A new threaded post on this topic can be found here. For previous posts about the Harreld hire, click the tag below.
06/28/19 — The Face of Crony Corruption in Higher Education.
06/07/19 — The Iowa Board of Regents and Affiliated Foundations.
05/30/19 — The Iowa Board of Regents and the UI Children’s Hospital.
05/23/19 — The Iowa Board of Regents and Naming Rights.
05/17/19 — The Iowa Board of Regents and Fiduciary Duty.
05/10/19 — The Iowa Board of Regents and the AAU.
05/03/19 — The Iowa Board of Regents and Economic Development.
04/26/16 — An Open Letter to the Iowa State Auditor.
—————^^—– Published as Regular Indexed Posts —–^^—————
04/13/19 — J. Bruce Harreld and the 03/12/19 Daily Iowan Interview: Part 2. Updated 04/15/19.
04/10/19 — J. Bruce Harreld and the 03/12/19 Daily Iowan Interview: Part 1.
04/09/19 — In advance of next week’s meetings of the Iowa Board of Regents, two very sharp reports from the Gazette’s Vanessa Miller. First, the regents are postponing their tuition hikes for next year, despite having imposed perennial hikes precisely to provide “predictable” tuition. (The idea of “predictable” tuition was in fact a deliberate perversion by the board’s president, Mike Richards, who substituted that concern for very real concerns from students and families that tuition hikes were announced at the last minute — as will again be the case this year.) Second, Miller provides critical context for the University of Iowa’s request to once again explode the budget for the new children’s hospital, after years of downplaying the school’s exposure to additional charges in the tens of millions of dollars.
03/30/19 — J. Bruce Harreld’s Entrepreneurial Insurgency at the University of Iowa is a Massive Grift — Part 5.
03/26/19 — J. Bruce Harreld’s Entrepreneurial Insurgency at the University of Iowa is a Massive Grift — Part 4.
03/06/19 — J. Bruce Harreld’s Entrepreneurial Insurgency at the University of Iowa is a Massive Grift — Part 3.
02/25/19 — J. Bruce Harreld’s Entrepreneurial Insurgency at the University of Iowa is a Massive Grift — Part 2.
02/19/19 — Harreld the Ogre Backs Down on Closing the UI Labor Center.
02/17/19 — J. Bruce Harreld’s Entrepreneurial Insurgency at the University of Iowa is a Massive Grift — Part 1.
If I have learned anything over the past three-plus years, since a small cabal of co-conspirators rigged the 2015 presidential search at the University of Iowa, and in so doing fraudulently appointed J. Bruce Harreld, it is that there is no end to the crony corruption in Iowa. Although that momentous act of betrayal was my personal introduction to the rot in the Hawkeye state, it was not the inception of the corruption that currently pervades state government, including the three state universities under the crippling influence of the Iowa Board of Regents. When the leadership of that corrupt board foisted Harreld on UI, that egregious abuse was merely an extension of prior bad acts which allowed the individuals who perpetrated that fraud to ascend to the requisite positions of power. And of course chief among them was Bruce Rastetter, the brazen former president of the regents, who engineered his own appointment to the board by showering former governor Terry Branstad with big bags of campaign cash.)
In retrospect, my assumption that Iowa was immune to such crony abuses was simple naivete on my part, and I have come to learn that hiring fraud is pervasive in higher education in America. If there is a secretive selection process, you can bet it will be exploited by those in power, who are usually crony associates of the dominant political machine in that locale. While the blue-blazer types give each other plaques in noble ceremonies, behind the scenes they are rigging promotions and contracts and appointments for each other, for relatives, for friends and for their professional peers.
Still, peeling back layer after layer of sleaze, only to find more sleaze, has been an interesting education in itself. The impetus of the conspiracy to appoint Harreld dovetails with Rastetter’s failed attempt, in late 2014 and early 2015, to implement — via crony political means — a so-called performance-based funding plan at the state schools. Having goaded the presidents at Iowa State and Northern Iowa into pushing his plan — which would have shifted tens of millions of dollars away from UI, to the other schools — in May of 2015 Rastetter’s plan ultimately stalled and failed in the legislature.
Even with the governor in his back pocket, and with two of the university presidents willing to gang up on the third, Rastetter would prove unable to crippled the University of Iowa while former UI President Sally Mason was in charge — despite paying top dollar for his presidency at the Board of Regents. (Not that he didn’t mightily try, including twisting Mason’s arm, ridiculing her in public, and forcing her to work without a contract.) As regular readers know, however, in late 2014 Mason let the board know she would be retiring in mid-2015, thus opening another avenue by which Rastetter could corrupt the school — only this time from the inside out.
Seizing that opportunity, in early 2015 Rastetter unveiled a search committee stacked with crony insiders, including the two key partners in administrative crime who would help him steer Harreld through the selection process. Those men were: Jean Robillard, then UI Vice President for Medical Affairs, whom Rastetter also made chair of the search committee, and would later appoint as interim UI president during the transition, and who would later appoint himself as Dean of the UI College of Medicine subsequent to Harreld’s appointment; and Jerre Stead, a UI alum and mega-donor, as well as the former mentor, peer, and long-time Colorado neighbor and pal of one J. Bruce Harreld. (Needless to say, during the search none of these fine, upstanding men disclosed their prior contacts or relationships with Harreld.)
Several months later, when Rastetter almost certainly knew his performance-based funding plan was doomed to fail, Robillard popped up out of nowhere and said that the board might hire a CEO-type like Bill Gates at Iowa, as opposed to someone who was actually qualified for the job. At the time it almost seemed like a non-sequitur, but in retrospect we now know that Robillard was not simply being prophetic. Instead, his comment tipped the rigged hand that he, Rastetter and Stead were already playing in order to install Harreld in office. (That particular moment was likely prompted by what we have previously described as a ‘missing meeting’ between those three individuals, and perhaps others, which took place at Stead’s Arizona residence in early-to-mid-April of 2015.)
While Sally Mason was president, Rastetter could only corrupt the University of Iowa by injecting his bile from the outside. That not only included trying to shift resources using legislative and administrative might, but imposing board spies on each of the regent campuses, so the presidents would know he was always looking over their shoulders. To truly corrupt any institution, however, you have to do that from the inside, which means either promoting someone who has the requisite lack of ethics and integrity, or hiring an outside mercenary to wreak havoc.
To his credit, Rastetter did both. First, by using corrupt UI administrator Jean Robillard to implement the rigged search process, then to oversee the final critical phase and transition as the acting UI president. Second, by appointing J. Bruce Harreld, who had no prior experience in academic administration or in the public sector, and no prior association with the state or the school, but who was more than willing to lie to the press, the people of Iowa and the UI community to obscure the conspiracy that led to his hire.
Once installed at the top of the org chart at UI, Harreld was then free to rig the new UI Strategic Plan, to rig the ‘new’ budget model and allocation process, to rig new hires and appointments, and even to rig political hit jobs for his political minders, including particularly the closing of the Iowa Labor Center. Without a tool like Harreld in the president’s office, Rastetter and the regents would have been powerless to effect any of that corruption, let alone to convert the University of Iowa from an academic institution to an engine of economic development, which they had long sought. With businessman J. Bruce Harreld at the helm, however — and having hired him on the basis of his experience in the corporate world — every decision in central administration could now be made with profit potential in mind.
Although there are organizational protections for academic programs at the University of Iowa, Harreld now also controls the hiring of individuals into the positions which govern academic administration, and not surprisingly there has been a trend in that regard. Three years ago the new dean of the College of Education was introduced primarily as a former entrepreneur, who also happened to have an academic background. More recently, the new dean of CLAS — who has yet to take office — comes to UI after serving two years as the Vice Chancellor of Research and Economic Development at Nebraska-Lincoln, from 2016 to 2018.
And of course on the executive side there was the recent hire of Jon Darsee as the new chief innovation officer (detailed here), into a brand new job that Harreld himself created, which will cost the school a quarter of a million dollars each year. (It was initially asserted that Darsee would report to the UI VP for External Relations, but a subsequent correction noted that Darsee would also report directly to Harreld. Note also that Darsee’s position was originally titled “chief entrepreneurial officer”, but the name was changed at the last minute — presumably to obscure the profit-making focus of his hire.)
While it is always risky to interpret history as it unfolds, there are times when we can see an arc playing out, even if we do not know when or how it will end. The Harreld hire is one such example, having begun with his appointment in early September of 2015, and now three-plus years into his five-year deal. Whether the regents can or will entice him to stay by throwing more money his way, or have grown tired of the bad press he has engendered while covertly corrupting the school on their behalf, it is safe to say that Harreld is well along in converting the university to the ostensible goal of generating revenue from inventions and intellectual property.
And yet, on closer inspection even that turns out to be a lie. What Harreld and the regents are actually running is a massive grift in which money is being taken by compulsory means, under false pretenses, then used to fund aspects of the university that the state will no longer support. That this is quite literally the same justification that Harreld and the board are using to kill off the UI Labor Center merely exposes the depth of their hypocrisy.
Setting the Entrepreneurial Hook
Inherent in the very premise of business is the notion that for-profit ventures will be launched in the private sector, as opposed to the public sector. Because the private sector is a very risky place, however, when the modern entrepreneurial movement first exploded on Wall Street in the early 1980’s, it became clear that colleges and universities — including public institutions of higher learning — could abet private-sector greed in two ways. First, by encouraging every college student to become an entrepreneur, thus massively increasing investment opportunities for pools of capital, and second, by injecting entrepreneurial activity into colleges and universities themselves, thus using public money to drive private profits.
The obvious academic hosts for these symbiotic initiatives were business colleges and MBA programs, which also exploded in popularity in the early 1980’s as college students were encouraged to put profit-making at the top of their educational agendas. Flash forward thirty-plus years, and for most Americans the word ‘entrepreneur’ now conjures up images of sexy, self-made millionaires and billionaires, if not attendant greed and consequent drool. How this lusty branding came to be is for another day, but in the context of J. Bruce Harreld’s entrepreneurial insurgency at the University of Iowa, it is again worth noting that business colleges across the country have been aggressively pushing entrepreneurial programs for decades.
As a result of this new, rising tide of cultural greed, waves of business graduates entered the American marketplace with mercenary zeal, reckless abandon, and a conviction that squeezing profits out of anything or anyone was objectively good. While people have obviously been starting new businesses since time began, what set these entrepreneurs apart was their willingness to embrace increased risk in exchange for a chance at astounding returns. Typically, that risk was diversified across pools of investors who were also willing to accept the attendant risk, including venture capitalists who expected to take the lion’s share of early profits. (Fortunately there is a small but growing backlash to the VC pipeline, which is producing healthy, stable companies which are not crippled by debt or profit-obsessed shareholders.)
In the state of Iowa, you will probably not be surprised to learn that former regent president Bruce Rastetter is a notable and successful entrepreneur. From a 2008 post on the Iowa State Foundation website, years before Rastetter was appointed to the board:
Because the word ‘entrepreneur’ portends riches, while ‘businessperson’ reeks of menial labor and limited profit potential, even people who open simple small businesses these days tend to think of themselves as entrepreneurs. In a financial sense they aren’t, but because all new ventures feel risky to those who launch them, the relationship between entrepreneurs and risk has expanded to include emotional and psychological risk, which is compensated for by wealth fantasies. For the most part there is no real harm in this — just as there is no harm in calling yourself a custodial engineer instead of a janitor, or an executive assistant instead of a receptionist — because the bottom line is literally the bottom line, meaning whether your business makes a profit or not.
Still, whether you are opening a restaurant or launching a high-tech startup, risk is not benign. For every entrepreneurial success that is hyped in the press, there are a hundred or more anonymous failures which lead to bankruptcies, divorces, litigation, suicides and even the occasional homicide. Also note that while every business school teaches undergrads and graduate students to avoid making simple, basic mistakes, that simply raises the level of competition in the marketplace. It does nothing to increase the number of entrepreneurs whose products or services are ultimately successful.
Ironically, one thing that does differentiate small-business owners from true entrepreneurs is not only the degree of risk involved, but the additional steps that entrepreneurs often take to defray their personal risk exposure. If you open a mom-and-pop diner in your home town, chances are you will be the only person on the hook if that business fails — or perhaps a few relatives or friends, if they chipped in. On the other hand, if you secure venture capital to launch a startup, you can not only walk away if the business fails, you can pat yourself on the back for ‘failing faster‘.
In modern parlance, the main appeal of the word ‘entrepreneur’ is that it has largely been shorn of any negative connotations. If you literally cannot fail — even when you burn through a billion dollars and leave a smoking hole in the ground — who would not want to be an entrepreneur? That’s where all the money is, that’s where all the fun is, that’s where all the fame is, and yet you can never fall short because failure is also defined as future success….
The only thing that would make the entrepreneurial racket perfect would be a perpetual source of investment capital which could be directed at an endless stream of risky ventures, all without incurring any risk. If a business failed someone else would bear the loss, but if it succeeded the profits would be spread not among the original investors, but only among those who could make a legal claim of ownership. Even better, in hosting those entrepreneurial ventures, various charges and fees could also be taken off the top of that same risk-free pool of investment capital, thus ensuring an institutional profit whether a venture succeeded or failed.
In a little over three years, this is the reality that J. Bruce Harreld and his entrepreneurial minders have foisted on the University of Iowa. We will dig into the details in this multipart post, but for now we will simply note that this is in keeping with Harreld’s background in the private sector. After purportedly saving IBM from possible reorganizational bankruptcy, Harreld could have gone on to found new startups, thus putting his entrepreneurial genius to work. Instead, he spent the next six-plus years pontificating at the posh Harvard School of Business, until an old friend and a couple of crony insiders stole a public-sector job for him. Instead of risking it all, or risking anything, Harreld played it safe until he could suck on the Iowa government teat, to the tune of $4M over five years. (Whether he does minimal damage or drives the university into the ground, Harreld gets paid.)
If Harreld had any purported strength as a private-sector businessman — albeit as a second-banana, because Harreld was never the CEO of anything — it was in supporting the managers of startups in IBM’s Emerging Business Opportunities division. Apparently on that basis alone, Rastetter and his small cabal of co-conspirators rigged the 2015 presidential search to inject Harreld into the UI campus to pursue a similar agenda. That this put the entire university at risk as an academic institution, yet none of the people involved — including Harreld — gave that a second thought, only underscores the narrow intellectual bandwidth of what I call money junkies.
To be sure, as Rastetter’s 2008 cheerleading makes clear, entrepreneurial lust had long been encouraged at the state schools — including particularly by Des Moines venture capitalist John Pappajohn. Until Harreld was imposed on the UI campus, however, there was at least a pretense of differentiating between the academic heart of the school and peripheral concerns like economic development. Now, with Harreld’s hire, the profit-first ethos has became an all-consuming focus at UI, to the delight of others on campus who also want a risk-free shot at the entrepreneurial big-time.
J. Bruce Harreld Gets to Work
As regular readers know, there is a world of difference between academic or scholarly research, and commercial or applied research. Generally speaking, the goal in the former is the pursuit of knowledge for its own sake, while in the latter the goal is cash money. Not surprisingly, the money junkies lurking on campuses all over the country routinely use the common word ‘research’ to shift resources from the former to the latter, abetted by the private-sector rationale that if you’re going to spend money you ought to get some return on that investment. This of course obliterates any distinction between higher education and capitalism — and particularly so at public universities — but because greed does not discriminate, it is pretty easy to hook scholars with the promise of a percentage, no matter how many degrees they may hold.
Over the past three years, in these virtual pages, we have documented Harreld’s step-by-step progress in converting the University of Iowa from an academic institution to an engine of economic development. One important component of that administrative switcheroo was infusing every document and plan with entrepreneurial rhetoric, and that included talking about research in an ambiguous way. For example, when Harreld pushed through the development of the new UI Strategic Plan in record time, the three main goals were, in order, Research & Discovery, Student Success, and Engagement.
At a cursory glance that all seems in keeping with the mission of a public research university. It is not the broad-brush themes or high-flying aspirations which are important in that document, however, but the specifics — the concrete details — no matter how bland they may seem. For example, when we drill down into the section on Research & Discovery, we find this university-wide, for-profit goal listed last in the Metrics section [p. 9]:
Likewise, under Student Success we find another for-profit goal — again listed last in the Metrics section [p. 15]:
In the section on Engagement — which is a euphemism for prying money out of the pockets of faculty, staff, students and alums — we first find this over-arching goal [p. 16] —
— followed by this emphasis on profit-making [p. 19]:
Despite an abundance of metrics throughout the strategic plan, including elsewhere in the Engagement section, there are, oddly, no metrics for measuring the success of entrepreneurial ventures at UI, even though multiple line items clearly call for increased investment. Precisely because of that intentional omission, Harreld is thus free to use that document as justification for whatever he wants to do on the entrepreneurial front, yet — like a good little entrepreneur — he can never actually fail. The details of the strategic plan give Harreld license to commit money and resources to entrepreneurial ventures and economic development, yet nowhere is there any mechanism by which it can be objectively determined whether those plans are on track, off track, or a financial black hole for the university.
There are indeed plenty of nifty strategies and goals in the UI Strategic Plan, but relative to Harreld’s entrepreneurial focus, most of them simply function as distractions or cover. As long as there is a through-line of emphasis on entrepreneurial ventures, Harreld can endlessly point to that document as proof of consensus, even if the specific are little more than footnotes or fine print. For example, here is J. Bruce Harreld on April 12th, before the Iowa Board of Regents, using the strategic plan to justifying cuts to centers and institutes on campus [1:02:36]:
Two important things to note in this quote. First, the transcription does not do justice to the audio of Harreld delivering that line. Whether the aside was in the prepared text or not, when Harreld says, “…which we have all approved…”, he sticks it in like a rhetorical shiv. It’s not that he wants to kill off programs and institutes on campus — including the Iowa Labor Center — it’s that the the strategic plan compels him.
