get a good education--including a lot of low-income and minority young people. 

But that would be too hard.  It is much easier to launch senseless and expensive litigation against a Southern state's efforts to improve its education system.  Louisiana's Education Superintendent John White called the litigation "deeply cynical:" and off course, he's right.

References

Michelle Millhollon. Jindal rebukes Fed voucher stance. The (Baton Rouge) Advocate, August 25, 2013, p. IB.

Why President Obama's Proposal for Controlling College Costs is a Nonstarter

In politics as in life, there are problem solvers and there are problem managers.

President Obama is a problem manager.  Before he was elected president, he saw Guantanamo as a problem to be solved, and he promised to close it. Five years into his term of office, Guantanamo is still open; it is being managed.

Ma'am, I don't solve problems; I manage them.

Likewise with the student loan crisis. Fifty Million Americans now hold $1.2 trillion in student loan debt.  About 6.5 million people have formally defaulted, and another 9 million are not making payments because they have been granted deferments or forbearances. 

For-profit colleges account for almost half of all student loan defaults.  The Department of Education reports that about 20 percent of student loans originating in the for-profit sector default within three years of entering repayment, but DOE estimates that almost half of all students who borrow money to attend a for-profit institution will eventually default.

Now that's a problem. Is the Obama administration trying to solve it? No it is not.

Last week, President Obama proposed the creation of a college rating system whereby the federal government will rank colleges and universities based on their costs, their graduation rates, the number of low-income students they enroll, and some other factors.  The President hopes to link this rating system to the federal student loan program, perhaps allowing students who attend high-ranking colleges to borrow money at a lower interest rate.

By introducing such a system, the President hopes to encourage colleges to keep their tuition prices down and stop the ever-increasing cost of attending college. In short, President Obama wants to manage the student loan crisis, not solve it.

Why is President Obama's college ranking system doomed to fail? Several reasons:

Colleges will just game the system. First as the New York Times pointed out in a recent editorial, colleges are very good at gaming the system when it comes to measuring college quality. We've seen how they've manipulated data to make themselves look better in the U.S. News & World Report rankings.  They will use the same tactics if the feds implement a college rating system. So why go through this charade?

DOE doesn't even give us useful information about student-loan default rates. Second, DOE has shown itself unable to provide the public with accurate information about one simple measurement--the student-loan default rate.  DOE only measures the number of people who default during the first three year of the repayment period--currently about 13 percent.  But the number of people who default over the lifetime of the repayment period is much higher--probably double DOE's posted rate.  And that''s the number the public really needs to know.

If DOE can't report an accurate and useful student loan default rate--a simple thing to do, what makes anyone think it can manage a much more complicated college ranking system?

Students and families won't choose a college based on the federal ranking system. Third, students and their families won't make college choices based on the federal government's rankings, so why set up a bureaucratic ranking system?  Texas high school graduate are not going choose between enrolling at the University of Texas or Texas A & M based on rankings reported by Secretary of Education Arne Duncan.  They choose their college based on a host of very personal factors, not the least of which involves the varsity football team's win-loss record.

The Clery Act, which Congress passed in 1990, demonstrates my point.  Congress passed the Clery Act in the wake of the rape and murder of Jeanne Clery, a freshman at Lehigh University, based on the belief that parents need more information about crime rates in and around the nation's colleges and universities.  The law requires all higher education institutions that receive federal funds to report crime activity in their campus communities on an annual basis.

Although the Clery Act has some useful features--colleges are required to notify the campus community of ongoing criminal activities--I have never met anyone who made a decision about where to go to college based on the Clery Act's crime reports.

If students and their parents aren't going to make college choices based on the Clery Act's crime statistics, they are not going to make them based on Secretary Duncan's rating system.  Does anyone disagree?

Why impose more federal regulations on a host of colleges that are doing a pretty good job? Finally, President Obama wants to impose another layer of bureaucratic measurements on colleges and universities that are already overly regulated.  And a lot of these institutions are doing a pretty good job.  College tuition has gone through the roof at the Ivy League colleges and other elite universities, but a college education is still fairly reasonable at the nation's community colleges and regional universities, like the one where I teach.

The growing level of student-loan debt is a big problem that gets bigger every day, and there is no simple solution. Nevertheless, it is clear that the rapacious for-profit college industry is the source of a lot of student indebtedness and about half of the student-loan defaults. 

We won't solve the student-loan crisis until we bring the for-profit colleges under control. Unfortunately, President Obama doesn't have the political courage to tackle that problem.  He would rather rank all colleges than put the bad apples out of business.

In short, President Obama doesn't want to solve the student-loan crisis, he wants to manage it--at last until his term of office expires.

References

Editorial. A Federal Prod to Lower College Costs. New York Times, August 22, 2013. Accessible at: http://www.nytimes.com/2013/08/23/opinion/a-federal-prod-to-lower-college-costs.html?_r=0

Michael Shear and Tamar Lewin. On Bus Tour, Obama Seeks to Shame Colleges Into Easing Costs. New York Times, August 22, 2013. Accessible at: http://www.nytimes.com/2013/08/23/us/politics/obama-vows-to-shame-colleges-into-keeping-costs-down.html?ref=opinion