"The Dangerous Wealth of the Ivy League" (Business Week)

Parents Forum
1

<p>An article in the current (10 December 2007) issue of Business Week </p>

<p>The</a> dangerous wealth of the Ivy League - BusinessWeek.com - MSNBC.com </p>

<p>contends that the Ivy Plus colleges (the eight colleges actually in the Ivy League, and Stanford and MIT) have accumulated a "dangerous" amount of wealth. </p>

<p>
[quote]
Administrators at many public research universities are not willing to accept [Harvard President] Faust's invitation to surrender. "We have no choice but to recognize the realities of the marketplace we work in," says Patrick V. Farrell, provost and vice-chancellor for academic affairs at the University of Wisconsin at Madison. "But we intend to remain at least as good, if not better, a research-intensive institution as we have been in the past."

[/quote]
</p>

2

<p>Yeah, Whitman's pretty nice! I try to sneak in and look around every time I visit my S. It looks like a huge castle - the dining hall is amazing - complete with vaulted ceilings, mahogany everywhere and a fireplace that's about 10 feet high.
I can't believe my S didn't try to get in, but he loves his eating club too much. He lives in another dorm that looks like a castle, but it's 100 years old and there's no air conditioning.</p>

3

<p>wow! thanks for this article. Pretty worrisome I'd say.</p>

4

<p>Where is Christopher Newfield when we need him. </p>

<p>On the heels of this article and Newfield "Education for sale in the land of the free" should we consider seizing the Ivy League assets and redistribute the few cents to schools that have Red Squares on campus?</p>

5

<p>Having graduated from a top 25 or so school, I am of two minds.</p>

<p>On the one hand, my school's rapid growth and wealth increases mean that it might become more respected and my degree name might end up mattering even more in the long run.</p>

<p>On the other hand, I think it's all very sad that I'll often have more opportunities than a much better qualified UCI grad, just because of the increasing inequities of the system.</p>

<p>But rationally, the first hand makes me happier.</p>

6

<p>
[quote]
It's only fitting that Whitman College, Princeton's new student residence, is named for eBay CEO Meg Whitman, because it's a billionaire's mansion in the form of a dorm. After Whitman (Class of '77) pledged $30 million, administrators tore up their budget and gave architect Demetri Porphyrios virtual carte blanche. Each student room has triple-glazed mahogany casement windows made of leaded glass. The dining hall boasts a 35-foot ceiling gabled in oak and a "state of the art servery." By the time the 10-building complex in the Collegiate Gothic style opened in August, it had cost Princeton $136 million, or $272,000 for each of the 500 undergraduates who will live there.</p>

<p>Whitman College's extravagance epitomizes the fabulous prosperity of America's top tier of private universities.

[/quote]
</p>

<p>Wow, $272,000 for each student. That's pretty extravagant. What happened to the days when students lived monastic spartan existences?</p>

<p>And what makes this especially disturbing is that Ms. Whitman's contribution surely had a heavy taxpayer subsidy. If she just donated cash, the Federal treasury probably picked up at least 35% of the cost, since she's likely in that tax bracket. And, assuming she's a California resident, the California taxpayers kicked in another 10.3% of the cost.</p>

<p>On the other hand, if she donated appreciated stock (as many rich donors do), the Federal and state treasuries might have taken a significantly bigger hit, since donating the appreciated stock means she never has to pay capital gains on that appreciation AND she still gets to write off the entire appreciated value against other income. Depending on how much the stock had appreciated, the Federal and state treasuries could have picked up well over half the cost of her $30 million donation.</p>

<p>And the same goes for any other donors who contributed the rest of the funds to pay for the lavish new residential college.</p>

<p>Ironically, the first master of Whitman College is a public finance economist (i.e., a specialist in the economics of taxation and government spending) who is quoted gleefully rubbing his hands here:</p>

<p>
[quote]
“At Whitman, we have been blessed with a fabulous infrastructure,” said economics professor Harvey Rosen, who will serve as the first master of Whitman.