The second thing to note is what Harreld says at the very end, which is an obvious and telling lie. As noted earlier, the UI strategic plan focuses on Research & Discovery, Student Success, and Engagement — yet that’s not what Harreld said to the board. Instead of engagement, he substituted the real reason he was hired, which was to pervert the University of Iowa’s teaching and academic research missions in service of “economic development”. In that Freudian moment we see that Harreld is not a good man who is doing what’s best for the people of Iowa and the UI community, but is instead a shyster business executive in academic clothing — who, with the tacit support of the corrupt Board of Regents, happily lied to any rubes or yokels who may have been listening on that day. (Truly, you would be hard-pressed to find a more telling example of Harreld’s corruption than the quote above. In one breath he asserts that everyone agreed to the UI strategic plan, then intentionally misstates the strategic plan for his own benefit.)
The Reality of Entrepreneurial Ventures
Notwithstanding Harreld’s endless willingness to lie to the press, to the people of Iowa and to the UI community, you may still be thinking it makes sense to profit from any research conducted at the university. As sensible as that sounds, however, the determining factor is how much it would cost to pursue that end, against whatever revenue might reasonably be expected in return. (That is in fact the point of developing the kind of business plan that MBA students are so good at crafting — and of course Harreld himself has a Harvard MBA.)
For all of Harreld’s real-world business experience, however, he was clearly hired at UI as a salesman, and what he is selling is the idea of success. Scour every word Harreld has uttered since he was fraudulently appointed on September 3rd, 2015, and you will find no cautions about how difficult it is to engineer a profitable startup, and no concerns about whether it is proper to gamble university funds on for-profit businesses. Interestingly, however, two days before Harreld was hired by the corrupt Board of Regents, he actually did shine a passing light on the difficulty of engineering profits in an academic setting. From Hareld’s candidate forum on 09/01/15 [29:30]:
Here Harreld explicitly pooh-poohs the idea of making money off of IP, and instead pushes the vague concept of “collaborat[ing] with industry to solve first-of-a-kind problems”. What is not clear is how that would foster “economic development” for the school, or why a public research university would even need to “collaborative with industry” to tackle such issues. On the other hand, using a public research university to conduct free or subsidized research would obviously be of great benefit to private industry, and could also potentially increase tax revenue. (Although in Iowa many companies pay little or no taxes, and can often generate an actual tax credit for “research activities“, so that doesn’t make much sense either.)
In any event, just prior to his appointment at Iowa, Purdue-grad Harreld — who, predictably, has a bachelors in engineering from that school — freely admitted that his alma mater went down the wrong road. In fact, only moments before the above quote Harreld also admitted that he was on the “early board” of Purdue’s Discovery Park, so he clearly did have relevant experience to draw from on that narrow question. And that experience convinced Harreld — only two days before he was appointed at UI — that trying to make money from IP was a fool’s errand for academic institutions.
There are or course multiple reasons why academic institutions have a hard time leveraging IP, and particularly so outside of generational technological advances, such as occurred with the invention and widespread adoption of the personal computer and internet. (One hidden impediment is that anyone who truly believes they have a billion-dollar idea will probably be loathe to lock themselves into a long-term profit-sharing arrangement with a ponderous bureaucracy, such as exists at even the most nimble college or research university.) Despite Harreld’s clear-eyed assessment of the difficulty of driving profits at an academic institution, however, from the moment he was appointed two days later he became a full-on evangelist for spending millions of dollars on entrepreneurial ventures at UI, and he has never once revisited the difficulty of profiting from inventions and IP. Instead, between substituting “economic development” for engagement in the UI strategic plan, and rigging the ‘new’ budget model to automatically fund such ventures on the UI campus — about which we will have more to say in the next post — Harreld has been wholly committed to that money-losing cause.
Driving financial success from intellectual property at a private-sector corporation is risky. Attempting to do so at an academic institution, let alone on an ongoing basis, is a long-term, costly, and exceedingly dubious proposition — and that is not a subjective assessment. In April of 2018, two and a half years into Harreld’s illegitimate presidency, the Gazette’s Matthew Patane published a story titled, Getting to market: Iowa’s universities work to commercialize research. Despite Harreld’s non-stop entrepreneurial cheerleading, Patane’s article was a surprisingly sober look at how difficult it is to generate a profit, or even prevent a net loss, while attempting to commercialize academic IP at both Iowa and Iowa State:
Sarah Nusser is the VP for research at Iowa State, and Marie Kerbeshian is the executive director of the UI Research Foundation. Like Harred during his candidate forum, they both take pains in Patane’s report to stress that Iowa’s state universities are not going to start generating hundreds of millions of dollars in new annual revenue, even if the schools aggressively pursue entrepreneurial ventures or the exploitation of intellectual property. Despite those cautions, however, I am sure most people think that if $50M is good, then $100M would be great, and $500M would be even greater — thus also proving out Harreld’s infamous “great to greater” promise at his candidate forum.
So why not encourage Harreld to shoot for the moon? Well, to begin with that $50M total for a single year was not only the high-water mark over the past decade, but it covers all three state universities. If we assume a proportional split roughly equal to the budgets of each university, that might give us $30M in revenue at UI, $15M at ISU, and a charitable $5M at UNI. While even $5M would be a lot for you or me — or at least me — $30M would still be less than one percent of the University of Iowa’s $4B annual budget. Now add the fact that intellectual property often has a short shelf life, because the market quickly evolves and moves on, and it is exceedingly unlikely that UI is suddenly going to start generating a massive amount of reliable new revenue based on existing IP, or from bootstrapping a string of successful new businesses. It’s easy to imagine that happening, but as anyone from the private sector can tell you — including J. Bruce Harreld — it is extraordinarily difficult to pull off even once, let alone recurrently.
Countering Greed With Common Sense
In the context of “generational disinvestment” by the state, which Harreld is always wailing about, it certainly seems as if the regent schools should try to earn as much money as possible, but even if the speculative numbers above are wildly wrong, those aren’t the numbers that matter most. Again, in order to determine whether it makes sense to follow Harreld’s entrepreneurial game plan we would have to be able to calculate the university’s return on investment, but we can never do that because the investment side of the equation is routinely obscured by the university and the board.
Even in the cautionary comments by Nusser and Karbashian in Patan’s Gazette report, there is no accounting for the amount of money that was invested in order to generate a peak return of $50M in revenue in one year. And that omission is not an aberration. Look at every document you can find on the Board of Regents website, or at the state schools, and you will be lucky to find a few fragments of the total spending behind any exploited IP.
Despite the frank insight Harreld provided during his candidate forum, from the moment he took office Harreld incongruously moved to expand Iowa’s efforts to generate revenue from intellectual property and new businesses. Again, that seems to make sense given that part of Iowa’s core mission is conducting research, so someone probably should check to see if each discovery has some value in the marketplace. And yet…there is also a cost to making that tentative determination, and a cost to testing that conclusion, and that’s on top of the cost of conducting the research in the first place.
The reality, of course, is that the cost of exploiting even a single invention at the University of Iowa, or spinning out one new company, is considerable and distributed across the school. There is a legal cost, including the cost of patent searches, and defending against lawsuits which claim infringement. There are personnel costs. There are startup costs. There is a cost for office space, and there may also be lab costs, production costs or storage costs. And then come marketing costs, and the cost of attending or hosting meetings.
If history is any guide, more often than not the economic value of a given discovery will not cover all of those costs, let alone produce a profit. As they say in the private sector, it takes money to make money, but even risk-tolerant entrepreneurs do not throw money at every invention — and that’s particularly true if it’s their money. Then again, as they say in the lottery business, you can’t win if you don’t play — although playing is quite literally gambling, and the odds are prohibitively against you.
The first question we should ask — how much it costs to try to make money from intellectual property at the University of Iowa — is the last question anyone is willing to answer, and it’s not hard to see why. The one sure way to interrupt the fantasies that fuel individual and collective greed is to ask people how much they’re willing to risk on a lottery ticket. If it’s only a few bucks, why not? But what if it’s tens of millions of dollars, with no guarantee of any return on that investment? Because that money could be put to better uses, Harreld does not want people asking that question.
So let’s ask that question. Over the ten-year period in the Patane article, which included a peak annual return on investment of $50M between all three state universities, how much money did the state schools invest to generate that revenue? And by invest, I don’t just mean in trying to exploit ideas, inventions and new businesses after the research was conducted, but including the total cost of research across those schools.
On the profit side, we know that all three state schools generated less than $500M over that decade, because the best year was $50M. Assuming an average profit of $40M per year, that would mean all three schools generated $400M over the decade in question, but what about the total cost?
Well, it turns out that the National Science Foundation (NSF) compiles an annual ranking of “total R&D expenditures” by school, and included in those listings are Iowa (ranked #49), Iowa State (#73) and the University of Northern Iowa (#449). From the NSF data table, here are the totaled research expenditures for each school, for 2017:
As you can see, a massive amount of money is being spent on research at Iowa’s regent universities, the vast majority at Iowa and Iowa State. Over the same decade in which the regent schools reaped a guestimated $400M in revenue from IP and inventions, they spent almost $8B to generate that modest 5% return. And yet that still doesn’t include the cost of exploiting any research for gain, which is not covered by the NSF data.
The good news is that much of the money that the regent schools spend on research each year is not state money, but comes from federal grants. As noted in the Patane article, the Bayh-Dole act allows schools to profit from that research directly, which further incentivizes schools not only to conduct federally funded research, but as much federally funded research as possible. In that specific context it clearly does make sense to have the capacity to exploit research for economic gain, even if doing so adds to the total cost of operating the school, because the cost of the underlying research is subsidized. And of course once you have that capacity in place, you could then also use it to entertain other licensing and business opportunities, further defraying your overall cost of generating revenue from IP.
Despite that silver lining, however, it should be abundantly clear that even in a good year most of the research that the state universities conduct will count as a financial loss, and there is no reason to believe that massively increasing Iowa’s efforts to exploit that research will alter that reality. It may be, at the margins, that UI can recoup a bit more money overall by following Harreld’s zealous entrepreneurial agenda, but that merely brings us back to the question of what it costs to buy that profit. And here we are no longer talking about federally funded research, we are talking specifically about an investment by the university itself, into driving greater profits from IP.
In truth, we don’t need to debate hypotheticals to understand why the University of Iowa is never going to produce a net profit from the exploitation of intellectual property. It may make some money as opposed to no money, but it will always be conducing research at a loss, and the best that can be hoped for is that targeted exploitation — including keeping associated costs under control — may generate a relatively small amount of additional revenue. We know this to a certainty not because Harreld is, demonstrably, a liar and a cheat, or because the Board of Regents is, demonstrably, corrupt, but for the blatantly obvious reason that if there was a sure-fire way to generate profits from any kind of research — whether in conjunction with private-sector partners or not — every state would be shoveling billions of dollars at its public colleges and universities.
Even in the private sector, where the only motivation for doing anything, ever, is making money, research is an acknowledged gamble. The hope — and no matter how exhaustive the vetting process, it is only a hope — is that one or two ideas will pan out in a big way, thus covering the cost of all of the failures. But even that does not happen with any certainty. (Again, if it did, everyone would follow the same research template to guaranteed profits.)
For a public-sector institution, the proposition is considerably more complicated because making money is not — and should not be — a core part of that organization’s mission. (There are laws in many states which prevent entities of state government from competing with private enterprise. Not only is Iowa covered by such a law, but the Iowa Board of Regents produces an annual report to show that it is in compliance.) Like all states, Iowa does subsidize economic development in various ways, but in the context of higher education we are talking about diverting money away from education in order to gamble those funds on a possible positive return.
Even putting the same money out at interest, or investing in an index fund, would probably produce a greater guaranteed return, yet Harreid is determined to throw more and more money at the riskiest sorts of investments there are — which is precisely why such speculative ventures are usually confined to the private sector. Put all of that money toward teaching or “student success” and you get a guaranteed benefit. Put that money toward inventions and spinouts, and you would probably get better odds if you simply dropped it all on the pass line at a craps table.
Clearly, when Harreld misrepresents his own strategic plan in order to emphasize ‘economic development’, or raves about investing in intellectual property and building new companies, what he wants is for the UI community to see dollar signs dancing in front of their eyes. What he does not want is anyone applying simple common sense to the idea of spending precious dollars on risky entrepreneurial ventures, because that will prompt additional questions that he does not want to answer — like why he is determined to do so, and why the regents support him, despite the obvious intractable risk.
To the inevitable financial losses, which may or may not be marginally mitigated by revenue down the road, we can also add the very real concern that prioritizing profits will impact the research that the university decides to undertake. Setting aside overt abuses like fudging data in order to get funding, it stands to reason that if you’re trying to make money, the last thing you’re going to do is devote resources to research that has little chance of generating a financial return on any resources you invest. That research could be important in other ways, and perhaps even produce a quantifiable public benefit, but if it doesn’t generate cash it simply adds to the loss column, which puts that much more pressure on other ventures.
How long will it take before Harreld’s profit motive begins affecting academics on the UI campus? In fact, we’ve already seen Harreld make multiple academic hires which have an entrepreneurial bent, while other hires seem dictated by disciplines which are more likely to become profit centers on the UI campus. If you’re in the arts, or the humanities, you’re probably not going to roll out a billion-dollar invention, so does that mean your research proposal goes to the bottom of the pile? How about knowledge that is of value to Iowans? Should that be pursued if it cannot be monetized?
As long as we’re asking common-sense questions, here’s another. Where is Harreld going to find credulous investors for this money-losing scheme? In the governor’s proposed FY2020 budget there is a $3M line item for “innovation” in the Board of Regents budget (p 684), and there is money set aside for ‘economic development’ at the three regent universities. Even with $2.2M specifically devoted to that objective at UI, however, that is peanuts compared to the comprehensive entrepreneurial insurgency that Harreld intends to bankroll. In fact, while ISU and UNI will receive lump sums of $2.4M and $1M for “economic development” respectively, at UI that $2.2M total is broken out as just $200K for “economic development”, and $2M for “entrepreneurship and economic growth” — which will, as usual, be used to cover the operating costs of the John Pappajohn Entrepreneurial Center (p. 681). And since that $2M appropriation remains flat for 2020, there won’t be any extra to throw at Harreld’s new campus-wide entrepreneurial initiatives.
Slapping the term ‘economic development’ on the millions of additional dollars that Harreld will inevitably hose down the drain while trying to commercialize research does nothing to improve the odds of financial success for any of those ventures. Given the “generational disinvestment by the state” that Harreld endlessly decries, it should be equally clear that the state is not interested in investing any new money. And of course the federal government will not be throwing more grants at the university simply because Harreld is convinced he’s about to go on a hot streak….
If you take nothing else away from this post, remember this the next time Harreld or the regents talk about innovation and entrepreneurial ventures. If it was easy to make money from IP and new businesses, the state would be investing heavily, and private investors would be lining up for Harreld to make them rich. Neither of those things is happening, nor will they happen.
As in the private sector, Harreld needs people to invest significant sums of money to do what he was hired to do, but the smart money has already said no, which leaves us with two important questions. First, where will Harreld and the regents dredge up the suckers they need to fund new entrepreneurial games of chance at UI? Second, why are Harreld and the regents determined to spend time, precious revenue and other resources on risky entrepreneurial ventures which are unlikely to ever turn a profit? We will delve into the second question, about the motives driving this apparent insanity, in Part 3. As to the first question, if you have read any prior posts on the Harreld hire you already know par of the answer, bug we will dig into the details in Part 2 of this post.
In the previous post I referred to the closing of the University of Iowa Labor Center in the past tense, because the Iowa Board of Regents — at J. Bruce Harreld’s insistence — officially ordered the closing of that center during its November meetings. Along with several other centers and institutes on the UI campus, the Labor Center would thus be terminated on June 30th, at the end of the current academic and fiscal years, though the director was given a disingenuous opportunity to find long-term outside funding prior to that deadline. As Harreld pointedly made clear, however, on multiple belligerent occasions, under no circumstance would the university continue to provide funding for the Labor Center — either from the general fund, or from the College of Law, where the center currently resides.
Apparently that all changed today, according to a press release from UI, and subsequent reporting from the Daily Iowan’s Marissa Payne, and the Gazette’s Vanessa Miller. While I encourage you to follow those links for the full story — and to remember that Harreld and the board cannot be trusted — there are a couple of important particulars in the apparent resolution to this saga, including this from the press release:
The most important thing to note here is that four years puts the final resolution of this memorandum well outside the current contract window for J. Bruce Harreld. While he could certainly be signed to an extension, and could also betray the Labor Center between now and then, this provision leaves open the possibility that the memorandum might be revisited or even commuted at a later date.
As noted in a series of posts beginning late last summer (see here, here, here, here, here, and here), J. Bruce Harreld’s determination to close the Labor Center began with a premeditated lie and went downhill from there. Over the following months his evolving justifications for closing the center were discredited again and again, yet Harreld repeatedly doubled down in pursuit of his petty, bratty and vindictive agenda.
To her enduring credit, as soon as Labor Center Director Jennifer Sherer realized last summer that she had been sandbagged by Harreld, not only did she publicly assert that Harreld’s plan would not succeed, but despite his belittling attacks, she continually took the high road. I cannot think of any other person on the UI campus who has been targeted in this way over Harreld’s three-plus illegitimate years in the president’s office, but it is to her credit — and to the credit of Dean Washburn at the College of Law — that this new plan has emerged.
As I said in one of those earlier posts, Jennifer Sherer is exactly the kind of leader that the University of Iowa campus needs.
In Part 1 of this post we discussed the outright fraud of J. Bruce Harreld’s entrepreneurial insurgency at the University of Iowa. Contrary to his non-binding promise of glittering riches on the horizon, even Harreld admits that generating profits from intellectual property will almost certainly produce a meager return on investment — and that is one of the better possible outcomes. Yes, there could be a freak hit, just as you could win the next big lottery, but more than likely any money invested by the school will simply be lost to failed ventures, and may produce a net loss overall.
Whatever the corrupt Iowa Board of Regents had in mind when they rigged the 2015 presidential search in Harreld’s favor, they did not hire the man because he said he was lucky. Harreld was fraudulently appointed over three eminently qualified academic administrators because the regents wanted someone to run the University of Iowa like a business, and the one thing any business must do is make money. For that reason, and despite his candid admission to the contrary during his candidate forum, that is what J. Bruce Harreld has been promising to do for over three years: to make money by leveraging intellectual property, by patenting and marketing new inventions, and by starting new ventures — just like a for-profit corporation.
And yet, despite having gone to the trouble of orchestrating multiple flagrant abuses of power in order to jam Harreld into the president’s office at UI, the state — ironically, yet appropriately — has largely refused to fund the risky initiatives that Harreld was hired to implement. While that would seem to call into question the decision to hire Harreld in the first place, that’s not actually true if the state knew in advance that Harreld would be gambling with other people’s money, instead of putting taxpayer revenue at risk. And of course as regular readers know, that clearly turns out to the case.
J. Bruce Harreld Solves the Funding Problem
For all the self-aggrandizing heroism in Harreld’s claim that he helped save IBM from “near bankruptcy“, the reality is that IBM was sitting on a massive amount of capital that could be quickly repurposed to fund new ventures. And by massive I mean billions of dollars in assets and equity, which could be recycled and reinvested in order to generate new revenue. (At worst IBM was looking at reorganizational bankruptcy under Chapter 11, not going out of business.)
While the budget of the entire regents enterprise is about $6B, and $4B of that total covers the University of Iowa ($2B for the school, and $2B for UI Healthcare, which includes University of Iowa Hospitals and Clinics), as a government entity the Board of Regents cannot raise large pools of investment capital by selling stock or assets. Although the board does routinely issue bonds for construction projects, as it did on multiple occasions for the new $370M children’s hospital at UI, private investors will never beat down the door to provide risk capital for J. Bruce Harreld, or anyone else in state government. They might donate money if they have already cashed out themselves, but anyone still actively betting on home runs — as opposed to safe investments like revenue-backed municipal bonds — will put their money to work in the private sector, because that’s where the greatest profit will always be found.
To fund their own for-profit fantasies in the absence of outside investors or new money from the state, Harreld and his corrupt regent minders had to come up with another way to raise capital. To that end, the ever-helpful board pushed through a massive tuition hike in the summer of 2016, only six months after Harreld took office. Importantly, that hike was in advance of the collapse of the state budget, which did lead to two years of cynical budget cuts at the state universities. Seizing that opportunity, however, Harreld and the regents used those state cuts to increase tuition again and again, resulting in four abusive hikes in just under two years.
For every $1 cut by the state over that time, Harreld and the regents increased tuition at UI by about $2.8, thus looting student and family bank accounts on a pretext. Despite endlessly wailing about “generational disinvestment” by the state, in every year since Harreld’s fraudulent hire the University of Iowa has significantly increased its overall revenue, to the point that the school is now easily bringing in $35-$40M more than it was in FY2016, when Harreld first took office. And again, that’s after accounting for all of the cuts in state appropriations. (We have covered this topic in multiple prior posts, but you can see a quick rundown of the key numbers here.)
Whether resulting from naked greed, gross mismanagement or both — including blowing the children’s hospital budget by a whopping $90M or more — Harreld and the regents recently decided to grant themselves a minimum 3% tuition hike for each of the next five years. Importantly, those hikes may balloon substantially depending on the rate of inflation, and whether the state sufficiently increases appropriations to compensate. (If not, the regents have already approved tacking on an inflation adjustment pegged to the Higher-Ed Price Index, which further disincentivizes any state contributions at all.)
While some of the money appropriated by the state is unrestricted, meaning Harreld can spend it however he wants at UI, much of the state’s standing appropriation is already devoted to existing programs, and new money is often tied to specific line items in the budget. (Legislators may be corrupt, but they are not fools.) Because tuition revenue is not appropriated by the legislature, however, and comes from student and family bank accounts, it can be spent however Harreld sees fit — up to and including risking that money on for-profit ventures.
Despite the fact that revenue comes to UI from different sources, however, one thing that must be stressed is that the moment the University of Iowa collects a dollar in tuition, that dollar belongs to the state. While student tuition does not come from the state treasury, it is not ‘private equity’ or ‘private money’ once it is received. Unfortunately, this sort of semantic deceit occurs at the highest levels of Iowa state government, and was recently employed to justify spending $4M in state funds to pay off the sexual harassment victims of one of the governor’s old drinking buddies. Fortunately, in subsequent testimony the governor’s crony fixer was forced to walk back false claims that the money would not come from the state.
As regular readers know, this shell game about what is and is not taxpayer money or state money is a constant at the Board of Regents. At UI, it is complicated by the fact that school can also draw from, and launder money through, the UI Foundation — which is now known as the UI Center for Advancement, and uses a third name (‘ForIowa.org‘) as its official URL. While it may matter at times what the source of funds is, particularly with regard to restricted funds from the state or UI Foundation, the fact is that all of the money in the UI Gen-Ed Fund — including any unrestricted tuition revenue that Harreld chooses to throw at risky for-profit ventures — is state money.
Having said that, on a bipartisan basis the governor and state legislature are more than happy to have Harreld and the regents piss away tuition revenue on for-profit ventures, because from their craven political point of view there is no downside. If all that money is lost they won’t be held accountable, but if there are a few hits along the way that’s more money they won’t have to appropriate to UI in the future. (If you’re thinking it’s shameful that both Republicans and Democrats have been silent about the abusive tuition hikes at the board, let alone about what Harreld intends to do with some of that money, I agree. Unfortunately, there are no political heroes in this journey.)
From Harreld’s point of view as the mercenary president of the University of Iowa, the board’s statutory ability to raise tuition revenue — let alone to do so without ever publicly accounting for expending that money in any detailed way — is a literal gold mine. Instead of having to convince sophisticated private-sector investors that he knows what he’s talking about, Harreld can simply put in a request for more money from the president of the regents. Because the former board president was one of the three men who rigged Harreld’s hire, and the current board president is a casino owner and political ally of the former board president, Harreld’s requests are routinely granted.
But it gets better. As noted in Part 1 of this post, because much of the money that Harreld intends to throw at for-profit ventures will be skimmed from students and families, none of those unwitting compulsory investors are entitled to any profit participation on the back end. Unlike private equity — which, for some reason, not only expects to be paid, but to be paid first — venture capital raised by soaking students and families comes with no strings attached.
Better still is the fact that Harreld can now strip-mine new startup capital on a recurrent annual basis, which is not only a boon to the university, but will prove reassuring to private-sector partners. Nothing makes private money skittish like the fear that a public-sector commitment may suddenly change, whether due to political expediency or public outcry. By abusing the board’s power to raise tuition without any oversight from elected officials — to the tune of 18% in three short years, and another 15% minimum over the next five years — Harreld can promise private-sector partners that unrestricted funds will continue flowing into the till for the next half-decade.
Follow the Money
Given the paucity of state appropriations and the surfeit of tuition hikes over the past three years, along with Harreld’s contemporaneous commitment to turn UI into an engine of economic development, we can clearly see where the money for any for-profit ventures is coming from. Because the UI books are a veritable black box, however, we have no visibility into how much money has already accrued or been disbursed, but we do have some visibility into the administrative mechanism by which funds will be distributed. Because the ability to dole out money confers considerable power on both the initiator and recipient, following the flow of money gives us additional information about who on the UI campus stands to profit most from this deeply cynical diverting of tuition revenue.
Ironically, this opportunity for insight comes to us from Harreld’s ‘new’ budget model, which is not actually new in any conceptual sense, but simply new to the University of Iowa. From a presentation by UI CFO and Treasurer Terry Johnson, to the UI Faculty Senate, on 02/14/17:
While banal in implementation, Harreld and his supporters hail this new-ish budget model as a transformational change at UI, thus validating the wisdom of his scandalous hire. Apparently, only a visionary from the private sector could have made such a bold move, even as similar changes have taken place on campuses across the country — the vast majority of which are still presided over by timid academics. As with the UI Strategic Plan, however, which Harreld also rigged to his administrative benefit, it is only by digging into the details of the new budget model that we see its real appeal for Harreld, for his minders, and for those on the UI campus who also hope to use other people’s money to make themselves rich.
While Harreld and the regents can certainly impose a great deal of brute-force change by administrative fiat, motivating the UI community to willingly accept change is infinitely preferable to provoking opposition. For that reason, in pushing the new budget model Harreld and his acolytes have consistently championed the advantages of self-determination for the individual budget units on campus, which will indeed have more autonomy over how money is allocated and spent. To be sure, however, there are still strings attached, and in a previous post we exposed the fact that Harreld still retains final say over any spending. (Specifically, Harreld rigged four ‘pillars’ or ‘filters’ upon which the ‘new’ budget model is ostensibly premised. In Harreld’s sole determination, if spending does not conform to those priorities, he can simply reject proposals he does not like.)
From Harreld’s point of view there are several important advantages to distributing the budget-allocation process across the UI campus. First, many of the decisions which need to be made are of no consequence to Harreld and his executive team. Not only will they profit by pushing that workload onto others, but they get a goodwill bonus for embracing shared governance. Second, all of that new budgetary authority also serves as a distraction, so the campus is less likely to look at what Harreld and central administration are doing with their resources. Despite giving up some authority, not only will central administration get a significant cut of all tuition and any new, unrestricted appropriations, but even after funds are distributed to the rest of the campus, Harreld can then bill the academic units for providing services which are deemed to be “university-wide expenses”.
Innovation For All
Given the requisite lack of integrity, it is a trivial matter to fleece students and families for startup capital, because they are completely powerless to resist. Other than enrolling at a non-regent college or university — of which none are comparable even to Northern Iowa or Iowa State, let alone to the University of Iowa — students are hostage to the policies of the political hacks at the board. And those crony hacks can raise tuition with impunity.
Whereas most of the administrators, faculty and staff at the three regent schools are probably in favor of more funding by any means available, however, it would be quite another proposition to divert some of the resulting revenue into a massive slush fund, which would then be used to fund risky entrepreneurial ventures. Not only are there a lot of campus constituencies who would fight for those precious resources, some of those constituencies would have access to the bottom-line budget numbers, meaning it would be impossible to conceal the amount of money in play. Once word got out about how much the president’s office was skimming — to the inevitable detriment of colleges, departments, and other budgetary units on campus — there would be open administrative warfare about that mountain of cash.
Having rigged a clever administrative solution to avoid that problem, it is almost tempting to say that Harreld has earned his obscenely inflated salary, except for the damning fact that his solution is in pursuit of a nefarious end. Central to the long con that Harreld has put together is a newly proposed and board-approved innovation center, which, perversely, will be housed in the original Art Building on the UI campus. From Tom Snee, writing for Iowa Now, on 08/30/18:
So who is paying for the innovation center? Well, here we encounter another rhetorical scam at UI, which is insinuating that ongoing operations will be funded entirely by private donations, when that’s obviously not the case. Only the conversion of the Art Building will be covered by private funds:
So who will eat the cost of ongoing operations? Well, as it turns out, that would be — everyone! From the Gazette’s Vanessa Miller, on 09/09/18:
Even the term “active participation” makes it sound like everyone will be using the innovation center to make money, but that’s not actually what that terminology means. To understand why all eleven UI colleges will be “actively participat[ing]” in the new innovation center, we have to dig into the minutiae of the new budget model, and specifically the allocation process. From the UI Faculty Senate meeting minutes on 04/24/18 [p. 2]:
Broadly speaking, each college on the UI campus will now be able to keep a certain percentage of self-generated revenue, including tuition revenue, but from those funds must contribute to “university-wide expenses that fall into numerous categories”. And of course one of those expenses will be the new innovation center, which is what “active participation by all 11 colleges” actually means. Instead of charging a fee only for services rendered, the innovation center will bill each college for its ongoing funding — which the intentionally deceptive new budget model describes as an “allocat[ion]”.
As to how the innovation center will be funded “proportionally based on formulas”, we do not know the particulars. We can, however, get a rough idea of the massive amount of money that will be flowing to and through central administration — even under the new, decentralized budget model — and that will make clear just how easy it will be for Harreld and his campus underlings to divert tens of millions of dollars each year to entrepreneurial ventures. From p. 3 of the same Faculty Senate meeting minutes:
Here we not only see that the university as a whole profits from charging students and families more money for the same degrees, but Harreld and central administration get a 30% cut of the take from every college that generates a tuition surplus. And of course one good way to generate a tuition surplus is to raise the price of tuition, which Harreld and the board have done four times in just under two years, and will soon perpetrate for the fifth time in three years. However, proving it is harder to pull a fast one on informed faculty than it is on on hostage students and families, on p. 4 we find this razor-sharp question from a member of the Faculty Senate:
Although there is plenty of chatter about how any source of revenue will be divided, and Harreld and his supporters talk endlessly about the benefits of the new decentralized budget model, nowhere is there any cap on “services that the college shares with others”. Because each college is obligated to balance its own budget, Harreld can actually increase costs to all of the colleges — and thus revenue to central administration — simply by billing more for any shared central service.
As regular readers know, Harreld recently made it clear that he does not believe shared governance entitles the faculty or staff to “shared decision making”. In fact, here is the great man himself, from an interview with the Daily Iowan on 10/15/18, intentionally parroting the same hot garbage that got the university sanctioned by the AAUP for two years, for abuses during the 2015 UI presidential search:
All shared governance means to Harreld is that others get an opportunity to say what they think before he does whatever he wanted to do anyway. For that reason, the “shared decision-making” process that Curry outlined is not so much a check on Harreld’s power as it is a series of executive defenses which will inevitably render protests mute. The central advisory committees will be stocked with loyal bureaucrats who will derail any objections, while the Provost’s Office will soon be corrupted by the hire of a new provost, whom Harreld alone will select. (One of the things the new provost will have to do to get the job is swear fealty to Harreld.)
If we stand back and look at what Harreld has wrought, we can clearly see that he actually has two different ways to raise money for entrepreneurial ventures which will never be accounted for publicly. First, he can simply raise tuition, which — by incredible coincidence — the board has been eager to do since the moment it jammed Harreld into office. Second, he can increase the shared cost of the innovation center as a campus-wide service.
As to the state’s complicity, again there is no downside for elected officials. Without passing a single law, Iowa’s politicians can take tens of millions of dollars each year from student and family bank accounts and devote that money to economic development for the state — and all it takes is a little ‘tuition laundering’ by crony appointees at the Iowa Board of Regents.
As to any possible pushback, on the tuition front we have already established that most of administrators, faculty and staff at UI could not care less how badly the regents bleed the students, but there could be some resistance to increasing the compulsory fee for supporting the innovation center. Here, however, we see the importance of the campus-wide greed that Harreld has fostered over the past three years — ignoring his own awareness of the difficulty of turning academic IP into profits, and instead selling the promise of inevitable entrepreneurial success. (If you have read Catch-22 by Joseph Heller, J. Bruce Harreld is playing the part of Milo Minderbinder, constantly reminding everyone that they have ‘a share’ of prospective profits, but also that he needs things from them in order to be successful. And one of the things he needs is a new innovation center, which will be funded by every college on campus.)
The good news for Harreld is that compared to securing private funding from sharks in the venture-capital world, this is an easy lift. Simply having an innovation center on tap, largely funded by others, will satisfy the lusty dreams of most academics, who will never exploit any intellectual property or bring a product to market. What is critical, however, is that everyone believes they do stand to profit — either passively, through other people’s ideas, or actively, by exploiting their own — and we can see that importance by looking at a similar UI funding scam that is not fairing well.
In an effort to increase the number of UI students studying abroad, the UI Council of Deans created a working group which subsequently came up with a unique funding plan. In order to raise funds to send some students abroad, all students would be charged a mandatory study-abroad fee. While that may indeed sound like a scam, the learned administrators had a ready reply:
Setting aside the fact that this rationale implies that all other fees on the UI campus are scams in themselves, it is not clear why the deans involved in this proposal thought this was a particularly compelling justification. If you are taking money from every student, and that money benefits only a few students , it doesn’t really stand to reason that the students who are being screwed will be happy for the students who are studying abroad. In fact, a few months later the UI Student Government expressed opposition:
By analogy to Harreld’s new innovation center, the problem here is that the vast majority of students who paid the study-abroad fee would have no reasonable expectation of any future benefit. It is not even the case that studying abroad is determined by lottery, but even if it was, some students, including undergrads with children or with other care responsibilities, would not be able to participate even if they were selected. (There isn’t even the potential of receiving a random gift from those students who did study abroad — say, a snazzy t-shirt, or a cool pair of sandals in appropriate size.)
In this debacle we can see why it is so important for Harreld to convince everyone not only that the new innovation center will make scads of money, but that everyone will necessarily profit from that revenue — and all for the low, low price of collectively funding that program. If it ever got out, say, that most of the colleges on campus were paying for prospective services that they would never use, or that one or two colleges would see the lion’s share of the support from the innovation center, that would inevitably provoke some objections. As with the study abroad program, people would wonder why everyone was paying for a service that only a few were using, and why the university was not simply billing on a fee-for-service basis. Of course if that were the case, then the innovation center — like the study abroad program — would never find itself sitting on a massive pile of cash, which it could then pass out to a chosen few.
Innovation For a Few
Assuming for the moment that turning a profit really is the primary objective of the new innovation center, it stands to reason that Harreld and the leadership of the center would want to focus resources on inventions, businesses and intellectual property that had the greatest viability in the marketplace. How such determinations are made would of course be the result of yet another byzantine and ceremonial shared-governance process, which would ultimately devolve to yet another hand-picked gatekeeper advancing Harreld’s crony agenda — but for the moment let’s set all that aside and simply take Harreld’s entrepreneurial insurgency at face value.