[/quote]
</p>

<p>Whitman</a> College Opens at Princeton University</p>

<p>One wonders if he feels any qualms about the taxpayer subsidy that contributed to that "blessing."</p>

7

<p>What makes this worrisome?</p>

8

<p>The fact that public universities can't compete with that kind of wealth. Did you read the article?</p>

9

<p>I'm sorry, but are you legitimately complaining that we should be wary of such charitable donations because they preclude tax collection? That smacks to me of an enormous double standard - as long as you like what the non-profit in question is doing and don't find it extravagant, it's ok, but if you think it's over the top suddenly the donor is screwing the people of America out of tax funds? Give me a break. </p>

<p>On a slightly more mundane note, Whitman is incredibly, incredibly beautiful, but while the building is architecturally beautiful and the size and expenses almost astounding, it's not like the students are living like kings in the college. Room sizes are comparable to those in the other colleges, and air conditioning is still not available (it may be installed, but is not operated). The only noticeable difference in actual accommodation is a larger proportion of single rooms in the college. I'm not going to argue that it's not extravagant; it is. However, what is extravagant about it often gets blown out of proportion; in the same way that the majority of students in Princeton's many castle-like dormitories are not living like royalty, neither are Whitman's students.</p>

10

<p>The donation exemption presumes some public purpose for the funds. The building of monuments may be stretching that assumption. Courts have forced tax exempt orgs with large amounts of accumulated donation wealth to start spending with the public benefits in mind. The tax law does not grant carte blanch spending on luxuries.</p>

11

<p>Yes, but top universities have accumulated donation wealth only insofar as they attempt to ensure their ability to be top quality educational institutions far into the future, whether investments continue to return at their current rate or not.</p>

12

<p>Yes I did. How does Chile, just to name a country, feel when it can't compete against the wealth of the US?
We elect our politicians and they finance our public universities. Let's share the blame.
If (big if) this wealth-bought excellence translates into providing a great education to a diverse socioeconomic cross section of the extremely bright US students, I have no problem. It's a great way to share the wealth. I come from where wealth was expropriated and poverty distributed: it didn't work.</p>

13

<p>Article states that current law exempts religious and educational institutions from spending the 10% of funds. They really don't have to spend anything if they don't want to. I have no opinion.</p>

14

<p>D lives in a dorm at Princeton that looks like a castle. From the outside.</p>

<p>Not Whitman.</p>

<p>She and 3 other junior girls live in 3 rooms. D's single (until January when she moves into the putative living room as a double) is so small you can barely move between the bed and the desk and the dresser. The heating is either blasting hot or off. No AC.</p>

<p>Last year her food was no gourmet servery it was institutional foodery.</p>

<p>So I wouldn't get too up in arms about the living arrangements yet. Now, if they want to pay huge sums for brilliant profs, I'm on board for that.</p>

15

<p>I think the BW author is attacking the wrong party.</p>

<p>What about the states that have slashed their support for their own state universities in the past decade or two, as they lavish spending and tax breaks on things such as new sports stadiums for pro teams? when I went to college (to a state U) in the "good old days" there was a frenzy of construction on campus, state of the art lab buildings and recruitment of star faculty. State support was a much higher percent of the overall institutional budget. State universities were actually more innovative than the Ivies for educational programs, pioneering such things as residential colleges.</p>

<p>Flash forward to now. State legislatures have put public U's in the worst possible position: subject to all sorts of state mandated restrictions covering everything from purchasing of supplies to faculty travel to inflexible state policies for hiring faculty and staff. Construction is hostage to state appropriations and planning cycles. University policies are all too often challenged by or overridden by state legislatures given to all sorts of "creative" social agendas. </p>

<p>To use one example of the latter, about 18 years ago, U. Minn decided to raise the quality of its undergraduate student body by raising admissions standards. This would have had all sorts of benefits in terms of faculty recruiting and such. The new policy was shot down by state politics as being to exclusionary of more ordinary folks - too elitist.</p>

<p>So, why do we have bastions of elitism within a sea of ordinaryness in higher ed? Because that's what a good portion of the public wants.</p>