Here are the eleven colleges at UI that will be compelled to “actively participate” in the funding of the new innovation center:
* College of Liberal Arts & Sciences
* Tippie College of Business
* College of Dentistry
* College of Education
* College of Engineering
* College of Law
* Carver College of Medicine
* College of Nursing
* College of Pharmacy
* College of Public Health
* Graduate College
Even if you don’t know a lot about higher education, intellectual property or monetizing inventions, it should be clear that there will be academic subjects, departments and even entire colleges which are more likely or less likely to yield knowledge which can be leveraged in the marketplace. It is possible for anyone to come up with a new product or process that is useful, and that invention may also make money depending on the cost of development. Because nothing is ever a sure thing, however, entrepreneurs strive to minimize their risks and maximize the potential for success, and one of the factors they consider is the size of the potential market and the scale of any potential profit. For example, a ground-breaking invention which solves a critical problem for five people will almost always be passed over for a culturally corrosive product which appeals to the masses.
From the point of view of Harreld and his minders, the concern is not whether there will be individuals from every college who want to use the new innovation center — because that legitimizes the campus-wide fee — but which subjects, departments and colleges are most likely to make money. Not only is that were the innovation center will ‘invest’ most of the money that the university strip-mines from students and families, but as it turns out the answer to that question is already known — and has been for a long time. Here is Dan Reed, the former UI VP for Research and Economic Development, talking about profit-making in a report by the Gazette’s Vanessa Miller, on 06/04/17:
Shortly after that report Reed was forced out so Harreld could cleave his position in twain, thus shifting the economic development piece to the newly created position of chief innovation officer. What Reed said, however, backs up what we said in Part 1, which is that monetizing knowledge is a slog, and takes a commitment which may be as long as a decade or more. That in turn means the new innovation center will not be turning a profit any time soon, unless it gets — or takes — credit for IP already in the pipeline.
With regard to this post, what obviously stands out is that much if not most of the potential profit at Iowa is and will be centered around “biomedicine, pharmaceuticals, bio-agriculture and engineering” — and UI does not do much in the field of bio-agriculture. (Iowa State is Iowa’s land-grant university, and is dominated by agriculture.) From our slate of eleven UI colleges, then, we can significantly shorten that list to those colleges which will almost certainly make the most use of the new innovation center, precisely because those colleges stand to produce the most profit:
* College of Engineering
* Carver College of Medicine
* College of Pharmacy
Officially the innovation center will always be open to other colleges, thus justifying the “allocation” of a formula-based support fee. Out of simple pragmatism, however, the entrepreneurial pipeline on the UI campus will inevitably favor those three colleges, and the College of Medicine easily stands head and shoulders above the other two. Not only are the sprawling University of Iowa Hospitals and Clinics on the cutting edge of medicine, but as noted earlier that academic-industrial healthcare complex comprises fully half of the university’s $4B annual budget.
That in turn may explain why the man that Harreld hired as the new chief innovation officer — who will oversee all of the entrepreneurial activity on campus — is not only a former UI basketball player, but has a professional background in startups with a decidedly medical bent. From the Press-Citizen’s Aimee Breaux, on 11/21/18:
How much influence will the healthcare-focused Darsee have on entrepreneurial initiatives at UI? From the Iowa Now press release announcing Darsee’s permanent appointment, on 11/08/18:
Whether Darsee will directly manage the new innovation center or not, it should be clear that he will direct the focus of entrepreneurial operations across the UI campus. Given his healthcare background, and the dominance of healthcare at the University of Iowa, and the profit potential in that market, it will not be surprising if healthcare startups get the lion’s share of attention and resources. That in turn dovetails with the fact that the three co-conspirators who imposed Harreld on the school were all heavily involved with or invested in UIHC, either literally, figuratively or both.
Bruce Rastetter, of course, was not only the president of the Board of Regents and an entrepreneurial evangelist himself, but on his watch the board approved the new children’s hospital at UIHC — which eventually opened behind schedule, and more than $90M over its original $270M budget. Jean Robillard was UI’s VP for Medical Affairs when Rastetter appointed him to chair the rigged 2015 presidential search committee, on which Rastetter also served. Robillard was also appointed by Rastetter to serve as the interim president of the university during the crucial final months of the search, then appointed himself dean of the College of Medicine shortly after Harreld took office. Finally, Jerre Stead — who was either appointed to the search committee by Rastetter, or who told Rastetter to appoint him — is not only Harreld’s long-time mentor and pal, but a major donor to UIHC. Which is in turn why Rastetter, Robillard and Harreld granted Stead the naming rights to the new children’s hospital one month after Harreld took office.
In the context of this post, in fact, one particular event during the corrupt 2015 presidential search stands out among the other dirty tricks, precisely because it gives us a window into who Harreld really works for on the UI campus. While we did not know about this event until after Harreld’s fraudulent appointment, it is part and parcel of the preferential treatment Harreld was shown throughout the rigged selection process. Specifically, on 07/08/15, as the presidential search was entering the stretch run, J. Bruce Harreld was invited by Robillard to give a talk not to the greater campus, or even to the business college — which would have been appropriate given Harreld’s MBA and business background — but at University of Iowa Hospitals and Clinics.
From the Gazette’s Vanessa Miller, on 09/16/15:
As Laura Belin noted at the time, the official explanation for Harreld’s visit to UI shifted repeatedly, even as Robillard insisted that Harreld had not been brought in as a paid consultant, nor had he been brought in as a prospective candidate for the open presidency. Instead, Harreld traveled to Iowa City and back from Colorado, with his wife, on his own dime, to talk to 40 administrative heavyweights at UIHC, then lunched with Robillard, Rastetter and two key members of the search committee, for no reason whatsoever. (And more than three years later, that is still the official explanation.)
As it turns out, however, on the eve of taking office Harreld admitted that he participated in an even earlier meeting with Robillard, Rastetter, and then UI chief of staff Peter Matthes, which was arranged by Jerre Stead, who was also slated to attend but who backed out at the last minute. So why, after that prior secret meeting, did Robillard invite Harreld to give a presentation at UIHC? The obvious answer is that Harreld was auditioning with the one campus constituency that had the power — through Robillard — to put Harreld in the president’s office. He didn’t need to talk to anyone at the College of Liberal Arts & Sciences, but he did need to convince the healthcare leadership on campus that he was the right man for the job, and clearly he did just that.
Now, three years later, Harreld has hired his own hand-picked toad to oversee “innovation” at UI, who not only appeared out of nowhere — just like J. Bruce — but who happens to have a healthcare background. (Note that when Darsee’s job was first conceptualized, the title was actually “chief entrepreneurial officer” — which was apparently a bit too ‘on the nose’.)
As for funding the innovation center, while we do not know the formula by which every college will be charged for “active participation”, we do know that relative to the other colleges, the College of Medicine is quite small. Here are the 2018 enrollment figures for all eleven colleges, showing undergrads, grads, and total:
College of Liberal Arts & Sciences: 16,356 + 1,914 = 18,270
Tippie College of Business: 3,148 + 408 = 3,556
College of Dentistry: 331 + 77 = 408
College of Education: 450 + 559 = 1,009
College of Engineering: 2,183 + 269 = 2,452
College of Law: 422 + 23 = 455
Carver College of Medicine: 447 + 339 = 786
College of Nursing: 631 + 241 = 872
College of Pharmacy: 425 + 65 = 490
College of Public Health: 103 + 294 = 397
Graduate College: 0 + 478 = 478
[Not included: approximately 1,750 students, combined, in the School of Management and in University College.]
Many of the faculty physicians at the College of Medicine also work at UIHC in a patient-care role, but in terms of academics that college is a marginal player at best. And yet, when it comes to political power on campus, the College of Medicine, along with the other healthcare-oriented colleges, actually has the greatest representation on the UI Faculty Senate, despite the fact that enrollment in the College of Liberal Arts & Sciences is several times greater than all other colleges combined.
Of the 80 members of the Faculty Senate, a whopping 28 are from the College of Medicine alone, 3 are from Dentistry, 2 are ‘medicine non-technical’, 3 are from Nursing, 2 are from Pharmacy, and 3 are from Public Health –or 41 total from the healthcare disciplines. By contrast, the College of Liberal Arts & Sciences, which is by far the largest college on campus, has only 20 members, despite having twenty-three times the number of students as the College of Medicine. By sheer enrollment alone, the number of CLAS faculty, staff and students who might take advantage of the innovation center would also seem to be orders of magnitude greater, yet the entrepreneurial pipeline at UI is clearly being built up around the College of Medicine. Again, given the specifics of the funding formula(s), it is not at all hard to imagine that many if not most of the other colleges at UI will end up subsidizing entrepreneurial ventures for what is a relatively small campus constituency.
It is also interesting — and telling — that despite the massive budget footprint of UIHC, it is not listed as an “active participant” or compulsory contributor to the new innovation center. It will reap considerable benefits, but at no cost.
From the How to the Why
Merely by entertaining the idea of making gobs of money we are mimicking Harreld’s big lie from Part 1 of this post. In reality, even if UI focuses on healthcare startups and inventions, and prioritizes only those ventures which are most likely to produce a profit, there will still be far more misses than hits, and it is entirely possible that more money will be spent trying to generate those hits than is earned out over time.
Again, here is Dan Reed, former UI VP for Research and Economic Development, who was already focused on the most profitable intellectual property at the school before he was driven out:
To Harreld’s lie that profitability is easy, and only requires a commitment of sufficient resources, we showed in Part 2 of this post that ‘Innovation for All’ at the university is also a lie. While focusing on healthcare ventures makes practical sense because most academic departments do not embody disciplines which are likely to generate a sizeable return on any entrepreneurial investment, Harreld is insisting that every college pay for a service that one college will inevitably dominate. Instead, as with the study-abroad program, the new innovation center should provide a service for a fee — not stockpile cash to be doled out to a few.
So why is all of this being done? Why is Harreld building out entrepreneurial infrastructure at UI, including the brand-new position of chief innovation officer, which will cost the school a quarter million dollars a year, and a new innovation center, which will cost millions more to operate? We will answer those questions and more in Part 3.
In attempting to expose the massive grift behind J. Bruce Harreld’s entrepreneurial insurgency at the University of Iowa, we face several obstacles beyond the fact that the people involved are willing if not eager to lie to the press, to the people of Iowa and to the UI community. Chief among those additional impediments is the complexity and scale of the scam, which makes it hard to see what is actually happening. In a garden-variety grift a con artist attempts to take money from a mark, thus profiting directly, but in Harreld’s entrepreneurial insurgency the scam is indirect.
Further confusing the issue, even though Harreld and the Iowa Board of Regents routinely lie by commission and omission, lying is not against the law. Unlike someone hustling Three-Card Monte on the street or running a billion-dollar Ponzi scheme out of a Wall Street office, nothing that Harreld and the board have done has yet been proven illegal. (Even the rigged, $300K, 2015 presidential search — which the board authorized to cover for their fraudulent, done-deal appointment of Harreld — was apparently not against the law, because the board has the statutory right to conduct searches as it sees fit. If the regents want to blow state money in pursuit of a blatant abuse of power, they literally have the legal right to do so.)
The good news is that we will continue to make headway if we simply keep following the money, as we did in the first two parts of this multi-part post. In Part 1 we noted that Harreld, like a true grifter, was overselling claims of future entrepreneurial success in order to foster greed on campus. The purpose of that greed is to convince the UI community to support Harreld’s entrepreneurial insurgency, even as Harreld and others on the UI campus already know that any profits will likely be modest. Yes, a fluke hit could generate a vault of cash, but it is far more likely that most of Harreld’s entrepreneurial ventures will fail, with only a few providing enough revenue to produce a positive return on Iowa’s overall investment.
In Part 2 we showed that although the entire campus will be compelled to fund the operation of the new innovation center, most of the profitable intellectual property (IP) will originate from the healthcare campus, and particularly the academic-industrial complex defined by overlap between the College of Medicine and University of Iowa Hospitals and Clinics. In fact, from Harreld’s fraudulent hire, to his recent appointment of a chief innovation officer with a background in healthcare startups, the entire entrepreneurial pipeline at UI — including critical academic offices — is or soon will be dominated by people whose focus and allegiance is not to the university as an educational institution, but as a healthcare enterprise.
To limit the number of variables in play, in Part 3 of this post we will take a closer look at what is happening on the UI campus, then in Part 4 we will pull back and look at the big picture from the point of view of the Board of Regents and the state. For that same reason, in this part we will also assume that there is no influx of new money for Harreld to play with, even though we know that’s not the case. That advantage in doing so is that we gain visibility into why Harreld’s entrepreneurial insurgency is more than worthwhile to his minders, even if UI never makes any money from IP.
The Entrepreneur as Grifter
In Part 1 we noted that people have been starting new businesses since time began. Technically, the difference between a businessperson and an entrepreneur is the degree of risk they embrace, with entrepreneurs assuming more risk in pursuit of greater returns. Today everyone likes to think of themselves as an entrepreneur because it’s sexier, but many people who claim to be an entrepreneurs are unwilling to embrace risk.
There are indeed bold and gutsy innovators in the marketplace, and none of them — not a damn one — would be caught dead sucking on the government teat in order to limit their risk exposure. Real entrepreneurs tend to hate regulation and regulators, and prefer relying on themselves. Unfortunately, right behind them are hordes of pseudo-entrepreneurs who are more interested in selling the idea of profits than earning profits. And that includes outright hypocrites who flee the private sector to take a safe government job with a cushy salary — like Harreld over the past three years — while still espousing the superiority and profitability of the marketplace.
If you can make it in private industry you do not take a government job. And no, taking a taxpayer funded job at UI is not ‘giving back’ to the state or the school. It’s taking taxpayer money to do whatever job you’ve been given, likely by corrupt cronies who expect administrative loyalty in return.
For those oxymoronic entrepreneurs who are not self-starters — as Harreld apparently never was — you can also see why they might be attracted to, if not infuriated by, the massive governmental money flows in even a relatively low-GDP state like Iowa. Why should patriotic pseudo-entrepreneurs have to slug it out in the marketplace, including raising venture capital from sophisticated and cautious investors? Much easier would be convincing a bunch of daft, easily led, or openly corrupt government officials to turn their operations over to a parasite or washout from the business world — on the well-worn premise that market forces and private-sector know-how will inevitably lead to improved service and greater efficiencies, thus decreasing costs.
To be fair, in some instances there is a genuine profit-making objective, as was the case with Medicaid privatization in Iowa. Instead of all that government money being wasted on providing healthcare for Iowans, the state’s former governor and Lt. Governor (now new governor) decided to use their executive powers to turn Medicaid services over to private, for-profit corporations. To the surprise of absolutely no one, the entrepreneurs running those skimming operations are now making their own lives easier, even as services in the state suffer and patients continue to die.
From the Register’s Kevin Hardy and Jason Clayworth, on 02/11/19:
Clearly you can see the appeal. Instead of government officials spending money on actual services, private sector entrepreneurs can ingratiate themselves with conscienceless elected officials, then use a fire hose of money to life the fat-cat life. Unfortunately — at least from the point of view of the money junkies — not all government services can be privatized.
For example, years ago George W. Bush tried to privatize Social Security, but ultimately failed because people realized that Wall Street and financial advisors would take half of the population to the cleaners, thus leaving the federal government to provide necessary services to people who had even less to their name. (You can imagine the level of arousal that the financial markets felt at the mere idea of getting their hands on that massive and compulsory money flow, but fortunately there were not enough corrupt politicians to see that orgiastic pillaging fantasy through to fruition.)
For those government services which cannot be converted into future failed private-sector ventures or outright scams, entrepreneurs still make the same pitch, however, and the same daft, easily led or openly corrupt government officials are all too happy to buy into that same hackneyed spiel. Increased efficiencies! Profit-making ventures! A sexy new budget model — even though that ‘new’ budget model was first implemented at the University of Pennsylvania in 1974!
Not surprisingly, the massive amount of money that flows to and through public research universities is an increasing target of parasitic entrepreneurs. Not legitimate entrepreneurs, because they are looking for the kind of profits you can only find in the marketplace, but pseudo-entrepreneurs, who are willing to do what they are told in exchange for a government paycheck. Yet none of that explains why someone would want an entrepreneurial type in those jobs in the first place.
Whatever plans the pirates in the private sector have for squeezing money out of the higher-ed turnip industry, no one thinks colleges and universities are going to make money on par with the tech sector, or the energy sector, or any other for-profit marketplace. It can happen by pure chance, but the idea that all research universities can turn a profit by pursuing entrepreneurial ventures is objectively false. (Again, if anyone had figured out how to do this reliably, everyone would be doing it.)
So what’s the attraction? Why did Harreld’s co-conspirators pluck him out of a dumpster behind the Harvard School of Business, let alone offer him $4M over five years, if no one expects him to recoup that money many times over? (More to the point, between their faith in Harreld and his faith in himself, why isn’t he using his business genius to make billions of dollars in the private sector? Why didn’t BP or Volkswagen beg him to put his cutting-edge ideas about organizational change to use for them?)
In reality, even if his minders knew in advance that every venture Harreld initiated would lose money, they would still have stolen the UI presidency for him — and that would clearly not be the case in the profit-driven private sector. If you can’t make money in the business world you have to do something else — like, say, preside over a university — so even though Harreld himself is profiting handsomely, he wasn’t actually hired to make money. As to why the former president of the board of regents, former UI VP for Medical Affairs, and an Iowa megadonor did conspire to lever Harreld into office, we got a clue in Part 2 of this post.
Money Is Power
Imagine if someone told you they would give you a billion dollars, but only on the condition that you give all of that money away. At first you might be disappointed that you would not get any money for yourself…but then the greed gears would start turning in your head What if you gave that billion to your spouse, or to your parents or kids? What if you gave it to a stranger, on the condition that they give back 90%? (Who are we kidding. That would be 95% minimum, because anyone would be happy making $50M to park $1B for a few days.)
A similar circumstance informs the plot of the 1902 novel Brewster’s Millions, which, over the years, has been turned into thirteen different films worldwide, including the 1985 version starring Richard Pryor. In the original version of that story, however, and in the Pryor version, the protagonist has to choose between a million dollars up front, versus a much greater fortune if they comply with the stipulation that a large sum of money must first be given away. That in turn precipitates additional conditions to preclude tomfoolery, but there is also a surprising and consistent twist. It turns out that it’s actually quite hard to give away a lot of money without incurring some consequent benefit along the way.
Even if you are entirely selfless, and simply hand a million dollars to a stranger, that stranger will probably feel some loyalty to you, or want to return the favor in some way. And of course the same holds in a professional setting if you do someone a financial favor — like, say, help them find money for their research. You might not pocket a wad of cash yourself, but sooner or later you would probably benefit. In fact, even if your motives weren’t pure, it would be hard to rig a set of conditions which precluded you from using your money-granting powers to the advantage of your friends, which would in turn advantage you — perhaps indirectly, perhaps later, and perhaps in a corrupt or criminal way.
This is precisely why decision makers in the public sector are usually obliged to follow guidelines that prelude favoritism. Your state governor may only make a low six-figure salary, but because they control billions in state funding they can also direct that money to business or political cronies, family or friends. And of course if they’re corrupt, they may get or even demand a kickback — meaning an actual cash payment in exchange for having directed money to a particular company or individual. (This is why government contracts are usually put up for competitive bid, and why any situation in which that is not the case is inherently suspect.)
While Harreld is clearly getting paid, and massaging his considerable ego along the way by pretending to be a university president, his co-conspirators did not rig his appointment to drive profits at the University of Iowa. Instead, Harreld was appointed to spend money the way his overlords see fit. The fact that he has been talking about profiting from entrepreneurial ventures is not because that’s how he expects to profit, or even how his minders expect UI to profit, but because that’s how weasels like Harreld get people in the public sector to give him the power and authority to direct the flow of funds as he sees fit.
What is happening at the University of Iowa was never about making money. It was always about taking control of the massive amount of cash that flows to and through that institution every year, and redirecting that money as much as possible to the advantage of Harreld’s masters. Again, the University of Iowa has a $4B budget, half of which relates to UI Healthcare and UIHC. Due to mismanagement and cost overruns, however, as well as price and profitability pressures in the healthcare sector, the medical campus has endured serious blows over the past few years, meaning they are looking for additional sources of revenue. And as we saw in Part 2 of this post, Harreld is working like a dog to make sure more and more money is diverted to the UI College of Medicine and UIHC, even if every penny of that money is ultimately flushed down the drain.
But again the question is why? Why would Harreld — the purported business visionary — and his backers on the board, and in the donor class, want Harreld to steer precious revenue toward what will, in all likelihood, be a money-losing proposition overall? Well, as it turns out there are three different answers to that question, two of which we will dig into in this post, and the third of which we will use as a springboard to Part 4.
Building Out Crony Infrastructure
Were you to visit even a small liberal arts college, you would be forgiven for assuming that the college existed to further the education of the students on campus. The truth is that any institution of higher education exists to pay the salaries of the people who work there, while incidentally funding the profits of local businesses that provide attendant services like food, alcohol and housing. Education is simply a product, and the students who pay for an education are merely the means to an economic end — and are quite often treated as such. (Need more revenue? Raise tuition. If the students don’t have the cash, send them down the street to the local money lender, while pocketing a handling or referral fee in the process.)
Even assuming the most altruistic of motives, it is not wrong for a sleepy liberal arts college to look out for itself or the surrounding community, because the college and community must persist while the students come and go. At a purely practical level, having good relationships with local suppliers and service providers is beneficial to all, and all that usually takes is paying the bills on time. Unfortunately, there is often more to such relationships than pure practicality, and not everyone at a small liberal arts college is concerned with efficiencies — or even with financial stability.
If we add ego, vanity and vice — whether from administrators, faculty, or staff, let alone powerful alums and donors — the complexity of maintaining a stable operation is substantially increased. Fortunately, most of the resulting issues can still be resolved by throwing money at those problems, provided you’re in a position to direct the flow of funds. If you have discretionary authority or sufficient influence, you can direct that money be spent on everything from a snazzy donor plaque to a long-term service contract, which may not personally profit you in any direct or obvious way.
Now scale up all of that complexity — and ego, vanity and vice — to a major public research university with an annual academic budget of $2B, and you can see the potential for substantial abuse. Even if we assume the budget remains flat forever, and every entrepreneurial venture on campus goes down in flames, the sheer amount of money flowing to, and more importantly through, such a university, is bound to have influence. And that’s before we install a corrupt, crony president for that purpose.
From the outside looking in at UI, it may seem as if nothing much could change if the budget remains flat, but total revenue is not the critical factor. Much more important to anyone with a vested interest is where money is going, and who is getting how much. $2B is a staggering amount of funding, but even if you only shift $5M — which is 0.0025% of the total — you are going to make some people ecstatic, and others very unhappy.
Were you to shift those funds solely for the benefit of the university’s educational and research missions, that would be one thing, but you could also shift money around to make or break someone’s career. Speaking of which, and as noted in multiple prior posts, J. Bruce Harreld not only drove out the old VP for Research and Economic Development, in order to cleave that position in two, but his new chief innovation officer — former UI basketball player Jon Darsee — will make $250K per year, which is money that won’t be put to any academic use. (In his search for efficiencies, Harreld is now paying two people to do what was one job, at twice the salary of the former employee who handled both roles.)
Whether Harreld was following orders to hire Darsee, or came up with that idea himself, we don’t know. As to whether he has used his position to move money around for political reasons, however, we do know that to a certainty. All we have to do to confirm Harreld’s mendacity is look at his determination to destroy the UI Labor Center, including multiple administrative abuses committed along the way. Although he has apparently been rebuffed, Harreld insisted that UI would not put any Gen-Ed funds into that center’s $500K budget because the center had nothing to do with student instruction, even as he was creating a new $250K job for Jon Darsee, which has nothing to do with student instruction.
To the Darsee hire we can also add any positions that will be required to staff the new innovation center, and it’s not hard to imagine that total cost pushing past $500K per year. What we don’t know is how many other crony hires are already taking place, how many crony deals are already being cut on the sly, and how many resources are already being shifted to the innovation center and UIHC — particularly under the guise of providing common support services from central administration. Once those new money flows are established, and new hires are made, it will also be difficult to curtail them, even if their purpose was suspect from the beginning — which is why it pays to have a crony at the top of the org chart.
As noted in the example about the small liberal arts college, opportunities for cronyism and corruption also do not stop at the edge of campus — and that’s all the more true for a major public research university with a regional and at times global reach. Even as damning details of the rigged 2015 presidential search were still being disclosed, it was shocking how open the local business community was in their expectation that they would profit simply because the new illegitimate president was a former businessman. From the Press-Citizen’s Jeff Charis-Carlson, on 11/20/15 — or a little less that three weeks after Harreld took office:
Keep in mind — the “negative reaction” that Harreld received was directly related to the fact that the Iowa Board of Regents ran a corrupt search in order to jam him into office, ahead of three eminently qualified academic candidates. It was a remorseless betrayal, yet Harreld’s immediate response was to tell a lie himself, to cover for the conspirators who greased his hire. In fact, only a few weeks before the gathering in question, as Harreld was taking office, he was compelled to admit — however feebly — to having lied during both his candidate forum and immediately following his appointment. And yet to that august assembly of business leaders weeks later, Harreld was the victim.
This sudden and implicit loyalty was particularly remarkable given that most of the people in attendance knew nothing about Harreld except that he hailed from a business background, but that’s all they needed to know. As long as he was one of them, they not only supported him, they were weeping into their shawls on his behalf — along with one of his earliest acolytes in central administration:
That a high-ranking UI administrator signaled support for Harreld by pointing to acceptance off campus was bad enough, but as regular readers know Boston Chicken (later Boston Market) was essentially a vast pump-and-dump scheme, which imploded soon after Harreld left the company. But apparently that’s how these newfangled non-traditional university presidents roll. Everything is transactional, and his brothers and sisters in the local business community had no expectation that he would be anything other than a liar and a cheat.
Money As Honey
In any organization there will be turnover in personnel, and that puts a premium on recruitment. If you’re a mom-and-pop diner, not only can you probably get away with a ‘help wanted’ sign in a window, you can probably get away with all kinds of employment abuses, including discrimination against protected classes. At a public research university, however, not only is the hiring process much more formalized and rigorous, but as Harreld’s hire proved — or Darsee’s hire, or any of a number of other hires over the past few years — you have to go to significant lengths to plausibly hire the cronies you want, as opposed to having a fair and open search.
Assuming an alternate universe in which central administration at UI is not corrupt to its gills, and continuing our premise that the budget for the school remains flat, while every entrepreneurial venture loses money, one pertinent question would be how the University of Iowa intends to secure new hires in the competitive higher-ed marketplace. And of course the answer — once again — involves throwing lots of money at the problem. Because money is in short supply in our scenario, however, it will have to be shifted according to administrative priorities, including which departments you’re recruiting for, which departments you’re not recruiting for as much, and which departments you’re actively trying to starve and kill.
As detailed in Part 2, we already know that Harreld was hired by — and is aggressively shifting resources and priorities to — supporters of the healthcare campus, and in particular the UI College of Medicine. Apart from the crony underpinnings of that covert resource reallocation, however, there is actually some justification for doing so. Unfortunately, that justification has its roots in the incompetence of administrators like Jean Robillard, who was not only the UI VP for Medical Affairs when Harreld was hired, but also the chair of the search committee, the interim president during the transition, and the self-appointed dean of the medical college only a few months after Harreld took office.
Each year the Iowa Board of Regents files what is called a ‘faculty resignation report’, which details how many faculty resigned from each regent institution. The next report covering the previous academic year will probably be released at the next regent meetings — April 18-19, on the UI campus — but in last year’s report we can clearly see a disturbing trend. Covering 2006 to 2017, the badly formatted graph on p. 1 shows a significant bump in resignations from ‘clinical faculty’ in the three most recent years. (Because the UI campus is the only regent university with a medical complex, the board recently started breaking out faculty resignations on that basis. The top chart on that page shows academic resignations from all three university campuses, while the bottom chart shows clinical resignations, the vast majority of which occurred at UI.)
After bouncing between the mid-teens and low-thirties from 2006 to 2014, clinical resignations spiked to thirty-eight in 2015, forty-nine in 2016 (Harreld’s first year) and forty-two in 2017. The official line from the board and university is that clinical faculty tend to come and go more often than academic faculty overall, but even if that’s the case — and historically it is not — there has clearly been a significant increase in resignations over the past three years. Whatever the cause, those bodies must be replaced not only to continue instruction at the College of Medicine, but also to provide profitable patient care at UIHC.
So — how to replenish those depleted ranks, let alone attract the ‘world-class’ faculty Harreld always talks about whenever he wants to raise tuition? While medical faculty command a hefty price, their salary is the floor of what you have to cough up to employ them. To get the best of the best to sign on the dotted line, you also have to agree to support their research, which may or may not be funded by sources approved by your institution. If a clinician has a lucrative federal grant, that’s awesome because it will probably be a net-plus to bring that money to UI. On the other hand, if a clinician is funded by a private-sector corporation or industry group, that’s an even bigger net-plus, as long as you can minimize or paper over the inevitable conflicts of interest.
The first problem — simply hiring anyone — is a straight cost for UI. Offer a competitive salary, plus whatever bump you have to include to entice them to live in the middle of nowhere, and at the very least you’ll get a look. If you really want them to bite, however, nothing succeeds like letting a prospective member of the healthcare faculty know you are standing by with millions of dollars in institutional and financial support. Cutting-edge lab space, plenty of qualified staff, lots of human guinea pigs, free labor from students under the guise of internships — and oh, did we mention our new innovation center, which is collectively funded by the entire university, and could make you rich, rich, rich…? Throw in a great parking space and any other perks you can swing, and you just might buy yourself a ‘name’ hire, further increasing your faculty and institutional cachet.
The second problem — hiring someone with close ties to industry — might give pause to an academic institution with even minimal integrity, but fortunately the Iowa Board of Regents vaporized such concerns when it hired J. Bruce Harreld. Having screamed from the rooftops that he wants to make money, and having spent three years preparing to ‘partner’ with private industry, the door is now wide open at UI for corporate sponsorship of public-sector research, which also routinely leads to negative publicity and reputational damage. But in the meantime everyone will get paid.
Loading up on star faculty and industry research would also serve as honey for private-sector, for-profit healthcare providers, who might be willing or even eager to partner with a public-sector medical complex. That in turn may be why, back in the fall of 2017, that J. Bruce Harreld authorized UIHC to publicly announce that it was open to such partnerships. From the Gazette’s Vanessa Miller on 09/03/17:
As to improving patient care, that’s only a priority insofar as UIHC does not want to be known for botched surgeries and MRSA outbreaks. With the board’s enthusiastic support over the past two decades, UIHC built itself out into the surrounding communities, prioritizing market share and profits over service. As a consequence, a little over a year after Harreld’s fraudulent appointment that market grab led to the following praise from two former presidents of the board, following the announcement that Jean Robillard would be stepping down from his leadership position, at some indeterminate date in the future.
From the Press-Citizen’s Jeff Charis-Carlson, on 09/30/16:
After that laudatory article appeared, and before Robillard stepped aside more than a year later, not only did profits fall off precipitously at UIHC, but expensive and mismanaged clinics were largely sitting idle. To that we can also add massive cost overruns and delays at the children’s hospital, leading to years of contentious lawsuits which will probably cost the university another $30M at least. But other than that — good job!
Grifting at Scale
In the first three parts of this extended post, we clearly see the enormous influence that Harreld can have at the University of Iowa, and that would be true even if the budget were flat and all of his entrepreneurial ventures blew up in his face. At the level of mere rhetoric, that fact that UI has a huckster for a president — who constantly talks about profiting from IP and starting new businesses — has already turned a percentage of the UI community into salivating and supplicating dogs, eager to foster a community of innovation that will, in the end, profit a very few. From the point of view of Harreld’s backers, of course, nothing could be better because that’s why they stole the UI presidency in the first place. Whether Harreld ever drives any additional profits from IP, he is already diverting and spending revenue on their crony priorities by the tens of millions of dollars.
Along with marshaling a narrowly focused entrepreneurial healthcare insurgency, and devoting resources to profit-oriented healthcare hires, there is a third way that Harreld can profit his minders, but to comprehend that angle we have to pull back from UI and take a broader look from the perspective of the Board of Regents. In doing so we will confront an issue which was prominent a year or two ago, but suddenly disappeared from Harreld’s revolving list of grievances. Why Harreld may have decided to stop talking about that issue — even as it remains important not only to UI, but even more so to Iowa State — will be the focus of Part 4.
In Part 3 of this multi-part post we posited that even if the University of Iowa budget stayed flat, and all of the entrepreneurial ventures initiated by illegitimate president J. Bruce Harreld failed, he and his cronies would still derive benefits while hosing tens of millions of dollars down the drain. Not only would Harreld have a profound impact on campus simply by shifting resources and revenue to favor the aims of his minders, but by building out the entrepreneurial pipeline at UI he would also make that annual loss of revenue profitable for a salaried chosen few. To the taxpayers and students funding those losses there would be no return on that investment, but the people burning through their cash would make out like virtual bandits.
Because the individuals who conspired to jam Harreld into office were largely concerned with the healthcare campus, Harreld first rigged the UI Strategic Plan and ‘new’ UI budget model to favor those constituents, then hired a healthcare ringer to control innovation campuswide. As in the past, most attempts to exploit IP at UI will involve healthcare licenses, inventions and new businesses, but now the entire campus will have to support those narrowly focused aims, while substantially increasing the amount of money devoted to those ventures. By shifting more revenue and resources to healthcare research, including particularly for-profit research, Harreld is also making it easier to entice new healthcare faculty to the UI campus — at the expense of the other colleges — and may even be paving the way for a future public-private partnership at University of Iowa Hospitals and Clinics.
To the twin benefits of increased healthcare research expenditures, and attracting new healthcare faculty with the promise of increased research support — even if there is never a positive return on those investments — we can add a third crony benefit, but here we need to pull back and look at the Board of Regents more broadly. In the state of Iowa there are three public universities, each of which dwarfs every other institution of higher learning in the state. Along with Iowa there is Iowa State University (ISU), which is the largest of the three schools by enrollment, and the University of Northern Iowa (UNI), which is the smaller of the three by almost every metric.
In the higher-ed industry, UNI is known as a ‘comprehensive’ or ‘regional comprehensive’ university. While the definition of a comprehensive school varies, the general consensus is that such institutions are focused more on academics than research, and more on education as a means to a career than on the pursuit of knowledge for its own sake. To those points, many comprehensive universities trace their origins back to what used to be called teachers’ colleges, and UNI is one such institution. (Even today, Northern Iowa still trains the vast majority of Iowa’s K-12 teachers.)
The other two regent universities — Iowa and Iowa State — note only pursue cutting-edge research across a wide range of disciplines, but that emphasis puts them in rare company. In the United States there are various classifications of four-year colleges and universities, and one widely used standard is the Carnegie Classification of Institutions of Higher Education. In that system, both UI and ISU are classified as “R1: Doctoral Universities – Very high research activity” — which, in the snobby world of academia, is seen as the ‘highest’ ranking on the Carnegie scale. Importantly, however, the Carnegie system is not concerned with ranking institutions relative to each other, but only with classification. (Carnegie page for UI here; ISU here.)