16

<p>Despite the hard times, all the top 6 schools in research funding are publics as well as 13 of the Top 20. Not all faculty are even interested in moving to an Ivy or similar as there is more to the equation than money. Also the most productive researchers are rarely the old stars but the young up and coming people.</p>

17

<p>I think the article is misguided in its representation of schools like Berkeley and UW-Madison as examples of the kind of salt-of-the-earth institutions that 75% of American college students attend. They may be public, but they are elite schools by any possible measure. They are hard to get into, even in-state. They admit middle-class suburban kids at much higher rates than their proportion of the state population would suggest. They poach the best professors from Cal State and UW-Whitewater. And frankly, they aren't that cheap.</p>

<p>The real story, to the extent there is one, is the divide between elite research universities, public and private, and everybody else. The president of CSU-Fullerton isn't gratified when he sees his top professors abandon him for Berkeley as opposed to abandoning him for Harvard. He's busy getting mad that his students are living on crumbs.</p>

18

<p>On IVY schools building programs-</p>

<p>The</a> Daily Princetonian - Universities to spend billions on expansion</p>

<p>Yale apparently plans two new residential colleges at a projected cost of $750,000 per bed.</p>

19

<p>^^So what? Two examples of NON_IVY schools building programs:
UMass-Amherst (from Wikipedia)
In 2004, Governor Mitt Romney proposed an ambitious expansion project in which the size and population of the university would almost double as it took over the role of the state's community college system which Romney has begun to consolidate and dismantle. While this proposal received the support of the student government, town residents are exceedingly resistant to any such plan as it would increase the already critical traffic congestion in the center of town.</p>

<p>Following Mitt Romney's mandate, the UMass Amherst administration has pushed for admission of more students than there are residences. A large construction initiative, known as "New Dirt" is currently underway, in renovating and building new residential and academic facilities. Before the completion of North Apartments, the increasing size of the undergraduate body caused residence halls to reach maximum capacity, and many first year and transfer students were placed in area hotels until housing became available.</p>

<p>Since the record size of the Class of 2009 caused problems in terms of class sizes and housing, the university responded by tightening admissions standards for admission to the Class of 2010.[citation needed] The acceptance rate for the Class of 2009 was over 80 percent, however it has been reported that the acceptance rate for the Class of 2010 was significantly lower, at under 70 percent.[citation needed] It has also been stated that the incoming class of 2011 had the hardest admissions requirements, making their admissions harder to obtain.[citation needed]</p>

<p>University of Michigan (from UMIch website)</p>

<p>The overall stadium renovation plan includes building two multi-story structures on both the east and west sides of the stadium; the end zones will remain open. The west-side structure will include an elevated concourse, a new press box for media and game operations, new “club” seats with chair backs, and enclosed seating. The east-side structure will include an elevated concourse with new concessions and restrooms, and additional indoor and outdoor seating.</p>

<p>Other improvements to the stadium will include an increase in the number and quality of restrooms; an increase in the number of concession stands and a greater variety of fare; widening the aisles and seats; adding handrails; increasing the number of points of entry and exit for improved crowd circulation and a safer environment; and adding dedicated seating for fans with impaired mobility.</p>

<p>Approximately 83 suites and 3,200 club seats will be added in total. Other actions, such as widening seats and aisles will result in the loss of some seats. When renovations are complete, capacity at the Big House will top 108,000.</p>

<p>The expected cost of $226 million will be funded through private donations and Athletic Department resources, primarily the revenues generated by the new seating.
Michigan</a> Stadium Renovation | Project Description</p>

20

<p>I see Hanna's point, but there is something to be said when Berkeley's endowment is on the order of $3 billion and Harvard, Yale, Princeton, Stanford endowments are ~ $15-30 billion.</p>

<p>Now, public universities are subsidized, so endowments don't need to be as large, but state subsidies are dwindling. </p>

<p>Berkeley is losing professors to higher paying positions at HYPSM. The question is, how long will the publics be able to compete? Berkeley has been aggressively trying to improve fundraising, but it seems like a drop in the bucket in comparison.</p>

<p>Just look at USC and see how money and increased standards can elevate a school...</p>