While there are only 130 or so R1 research universities in the U.S., there is an even rarer association which is conferred by membership in an entirely different organization. While most people assume that particular association also represents a research classification, in fact it is rank-determined — much as U.S. News & World Report ranks colleges and universities. While U.S. News releases its rankings and methodology, however, this exclusive research fraternity does not publicize its rankings, nor the methodology behind them. Instead, it uses that information behind the scenes to coerce universities to perform more research, under the implicit and perpetual threat of expulsion if they fall short of the organization’s metrics. (In the Carnegie system your classification can change, but you cannot be expelled.)
The ranking organization in question is the Association of American Universities, commonly known as the AAU — which is not to be confused with the Amateur Athletic Union, also commonly known as the AAU. As to the mission of the research-oriented AAU, we get that from the Who We Are page on the AAU website:
While its long pedigree and noble academic mission lend instant credibility to the AAU, and its focus on healthcare is particularly relevant to the University of Iowa, the most important fact you need to know about the AAU is that it only has 62 members, making it twice as exclusive as the Carnegie R1 research classification. Despite the data-driven research that is performed by AAU members, however, and the murky data-driven metrics by which good standing is contingent, the only benefit that colleges and universities gain by belonging to that organization is the thrill of snobbish exclusivity. Either you belong, or you’re on the outside looking in.
Speaking of which, in 2011, for the first time, the AAU actually expelled one of its members — the University of Nebraska at Lincoln (UN-L) — for failing to maintain the metrics by which the AAU polices its members. We will come back to that expulsion shortly, but here it is important to focus on the fact that the value of AAU membership is entirely premised on prestige. From Tamar Lewin writing for the New York Times, on 05/02/11:
As to how the expulsion of UN-L came about, we get that from Doug Lederman and Libby A. Nelson, also on 05/02/11writing for Inside Higher Ed:
Again, note the AAU focus on “biomedical research”, which clearly benefits the University of Iowa, but also the degree to which the AAU undervalues land-grant universities — another subject we will return to momentarily. While the brand-conscious AAU is anything but a secret society, and its members flaunt that association at every opportunity, the AAU is notoriously secretive about it’s ranking methodology.
In 2014, the University of Missouri — another land-grant school — was also under the gun following the UN-L expulsion. In several articles in the Columbia Daily Tribune, written by Ashley Jost, we gain rare visibility into the inner workings of that very public but super-secretive organization. From 07/27/14:
It is perhaps understandable that individual schools might not want their AAU rankings known, or even that the AAU might prefer to keep its rankings secret. To deny that the AAU ranks schools, however, is a bald lie, and speaks to the coercive nature of the relationship. If you can’t talk openly about something you’re doing, let alone a purportedly objective, data-driven process — and national security is not involved — that’s a big red flag, and doubly so in academia. Yet that silence is precisely what the AAU seems to demand from its members, even as the AAU makes each school painfully aware of its standing within that organization:
From 07/29/14, also by Jost:
If you are not familiar with the higher-ed industry, the AAU may seem like either a boorish lampoon of collegiate snobbery, or a brutish cartoon of collegiate mendacity. What you should not do is underestimate the degree to which people inside that industry genuinely believe that membership in the AAU bestows superior standing. That there are no tangible benefits to belonging to the AAU, yet inclusion is considered a mark of distinction, gives a frightening glimpse into the emotional fragility of higher-ed administrators and faculty in general. Indeed, the mere thought of being expelled precipitates what I call ‘AAU panic’, while the desire to be welcomed into the fold can drive administrators mad with desire. (On that latter point there is no greater example than Mike Crow at Arizona State, who not only wrote an entire book about why ASU should be included in the AAU, but also proposed — by proxy — an entirely new AAU ranking system which would have vaulted ASU to the forefront.)
Were the AAU concerned only with vestiges of academic snobbery — including but not limited to the size of an institution’s endowment, or the number of celebrated alums — none of this ranking secrecy would matter. Because the AAU is specifically concerned with research, however, and particularly healthcare research, someone has to provide all of the money to pay for the research which keeps all of those panicky AAU members in good standing. Particularly at public schools, that funding has historically come from the states, but across America states no longer seem interested in funding what is, literally, a meaningless designation. So guess who will be paying the academic freight for AAU membership going forward?
Sticking it to the Students
Shortly after J. Bruce Harreld was fraudulently appointed to the presidency at the University of Iowa, not only did he begin pushing for steep increases in tuition, but he linked the need for more revenue to Iowa’s standing in the AAU. In fact, while Harreld was unceasing in his demand for increasing the cost of an education at UI, he was equally sparing of any offensive against the state’s politicians, and paid only minimal and grudging lip service to the need for increased state appropriations. From an article on the Iowa Now website, on 04/18/16 — six months after Harreld took office — detailing the ‘new’ budget model and resource allocation process:
Of the four bullet points, two are expressly concerned with improving the university’s AAU standing. The “AAU/Research indicators” in the first bullet point refer to the “eight [AAU] membership indicators” mentioned earlier — meaning the ‘new’ budget model at UI assumes it is worth paying for continued AAU membership. As to how much the university should spend, we see that referenced in the inscrutable third bullet point, which proposes “accenting the balance” between appeasing the AAU and teaching students.
Tellingly, the third bullet point is not concerned with research broadly, which is indeed part of the UI mission, or even about making new discoveries, but specifically about funding “an AAU aim”, versus funding education. So what does “accenting the balance” mean? Apparently, it means shifting resources toward “key AAU/Research indicators”, and away from “our core values of teaching and well-rounded student success”.
As for including the word “necessary” in the third bullet point, AAU membership is not necessary in order for a research university to conduct research. Despite being excommunicated, the University of Nebraska at Lincoln not only still exists, it still conducts research and still educates students. What it no longer has to do, however, is throw money — in the tens of millions of dollars — at metrics which please the AAU compliance police.
One month after that post on the Iowa Now website, and for reasons that have never been explained, the Board of Regents refused to extend the contract of University of Northern Iowa by president Bill Ruud, leading to the appointment of the UNI provost as interim president. A month after that, in the summer of 2016, the regents approved a massive tuition hike at all three state universities — on a pretext, no less — thus generating a massive revenue surge at each school from students bank accounts. While that money was clearly beneficial in pursuing “an AAU aim” at UI, however, it was even more welcome at Iowa State University, which at that time was under the leadership of president Steven Leath.
Having just signed a five-year extension after his initial three year deal, Leath was not only the elder statesman of the regent university presidents, but had the enthusiastic support of former regent president Bruce Rastetter, who engineered Harreld’s sham Hire at UI. In fact, Rastetter was such a fan that he not only helped Leath and his wife buy an acreage in central Iowa — by fronting the couple $1M for the purchase price, which they could not afford on their own — but with Rastetter’s blessing Leath conducted himself like an academic feudal lord. Until a funny thing happened….
As detailed in the press and in these virtual pages, toward the end of 2016 it was revealed that Leath had repeatedly violated school policy, board policy and state law while using Iowa State’s two airplanes — one of which he effectively purchased for himself through the ISU Foundation — for personal travel. While multiple state agencies banded together to erase that crime spree over a four-month span, in the end the damage to Leath’s reputation was so great that he resigned in order to take a higher-paying job as the president of Auburn. Having just signed a five-year extension, however, his unexpected departure not only left a vacancy at Iowa State, it left a gaping void in the messaging operation at the Iowa Board of Regents.
While the Leath saga was playing out, at the end of 2016 the regents hired Mark Nook as the permanent president at UNI, not only filling that vacancy, but proving they could conduct an honest presidential search if motivated to do so. Then, in early March of 2017, an old friend — Mary Sue Coleman — dropped by the UI campus to participate in a public forum with J. Bruce Harreld. Not only was Coleman herself a former UI president, but she was and still is the president of the AAU.
Appearing under the auspices of the American Academy of Arts and Sciences, as an ambassador of the Lincoln Project, Coleman joined Harreld in a public forum on March 9th. Three days earlier, on 03/06/17, Harreld had used his upcoming chat with Coleman as an opportunity to lobby the citizens of the state for more funding at UI. That lobbying did not take place at the statehouse, however, but instead took the form of a column in the state’s largest paper, thus priming the sympathy pump for tuition hikes to come. From Harreld’s column:
At the forum with Coleman, however, Harreld dispensed with any pretense of lobbying for additional state funding, and instead expressed the exceedingly short-lived view that the state was already providing enough money. To Harreld’s entrepreneurial way of thinking, all the university needed to do was go into business for itself — while also implicitly rocking students and families for the startup capital necessary to fund all of his sexy new ventures. From the Press Citizen’s Jeff Charis-Carlson, on 03/10/17:
Ten days later news broke that Leath would be leaving Iowa State. The regents covered that unexpected vacancy on an interim basis not by tapping the ISU provost, as they had at UNI, but by bringing the retired president of the University of Northern Iowa — who was also a former long-time administrator at ISU — out of mothballs. Again, the timing was problematic because it meant that J. Bruce Harreld — who was hired with no experience in academic administration, and had been on the job for all of eighteen months — was suddenly the elder statesman among the regent university presidents. Given that the board was about to make a concerted push for more tuition at all three state schools, including hosting a Tuition Task Force in the summer of 2017, institutional credibility was suddenly in short supply.
The announcement that Leath was leaving came on 03/20/17, and Leath was gone a month and a half later on May 8th. Also on May 8th, J. Bruce Harreld was once again talking about the AAU, only this time he produced documentation of Iowa’s declining AAU ranking during an interview with the Daily Iowan:
And there was this:
Two days later, on 05/10/17, interim ISU president Ben Allen was also quoted about the AAU, and he specifically tied membership to increases in tuition:
Allen’s linkage between tuition and the funding of AAU membership is explicit, yet the AAU is only peripherally concerned with education, and does not police educational excellence. While the AAU does include “undergraduate education” among its lesser Phase II Indicators, the AAU is primarily concerned with research, and particularly research expenditures. In that context, funding an “AAU-caliber institution” certainly does cost more, yet confers only ancillary benefits on those few students who intersect with an AAU school’s research. At the same time, all students would be asked to subsidize the considerable cost of that research to appease the AAU. To sell that scam, administrators like Allen and Harreld asserted — without any supporting data — that AAU branding on a degree was worth a price premium in the marketplace.
After another round of tuition hikes in the summer of 2017 — this time premised on state cuts triggered by the collapse of the state budget — the regents’ Tuition Task Force met in August of 2017, and featured presentations from all three regent university presidents. While UNI offered a sharp but nuanced series of hikes over five years, both Iowa and Iowa State lobbied for flat 7% annual hikes for the next half decade. Not surprisingly, not only was the AAU mentioned by both Harreld and Allen, but both presidents put on a hard sell, attempting to tie research — including applied or commercial research — to student success, thus legitimizing the plundering of student and family bank accounts.
From Allen’s ISU presentation on 08/09/17 (pdf here):
From Harreld’s UI presentation on 08/14/17 (pdf here):
While Harreld once again explicitly referenced a drop in Iowa’s AAU ranking, thus fomenting AAU panic in the UI community, here it is important to highlight a critical difference between UI and ISU. Whatever caused the relative drop in Iowa’s AAU metrics, and whatever happens in the future, the University of Iowa will never, ever, ever be kicked out of the AAU. In that context, Harreld’s fearmongering was only that — a scare tactic designed to justify massive multi-year tuition hikes, which would subsidize AAU research expenditures on the backs of students and families.
The reason UI will never be kicked out of the AAU is because of the academic-industrial linkage between the UI College of Medicine and the University of Iowa Hospitals and Clinics. Not only is the AAU primarily concerned with “biomedical research”, but the AAU’s metrics also favor schools that have an associated healthcare complex — and punish those that don’t. From the NYT report on the 2011 expulsion of UN-Lincoln:
From the Inside Higher Ed article mentioned earlier, also from 2011:
The link in the quote above is now dead, but on the current AAU Membership Policy page we do find a list of eight “AAU Membership Indicators”, broken into two ranked groups. Those indicators are of course the basis for the AAU’s secretive rankings, and because the University of Iowa has a massive healthcare complex and conducts ample associated research, Iowa will never fall out of those rankings. At Iowa State, however, there is reason to be concerned that the AAU could, some day, refuse to bestow what the former president of UN-Lincoln called AAU’s “gold star” — thus sending the administrators, faculty and staff into protracted academic despair.
Unfortunately, not only does Iowa State not have a medical college or associated healthcare complex — not even at another location — but like UN-L it is also a land-grant university, and heavily focused on agricultural research. Those are in fact the three main justifications that were used to expel UN-L from the AAU, and all three apply equally or more so to Iowa State. The only way to counter those considerable deficits would be to spend a lot of money improving ISU’s membership indicators — including particularly those listed under Phase I — but the state was clearly in no position to provide that funding, and would not have even if it were solvent.
Instead, the regents made it clear that Iowa and Iowa State would raise tuition each year for five straight years, and specifically linked those tuition hikes to standing in the AAU. The question was not whether there would be five years of compulsory hikes, but how steep the increases would be. While the threat of a compounded 37% increase over five years — on top of 18% over the prior two years — may have been a negotiating ploy, the underlying dynamic was clear. The regents wanted new money to shore up ISU’s standing with the AAU, and they were determined to take that money from the bank accounts of undergraduate students and their families.
As to why Harreld was fomenting panic when UI is not at risk of expulsion, if nothing else he is an opportunist. While the board now intends to allow UNI to charge a lower base rate for tuition, ISU and UI will remain in lockstep to prevent those much larger schools from competing with each other on price. (For example, because both campuses have engineering and business colleges, variations in price would inevitably skew enrollment demand to the cheaper option.) By parroting Allen’s rationale, not only did Harreld provide a coherent narrative for the regents, but he ensured a massive windfall for UI that he can then use to fund his entrepreneurial insurgency. And because much of that administrative infrastructure and research will be healthcare-related, it will also inevitably improve Iowa’s AAU rank.
It is also worth noting that to whatever degree the University of Nebraska at Lincoln was on the metric fence — along with Syracuse, which voluntarily withdrew in 2011 — the fact that the AAU finally expelled a school for the first time in its 111-year history clearly served the coercive aims of that organization. From the <a href="http://07/27/14 article in the Columbia Daily Tribune:
That an organization which confers no tangible benefits on its members can still compel this level of dread seems ludicrous on its face, but the world of academia is often more concerned about keeping up appearances than it is about data and reason. If you are on the faculty or staff at an AAU university, then you are part of the in-crowd, which is why the mere idea of exile from that prestigious organization is enough to bring a research university to the brink of emotional collapse. That in turn is considered sufficient justification for soaking the students to keep the AAU happy — even if the consequent tuition increases force students to take on more debt, or make it impossible for the most vulnerable students to attend UI or ISU at all.
Given that the threat of AAU banishment can be used to motivate policy decisions which are antithetical to the economic welfare of students — to say nothing of then diverting that new revenue to research or economic development, instead of improving education with those additional dollars — it is not surprising that Harreld and his administrative minions have used that same fear to motivate compliance with other aspects of his agenda. In fact, precisely because the majority of the faculty are so susceptible to concerns about status, AAU fearmongering has not been constrained to the executives in central administration at UI, but pervades the academic core of the institution. In early 2017, for example, a group of four deans — all of them loyal supporters and enablers of Harreld’s entrepreneurial agenda — were named to the Phase I committee of the 2020 Task Force. That select group was then charged with drawing up a battle plan for the academic reorganization of the entire campus, ostensibly at the independent direction of the provost’s office.
When the Phase I report foreshadowed the breakup of the College of Liberal Arts and Sciences (CLAS) — by far the largest college on campus, and the literal and figurative heart of the university — the AAU was again front and center in the deans’ efforts to motivate the campus to support that demolition. From the Phase I report [p. 2: bold text is original]:
Here the appeal to prestige and snobbery could not be more overt, and again the AAU is invoked as the arbiter of academic status. If you are in the AAU then you embody “excellence and distinction”, and if you’re not, you don’t. Note also the clever use of the word “remain”, which insinuates that Iowa’s AAU status may already be under threat, thus motivating acceptance of and compliance with the conclusions of the report. (You can read more about the 2020 Task Force here.)
Fortunately, the 2020 Task Force seems to have faltered during Phase II, and any overt breakup of CLAS has apparently been tabled. There is more than one way to skin an academic cat, however — or in this case, to weaken CLAS, thus compelling it to cede resources and influence to other colleges, including particularly those on the healthcare campus. For example, despite knowing more than a year in advance that the CLAS dean would be leaving, Harreld and interim provost Sue Curry — who, prior to being anointed by Harreld, was dean of the UI College of Public Health — held that position open for almost two full years, before finally filling that critical vacancy.
To no one’s surprise, Harreld — through Curry — hired an entrepreneurially minded academic administrator, thus aiding Harreld’s campus-wide insurgency. Here, however, it is also important to note the new CLAS dean’s prior employer. Despite all of the four-year institutions of higher learning in the U.S., Harreld and Curry found their new CLAS dean at — wait for it — the University of Nebraska at Lincoln, which is the only AAU member institution that was ever forcibly expelled. (And yes, if you’re wondering, Iowa’s new CLAS dean was on staff when UN-L was cut loose.)
For the foreseeable future there will be no individual on the UI campus who will be more susceptible to AAU panic than the incoming CLAS dean, making it that much easier for Harreld and the other deans to cripple CLAS from the inside. Even though there is literally zero chance that the University of Iowa will ever be kicked out of the AAU, fear is not a rational process. As embarrassing as it is — and it is not half as embarrassing at it should be — all it takes to turn an individual with multiple advanced degrees into a whimpering sap is threatening their sense of prestige. But I digress….
To bring this increasingly discursive post back to its original intent, note that while the University of Iowa must expend a massive amount of money to placate the AAU ranking minders, those expenditures may produce nothing of value in return. As with Harreld’s expansion of the entrepreneurial infrastructure on campus, and his intent to use that infrastructure and other resources to attract new healthcare faculty, membership in the glorious AAU can be maintained largely by hosing a massive amount of money down the research drain every year, whether that research pans out or not. Because the state would balk at that kind of subsidy, however — and clearly has — the regents are using their power to set tuition to take the necessary funds from students, on the pretext that an AAU degree is worth whatever larceny the board decides to perpetrate.
Bringing the whole sordid AAU saga full circle, note also that on 11/08/18 — in advance of the regent meetings the following week — the University of Iowa announced that it would be giving AAU President Mary Sue Coleman an honorary Doctor of Humane Letters degree. One week later, not only did the board approve that request, but it formally unveiled its plan to increase tuition by a minimum of five percent each year for the next five years. As for the students, they were given the right to pay through the nose to help anxious academic administrators sleep through the night.
It is not an accident that Harreld’s incitement of AAU panic spiked when both UI and ISU were pressing for mandatory tuition hikes. Now that the Board of Regents has approved five years of minimum five-percent hikes, including inflation protection — regardless of any contemporaneous increase in state appropriations — it is also not an accident that Harreld is no longer invoking the AAU as a specter of impending doom. Once again, the linkage between increases in tuition and AAU standing could not be more complete, and that leads to yet another conversation about Harreld’s hypocrisy. We will entertain that subject in Part 5, which will be the final part of this multi-part post.
In Part 3 and Part 4 of this multi-part post we assumed that revenue at the University of Iowa would stay flat, and that all of J. Bruce Harreld’s entrepreneurial ventures would also fail to generate any revenue. In reality, of course, neither of those assumptions will be the case. At minimum we already know — because of past and future tuition hikes — that revenue at UI has increased substantially since Harreld took office in 2015, and that overall revenue will continue to increase throughout the remainder of his tenure.
Having secured tens of millions in new unrestricted tuition dollars each year, we can also see that all three prongs of Harreld’s entrepreneurial insurgency are directly abetted by that new money. Not only can Harreld use that new revenue to build out the entrepreneurial infrastructure at UI, he can throw more money at the healthcare campus, including enticing new hires with research dollars — which will in turn improve Iowa’s standing with the AAU. Most importantly, however, Harreld now has the ability to divert millions of dollars in new tuition revenue to entrepreneurial ventures, some of which will inevitably produce revenue, if not an actual profit. That return on investment, however feeble, can then be touted as an economic development success story, even if Harreld’s overall returns represent a financial loss. (If you make $50M, but that return cost $100M, then you just threw away $50M.)
While Harreld is clearly scamming students and families at UI, not only is he wholly supported in doing so by the Iowa Board of Regents, but he has the implicit backing of the Iowa legislature as well, on a bipartisan basis. To that point, consider the following passage from the Gazette’s Vanessa Miller, on 03/12/19 — meaning less than three weeks ago — in her report about the confirmation hearings for three members of the Iowa Board of Regents. The topic under discussion was the difference between state funding for Iowa’s community colleges and public universities, and clearly the quoted senator — who has also been the chair and ranking member of the education committee — was well-versed in the dual educational and research missions of Iowa’s regent universities.
There is no question that the research component of the academic missions at Iowa and Iowa State substantially increases costs at those schools. Instead of simply providing an education, research universities — and especially R1 research universities, let alone those in the hallowed AAU — spend a massive amount of money fulfilling their exploratory and investigative obligations. And yet, while Quirmbach clearly understands that distinction, not once over the past three and a half years have I heard him or any other legislator talk openly about how they themselves are shifting more and more of that cost onto students. (Then again, that’s perhaps not surprising in Quirmbach’s case, given that he is also an associate professor at Iowa State.)
As noted in multiple prior posts, it is difficult to expose many of the financial shell games at the regent universities precisely because the books are not available for examination. In this case, however, we do have conclusive proof that any new ventures or expenditures at UI over the past few years have come from tuition revenue. And because UI and ISU are essentially funded in lockstep, we can assume that same dynamic holds at Iowa State as well, although the specific dollar amounts will vary.
Here is the official UI pie chart for FY2016 Gen-Ed Revenues — meaning the money that the University of Iowa took in and had available to spend during the first year of Harreld’s tenure:
As you can (kind’a) see, $230.9M comes from state appropriations, $432.6M comes from tuition and fees, and the total — along with $41.6M in savings and other income — is $705.1M.
Now here is the official UI pie chart for FY2019 Gen-Ed Revenues — meaning the current fiscal and academic year, which ends June 30th:
Here we have $214.7M in state appropriations (down $16.2M from FY2016), $482.8M in tuition and fees (up $50.2M), and $47.5M in savings and other income (up $5.9M), for a Gen-Ed total of $745M — or an overall increase of $39.9M from FY2016. Even after two straight years of state funding cuts in FY2017 and FY2018, not only is Harreld making out like the bandit he is, but that $16.2M decrease in state funding makes clear that whatever he is spending money on, most of that revenue comes from increases in tuition.
Following five tuition hikes over three years, almost all of the resulting new revenue — $34M of the $39.9M gain between FY2016 and FY2019 — comes from students and families. And of course that same proportional disparity holds true for Iowa State, because all of the state universities moved in tuition lockstep until this year. Except…in the case of Iowa State, that school has thousands of additional undergraduate students compared to UI, meaning its haul from tuition and fee increases will be even greater — giving that school tens of millions in additional revenue, with which it can placate the Association of American Universities.
While everyone seems to be using “generational disinvestment” as an overwrought term to describe decreased state funding at Iowa’s state universities over the past few years, there have indeed been several cuts to the state’s standing appropriations at UI and ISU. At the same time, however, it is clear that tuition revenue has exploded completely out of proportion to those cuts. For every $1 the state cut from UI since Harreld was hired, the regents have increased tuition between $2.5 and $2.8, without once acknowledging that fact. Instead of simply replacing lost funds, the regents are using “generational disinvestment” as an excuse to profit from students and families, but that extra money isn’t going to educate those students. Instead, it’s being diverted to research and economic development, which are state objectives.
If that wasn’t bad enough, this silent scam mirrors the justification that Harreld used while trying to kill off UI Labor Center for the better part of a year. From a press release on the Iowa Now site, on 07/10/18:
Harreld’s hypocrisy here is beyond rank. While he was adamant in refusing to support the Labor Center with Gen-Ed funds, at the same time Harreld was building out the entrepreneurial infrastructure at UI, and increasing spending on economic development — none of which is “directly tied to student instruction”. And of course the impetus for gambling all of that money on for-profit ventures ultimately comes from the state, which wants to use UI’s research capacity to generate revenue. Yet clearly the state is unwilling to financially support those “activities”.
The same circumstance that Harreld used to justify terminating the UI Labor Center is driving his entrepreneurial insurgency, yet not once has Harreld or anyone else questioned those expenditures on that basis. Even after the Labor Center was given a recent reprieve, Harreld has not changed his hypocritical tune. From three weeks ago, in his latest interview with the Daily Iowan, on 03/12/19:
blockquote>We [tried to cut] them because I thought it was totally inappropriate, in a world where two-thirds of the funding is coming out of students and their families, to actually be funding a number of these centers that weren’t student-centered in their missions and activities, out of the general education fund. It was really a funding mechanism, so if they could find another way fund, we’d be more than willing to go back to the regents, and we did, and the regents reinstated.
In early 2017, when Harreld was shooting his mouth off at the Lincoln Project forum with Mary Sue Coleman, and telling everyone that UI didn’t need more money from the state, it just needed to “build new businesses”, the one thing he left out was where the capital for those new businesses would come from. Because Harreld is one of the few people who gets to look at the UI books, he probably figured he didn’t have to fess up that he would be taking that money from students and families, but one look at the pie charts above makes clear that there is no new money coming from the state for such ventures. The claim of “generational disinvestment” is a scam in itself, but over Harreld’s relatively short presidential tenure, the state has indeed cut funding — while at the same time greatly increasing the money it is taking from student and family bank accounts.
In the governor’s proposed FY2020 budget there are several line items which speak directly to economic development at the Iowa Board of Regents. On p. 681 there is a standing $2M appropriation for Entrepreneurship and Economic Growth at UI, but that only provides ongoing support for the John Pappajohn Entrepreneurial Center, which will also now control the new innovation center. On p. 684 there is also a $3M appropriation to the regents for an innovation fund, so perhaps some of that money will be made available to Harreld at UI.
Other than that $5M total, however, I have not found any state money specifically tied to innovation and entrepreneurial ventures. From Harreld’s presentations over the past year and a half, however, we also know that he intends to blow $155M-$165M while implementing the new research-intensive UI Strategic Plan. So where will all of that money come from — of which $127M will be dedicated to research over the next five years? And of course the answer is that the bulk of that money will come from the Gen-Ed Fund, even though most of it will not be used for “student instruction” or “student-centered…missions and activities”.
Harreld’s determination to compel the entire UI campus to support UIHC and healthcare research echoes the focus that Iowa State places not on agriculture and farming for the betterment of the state and its citizens, but on Big Agriculture for the betterment of profit-making corporations. However bad things are under Harreld, however, they are exponentially worse at Iowa State, which has been thoroughly corrupted as an academic institution. What was a citizen-focused university that was founded in 1858, and became the first land-grant university in the nation in 1862, is now almost entirely devoted to advantaging agricultural businesses.
And it’s not just me saying that. From Art Cullen at the Storm Lake Times, on 02/06/19, writing about the abdication of responsibility that ISU administrators demonstrated toward the Leopold Center on the Iowa State campus:
The nightmare scenario at Iowa is not merely that Harreld is rigging the research pipeline to favor the healthcare campus, but that he is laying the groundwork for privatizing UIHC. In early September of 2017 — literally two years to the day after Harreld’s fraudulent appointment — UIHC actually announced that it was open to privatization offers from corporate healthcare providers. In the intervening year and a half there has been no news about a possible partnership, but UIHC did hire a new CEO who sees “growth” and “partnerships and collaboration as the path forward”.
Given the pervasive corruption in Iowa government, it is entirely possible that UIHC is already slated to be sold or merged with a private provider. In fact, the state made such a transaction easier over the past three years by clearing obstacles that might stand in the way. Not only has UIHC been struggling financially — meaning a private suitor could take the hospital over at a discount — but the regents added to those concerns by blowing the $270M budget for the new children’s hospital by $100M. With multiple judgments pending from that debacle, another $30M in cash may yet go out the door at UI, which may in turn be one of the reasons Harreld and the board raised tuition as much as they have. To that we can also add wiping out public-sector bargaining two years ago, thus eliminating pushback from the union members who provide the bulk of patient care.
Admittedly, one big problem with sorting this all out is that it’s almost impossible to differentiate between acts of malevolence and incompetence. For example, despite all of the brain power at UI — including central administration, and specifically the UI College of Medicine — the latest healthcare rankings by U.S. News & World Report were a disaster. From the Gazette’s Vanessa Miller, on 03/12/19:
Given the faculty exodus at the College of Medicine over the past few years, that drop-off is perhaps not surprising, nor is the desire by self-interested holdouts to have Harreld send more resources their way. That the discretionary resources he has at his disposal come not from the state but from students is more than hypocrisy, however, it’s fraud — or would be if the Board of Regents were subject to truth-in-advertising laws. As the pie charts above make clear, the state his simply stopped funding aspects of the University of Iowa that it still expects to profit from, and it is now using the regents themselves to generate the requisite funding.
The Secret of Harreld’s Success
To whatever degree the state is abdicating its responsibility to fund Iowa’s public universities — including, particularly, the significant research costs at the two AAU schools — there is no shortage of new revenue for Harreld to play with, almost all of which has been pilfered from student and family bank accounts. That new revenue, in turn, will not only be used to support traditional academic research, but will be used to conduct applied or commercial research for the express purpose of turning a profit. As to Harreld’s chances of success, from the outside looking in it is a veritable certainty that entrepreneurial ventures at the University of Iowa will prove to be wildly successful, precisely because UI and the Board of Regents have no obligation to publicly report the overall financial results.
No matter what happens behind the scenes, and how much money is lost, there will be endless reports of new ventures being launched, new rounds of funding being secured, new patents being filed and new licenses offered — even if none of that makes a dime for the school. Indeed, the University of Iowa could hose $100M down the drain in a single year, on a string of failed for-profit ventures, and there would still be endless positive propaganda from the UI Office of Strategic Communication. If nine ventures failed and one brought in even a marginal amount of revenue, we would never hear anything about the nine failed ventures, while that modest success would be hyped to the hilt — even if the venture lost money overall, when all costs were accounted for.
As is the case in the tech industry, academia has become adept at reporting all sorts of fancy metrics which imply financial success, but do not actually count as financial success. For example, everyone loves talking about raising seed money or generating cash through a new round of funding, but another word for those terms is debt — meaning money owed. This is of course the whole point of strip-mining student and family bank accounts for research funding, because there is no debt to be repaid. Once UI and ISU take in excess money as a fee for providing an education, they don’t have to pay that money back to anyone if the research pans out.
As to how this will all play out over the remainder of Harreld’s tenure — whether he leaves in a year and a half or signs an extension — at some point, and perhaps soon, the University of Iowa will announce that it has generated twenty or thirty million dollars in revenue from IP, if not more. While that will sound impressive on its face, in Part 1 of this extended post we noted that in the past ten years, the high mark for revenue generation across all three state universities was $50M. Because UNI conducts very little research, that means UI is probably already bringing in twenty or thirty million in revenue from IP, before any of Harreld’s plans are implemented.
As regular readers know, however, one of Harreld’s personality quirks is that he likes to take credit for other people’s work, so nothing will stop him from claiming any return on investment that was already in the pipeline — including ventures which predate his fraudulent hire. And of course if that’s the case, it’s also worth wondering how many new ventures at Iowa would have been successful under the old regime, which Harreld blew up in order to hire Jon Darsee as the new chief innovation officer. (Yet another six-figure government job for someone who claims to know how to make money in the private sector, but who apparently no longer wants to go to the actual trouble of making money in the private sector.)
To all of that uncertainty we can also add uncertainty about how much it cost to generate any new profits. Unfortunately, neither Harreld nor the regents will ever be forthcoming about net profits, when they are perfectly within their legal rights to hype gross profits without accounting for all of the money that was used to generate that return. (If UI invests $5M to make $50M, that’s a $45M profit. If UI invests $100M to make $50M, that’s a $50M loss, even though the amount of generated revenue stays the same.)
In truth, by ramping up the university’s efforts to generate revenue from IP, Harreld is making it harder for Iowa to produce a positive return. Whatever the annual average profit has been over the past decade, that amount was generated by a lean process that is now being built out, bulked up and subsidized with revenue — capital — from tuition and fees. As a result, all of those new costs go in the debit column, meaning more money will now have to be generated to break even.
Despite the lack of transparency about profit and loss, however, we don’t have to speculate about future returns to grasp the magnitude of the grift that is already being perpetrated. The whole premise of the tuition hikes over the past three years, and of the variable hikes that have been proposed over the next five years, is that the state has not been meeting its funding obligations. Whether that is true or not in any grandiose sense, everyone agrees that there has been “generational disinvestment” by the state, which is why the regents have been ‘forced’ to raise tuition.
What everyone seems to be ignoring — in part because the Board of Regents suppresses information about the revenue it derives from tuition and fees — is that whatever dreams Harreld and the regents have about driving profits from IP, from new state-owned businesses, or from public-private partnerships, the University of Iowa has already exceeded those expectations from tuition hikes over the past three years. No matter what happens on the IP front, as the pie charts above make clear, UI is already generating an extra $50M on an annual basis compared to FY2016, and there are no costs associated with that windfall. All the board had to do was call for a few voice votes and voila: $50M in new, unrestricted revenue, with more to come each of the next five years.
That’s the grift. While everyone fixates on what the state is and is not providing via appropriations, the state itself is looting tens of millions of dollars on that very pretext — far outstripping even the rosiest predictions about what UI might make from IP over any similar time frame. Going into the IP business is a long, costly, risk-laden process that often has a limited window for success, while raising the price of tuition takes thirty seconds and produces perpetual profit on an annual basis.
The very fact that Harreld is being paid to tell everyone that he will make massive amounts of money for the state is a tell in this regard, because that’s exactly what con artists do. They get your greed juices flowing, and that in turn clouds your judgement. What should be self-evident is pushed aside by financial lust, and the next thing you know you’re shelling money out instead of taking money in, on the promise that a massive return on investment is just around the corner.
The question with any fortune teller — and that includes business gurus — is not whether they have a gift, but why they would sell you that gift instead of using it themselves. If someone really can see into the future — whether through palm reading, tarot cards or gazing into a crystal-ball — why would they sell you that gift at forty bucks a crack, when they could take advantage of that gift to improve their own lot in life?
The same question holds for Harreld. He will personally profit by $4M over five years while playing university president, but that’s chump change compared to the amount of money he is intimating he can make — if only he has the “resources” to do so. Notwithstanding the obvious appeal of mountains of venture capital stockpiled from compulsory tuition hikes, why isn’t Harreld out there in the private sector, making all of that money for himself? Why isn’t he founding his own businesses — apart from the fact that J. Bruce Harreld has never actually been the CEO of anything?
If your answer is that perhaps Harreld wants to give back to a state he never lived in, or to a school he never attended, that doesn’t answer the question. If Harreld wants to give money to a university, why doesn’t he go make millions in the market and give that money to UI — or to Purdue or Harvard, which he actually attended? Why is he taking a state salary to perform his magic, when he could profit from that magic himself?
What Harreld is perpetrating at Iowa is the same crony corruption that reduced Iowa State to a shadow of its former self. The massive grift driving the entire process comes from the state, and specifically the Board of Regents, which has turned students into cash cows not only to subsidize entrepreneurial ventures, but as a means of profit-making in itself. While Harreld blathers on about starting new businesses, the tuition hikes that he has demanded and pushed through have already generated over $100M, and that’s after accounting for all state cuts.
Lying With Impunity
Because everyone involved in this grift is either a self-interested shyster or political crony, we will never get any direct admission that tuition hikes at UI are paying for J. Bruce Harreld’s healthcare-focused entrepreneurial insurgency, for economic development more broadly, or for a hundred other projects and initiatives that have nothing to do with education or student instruction. In the two pie charts above we can clearly see that almost all of the new revenue at UI over the past three years comes from tuition and fees, but the regents are so calculating in perpetrating this grift that there is no single published report which details exactly how much revenue the regents enterprise takes in each year. We can find endless reports on academic minutia at each school, but if we simply want to know how much revenue the regent universities took in — individually and collectively — there are no charts or graphs.
This is of course a premeditated omission. When the state cuts funding, or merely falls short of a regental appropriations request, the board aggressively publicizes that ‘loss’ as an aggregated total among the three state schools, thus making the amount as large as possible. With tuition revenue, however, not only does the board never produce aggregated totals, but it quite often references only that revenue which will be generated from increases in base tuition, thus omitting the millions in additional revenue generated from differential tuition and fees.
As is the case at the University of Iowa, the ability of the Board of Regents to conceal its financial ledger facilitates endless rhetorical shell games about funding, with the board cherry picking whichever revenue sources legitimize its objectives. If the board throws a hundred million dollars down a hole, as it did with the cost overruns at the new UIHC children’s hospital, it will emphatically state that no taxpayer money was lost — even though all of that money will be paid by the state one way or the other. Likewise, as Harreld demonstrated with his bitter attempt to destroy the UI Labor Center, if the board wants to deny funding to a program it will declare that tuition revenue from students and families is sacred, even as tens of millions of dollars is diverted to appease the vengeful AAU.
One assumption many people may make is that any real abuses of power — or actual crimes — will be detected by the auditors on each campus, or by the board’s own internal audit authority. Unfortunately, as we learned during the ‘planegate’ debacle in late 2016 and early 2017, that is not only not the case, but the board’s final audit in that instance covered up serial violations of university policy, regent policy, and state law. As detailed by Laura Belin at Bleeding Heartland on 12/15/16, the regents internal audit was not only insufficient, it was shot full of holes. (Ditchwalk post on that audit here.)
Compounding that problem — as recently detailed by Belin on 10/25/18 — the state auditor not only refused to look into the abuses and crimes that were perpetrated by then-president Steven Leath, but the omission of any serious inquiry was part of a coordinated effort across state government to cover up those crony violations, which would have led to criminal charges against anyone else. Meaning not only is the Board of Regents corrupt, but that corruption is sanctioned at the highest levels of state government — or at least it was until the beginning of this year.
On Election Day this past November, former Iowa Assistant Attorney General Rob Sand defeated incumbent State Auditor Mary Mosiman, and on 01/02/19 he was sworn in. A little over one month later, the state announced that it would pay $4.1M to victims of sexual abuse by the former director of the Iowa Finance Authority (IFA), who was also an old drinking buddy and close personal friend of the current governor. As with the revenue shell games at the Board of Regents, the new IFA director — who was recently appointed to that position by the same governor — took pains to make clear that Iowa’s taxpayers would not be footing the bill.
In prior years, under Mosiman, that statement would have gone unchallenged. Now however, Sand immediately pointed out that it did not matter what the source of revenue was for the settlement, because by its very nature that money was a state asset. From Jason Clayworth at the Des Moines Register, on 02/06/19:
Whether you have read any of the posts on this site about the Harreld hire, or have read press reports about Iowa government over the past decade, the directness of that statement may seem almost bracing. But of course Sand is right. It does not matter whether state money comes from taxpayers or not — just as it does not matter whether revenue at a regent university comes from state appropriations or tuition. If it’s state money, it’s state money.
Ten days later, Sands’ statement compelled Durham to revise her prior explanation. From Ben Oldach at WHO-TV, on 02/15/19:
To say that there has been a sea change in the State Auditor’s office would still be gross understatement. For the first time in a decade, not only is that office not held by a political crony affiliated with the dominant political party in the state, but the new auditor has a law enforcement and prosecution background. While the state auditor cannot charge anyone with a crime, by statue the auditor is also the only person who can look at the books of any government agency, including the Iowa Board of Regents.
Like the IFA, it does not matter where the board gets its revenue or assets. Although some of the board’s funds are restricted by the legislature, or by donors, every last penny — including any revenue from tuition and fees — is state money. To the extent that the board can lie with impunity because it does not have to reveal its finances, no one at the Board of Regents is going to tell the State Auditor that he does not have the authority to make sure their numbers add up. If the State Auditor calls with a question, someone at the Board of Regent is going to answer that question, or the State Auditor is going to answer that question himself.
And as it happens, there are a number of questions worth asking.
Over the past three and a half years the fraudulently appointed president of the University of Iowa, J. Bruce Harreld, has given a number of extensive sit-down interviews to the student-run Daily Iowan. Because Harreld does not talk to the UI community, let alone the public at large, unless compelled to do so by his official duties — and even then, tends to speak indirectly, through ghost-written press releases — these regular interviews often provide the only insight we have into Harreld’s thoughts on a given topic. Which is not to imply that Harreld is necessarily honest when he responds to questions from the Daily Iowan.
Over the first two and a half years of his presidency, Harreld’s responses tended to feature equal parts obliviousness and bluster. That’s not surprising given that Harreld hailed from the corporate world, and had zero experience in academic administration when he was hired. Still, as a result of his ongoing, on-the-job apprenticeship, about a year ago it did seem as if Harreld was finally getting his sea legs, at least in terms of plausibly portraying a university president. Based on his most recent interview with the Daily Iowan, however, I now have to qualify that reassessment.
In terms of sounding like he knows what he is talking about, I do think Harreld has improved, provided there is no tension in the issue being discussed. When Harreld can sit back and pontificate at a remove, at times he seems almost reasonable, and that’s particularly true when he casts himself in the role of the benevolent president — as he routinely does when referencing minority populations on the Iowa campus. (That in itself is revealing, however, because Harreld’s unceasing demand for perpetual tuition hikes has inevitably hit those same populations the hardest.)
If there is any hint of conflict, however — or worse, any threat to his ego — Harreld reverts to the petty, bratty, vindictive man who railed against opponents of his sham appointment in 2015. Between implying that anyone who opposed his hire was mentally ill, and asserting that he was entitled to a clean slate despite personally abetting that fraud on multiple occasions, Harreld demonstrated that he his, by his very nature, a divider. In the intervening years not only has Harreld been consistent in that tendency, but at times he actually seems to enjoy using the powers of his office to punitive ends.
In Harreld’s most recent DI interview we get more than one reminder that he was and is temperamentally unfit to be the president of any institution of higher learning, let alone a major public research university. In the margins he is better at faking it, but on substance, after three and a half years, Harreld has simply failed to grow into the position. To this failure to launch we can add the demonstrable fact that their is no lie too big or too small that Harreld will not tell in pursuit of his administrative agenda, which he once again ably demonstrated in his most recent interview with the DI.
Ironically, there is a silver lining to that tendency because Harreld tends to forget which lie he told last, and thus routinely contradicts himself. Couple that compound failing with his constant need to take credit while avoiding responsibility at every turn, and on more than one occasion Harreld’s eagerness to be seen as a master strategist has instead revealed prior deceit. Case in point, here is part of Harreld’s response to the first question in the 03/12/19 Daily Iowan Interview:
As detailed in multiple prior posts, this is not how events unfolded regarding the provost search. The announcement that UI Provost P. Barry Butler was leaving came on 02/15/17. It was first posted to the Iowa Now website, and precipitated widespread reporting in the local press.
A little over ten days later, on 02/27/17, the UI community learned that Harreld had appointed Curry to the interim role. Nowhere in that official announcement, however, was any notice given that Curry would serve an entire year before the search for Butler’s replacement would even be contemplated. In fact, in a report by the Press-Citizen’s Jeff Charis Carlson, also on 02/27/17, Harreld and the university actively avoided any comment about when the provost search would get underway:
Almost six months after Curry assumed her interim duties, not only was there no search underway for a permanent provost, but even the UI Faculty Senate had not been advised of Harreld’s “team” decision to put off that search. From the 09/12/17 meeting minutes of the UI Faculty Senate:
As we eventually learned, Harreld and Curry delayed the hiring of a permanent provost because they wanted to use the provost’s office to rig the dismantling of the College of Liberal Arts & Sciences, via the 2020 Task Force. That’s what Harreld meant when he said — in the press release announcing Curry’s interim appointment — that the university was reviewing its “academic organizational structure”.
While Butler initiated that process before he left, it was almost certainly put in motion after he knew that he would be leaving, which calls into question his motivation for initiating the review in the first place. In any event, the nascent 2020 Task Force was quickly affirmed by Curry, who added her own updated charge to the Phase I committee. Curry then turned around and invoked that ongoing review as justification for delaying the hire of a new CLAS dean — at least until late October, when her silence and obstruction came to a head. In the 10/24/17 meeting minutes of the UI Faculty Senate we see the critical role that Curry played in delaying the search for a new CLAS dean:
Despite Harreld’s claim that delaying the hire of a new provost had been a “team” decision in early 2017, Curry herself seems to have been out of the loop. In saying she “assumed that her interim appointment would only last about twelve months”, Curry acknowledged that she expected the year-long provost search to parallel her interim appointment. But that is exactly the opposite of what Harreld is now claiming.
Whenever Curry was apprised of Harreld’s “team” decision to delay the provost search, she also failed to pass that information along to the UI community until she was called on the carpet by members of the Faculty Senate. Whether Curry was telling the truth about her own expectations or not — meaning whether Harreld lied to her, or she was in on the con from the get-go — her characterization of the notice given by the outgoing CLAS dean was also objectively false. Not only did the dean of CLAS announce over a year in advance that he would step down in the summer of 2018, but that announcement occurred at the same time that Butler announced he would be leaving, and before Curry was appointed by Harreld. As with the provost search, Curry fell silent for six months about the search for a new CLAS dean until she had to answer to the Faculty Senate, and at no time did she volunteer any information.
In the end, Curry would not initiate the search for a CLAS dean, and Harreld would not initiate the search for a permanent provost, for an entire year. From the 03/06/18 meeting minutes of the UI Faculty Council — meaning over one year after P. Barry Butler announced that he was leaving the University of Iowa:
The provost search committee was announced on 04/23/18 — almost thirteen months after Curry’s interim appointment — and as predicted by both Harreld and Curry, it would take eleven more months to hire Montserrat Fuentes as the new UI provost. Fuentes will begin her tenure on June 28th of this year, which is almost two and a half years after Butler announced that he was leaving.
Had Curry delayed the search for a CLAS dean until a permanent provost was in place, that would have resulted in a three-year lag between Curry’s interim appointment and the appointment of a permanent CLAS dean. (For the first of those three years, CLAS would have been headed by a lame-duck dean, and for the next two by an interim dean appointed by Curry and Harreld.) Due to the intervention of the Faculty Senate, however, and pushback from the greater CLAS faculty, the delay was limited to two years, yet at no time did either Harreld or Curry refer to what Harreld now claims was a “team” plan all along. Instead, not only did Harreld have Curry take the lead in concealing his administrative scam, but even when she was taking heat he remained silent.
Continuing with Harreld’s most-recent Interview, note his immediate response to the next question from the DI staff:
Read the question again and you will see that no one asked Harreld who initiated the 2020 Task Force, or even insinuated that he was responsible. And yet, in true Harreld fashion, his overriding concern was to make sure that he didn’t take the blame — and that’s true whether he was actually telling the truth or not. In fact, here the DI reporters were referring back to an interview they had with Harreld on 12/12/18, and specifically to this exchange:
In response to that piercing question, a bit later there was also this from back in December:
You can find the Phase I report for the 2020 Task Force here. There is no mention of the performing arts in that document. You can find the final Phase II report here. The is also no mention of the performing arts in that document, which is largely devoted to promoting big ideas on campus, and grousing about the lack of same.
Returning to the most recent DI interview, here now is more of Harreld’s response to the question about the 2020 Task Force:
While the Phase I report touched ominously on the size of the College of Liberal Arts & Sciences, and intimated that an axe would swing in Phase II, that threat provoked a response which seems to have stalled the 2020 Task Force. As just noted, however, nowhere in the final report is there any specific mention of the performing arts, and yet for the second interview in a row — and the first after Harreld purportedly read the final report — once again Harreld is selling that very specific and provably false narrative. (This is J. Bruce Harreld in a nutshell: dispensing with facts and inventing whatever reality meets his current needs.)
Continuing with Harreld’s response to the same question, we do get a bit of actual news:
It is always important to pay attention when Harreld switches from generalities to specifics. While he is a huge fan of the performing arts (generality), and of the humanities (generality), and of the sciences (generality), he draws a very specific bead on science classes which are conducted by both CLAS and the “medical colleges”. In fact, when he initially professes discontent with those classes he implies that the courses in the medical colleges should be curtailed, but then he backs up and equivocates.
I don’t know what Harreld is angling for, but the impetus for Harreld’s sham hire came from the “medical colleges” at UI. If Harreld is trying to change the science classes on campus, he is not doing that to advantage CLAS. Maybe the med colleges want to cut overhead and spend that money elsewhere, but in any event Harreld does not float ideas for no reason, and he does not usually come up with ideas like this on his own.
Continuing with the next question — again, notice Harreld’s immediate response:
Having learned a great deal about ‘consciousness of guilt’ over the past year, I can only marvel at the degree to which straightforward questions from the Daily Iowan prompt immediate denials from Harreld. While there were indeed other centers and institutes involved, once again, the question that was asked was not about the criteria for closing those programs, but about one program in particular. In truth, not only was it immediately clear that Harreld targeted the UI Labor Center for closure, but among all of the other programs on the termination list, only the Labor Center decision prompted protests and pushback across the state.
That’s why the DI was asking about the Labor Center. That’s also why Harreld tried to immediately re-frame the conversation, as if it was simply one program among many. Continuing with Harreld’s reply:
As detailed in multiple prior posts, Harreld is spending money hand over fist on “activities” which are not “student-centered”, and most of that money will come from student bank accounts. That includes $127M for research that Harreld has ascribed to the UI Strategic Plan, without any supporting justification. (The dollar values attributed to various parts of that plan are made up, and do not actually exist in the plan itself.)
Continuing with Harreld’s reply — and here comes the petty vindictive brat:
As detailed in multiple prior posts, Harreld sucker-punched the UI Labor Center in July of 2018, after putting out information in April of that year which implied the program would not be at risk. As such, Harreld himself wasted three months that the Labor Center could have used to raise money. Harreld then decreed that if the Labor Center was not fully self-funding by the end of the coming academic year, it would be summarily closed.
Because Harreld is a petty, bratty, vindictive man, however, he omits all of that in his reply to the Daily Iowan, while castigating the very people he persecuted. And then he really piles on:
So let’s review. After intentionally screwing the Labor Center out of three months’ notice, which the program could have used to raise money, Harreld put that program on a very short clock. Harreld then told anyone who would listen that he could solve that problem himself, in less than a year, if only the fools at the Labor Center would listen to his eminence. Now that the Labor Center has five years to achieve the same goal, however, Harreld is suddenly deeply concerned that the Labor Center will fail to follow through, because apparently the people who work there are all giddy idiots.
(This is what you get when a small cabal of crony co-conspirators hires a miserable human being to run a $4B public research university.)
I am confident that no one at the UI Labor Center is having a “moment of euphoria” — which, in keeping with Harreld’s bullying instincts, is yet another allusion to mental imbalance. All the Labor Center managed to do, despite administrative opposition from Harreld on every front, was give themselves more time to transition to self-funding. That Harreld’s weather vane has now swung about, and he is floating the possibility that the Labor Center may fall short of its goals, merely underscores the degree to which Harreld expects people to beg him for help before he does his job. (There is nothing keeping Harreld from cultivating support for the Labor Center on his own.)
The next question from the Daily Iowan concerned a social media campaign which was initiated by the university, but co-opted by students who felt overlooked by assumptions implicit in the school’s marketing message. You can read more about that here,, but in that context:
Finally, here we have the caliber of reply that any university president should be able to give. It may have taken three and a half years, but apart from the on-brand need to congratulate himself at the end this is a solid explanation of the university’s response, and leaves the reader feeling that something is being done. Unfortunately, because Harreld is Harreld, he kept talking….
Setting aside Harreld’s wounded incredulity for the moment, here it is important to note that when Harreld first took office, he actively delayed desperately needed hires in the university counseling service. Despite ranting about hiring world-class faculty, and about keeping up with Iowa’s self-selected peer institutions, Harreld was fine with Iowa lagging woefully behind the other universities in the fourteen-member Big Ten — even as doing so negatively affected the well-being of students on campus.
As to Harreld’s reaction to the difference between online comments and conversations in meetings with students, there are two obvious concerns. First, while Harreld is up there in age — in his late sixties, if I recall — you might imagine he would have had some exposure to the tendency of social media to generate more heat than light. That is not to say that students were not raising valid concerns — they clearly were — but social media is often as much about performance and provocation as it is about communication, if not more so. Yet Harreld, who presides over a campus with 32K media-savvy undergraduates, does not seem to know that.
Second, and more importantly, Harreld is making the conversation about him, when the students were clearly trying to make the conversation about them, after the UI marketing department tried to use them to make the conversation about the university. And if you think that’s unfair, consider where Harreld went next:
As far as I know, Harreld is correct — no one is unfunding the cultural houses at UI. As alluded to earlier, however, one of the benevolent gifts that Harreld bestowed on the minority students at UI was increased funding for the cultural houses. So what we have here is not so much a university president who is concerned about the students, but a university president who is concerned that the students are screwing him out of credit.
Continuing with Harreld’s reply:
As noted in prior posts, this is Harreld’s greatest fear — that student unrest will suddenly explode and sweep him from power, as indeed happened to the former president of the Missouri System only weeks after Harreld took office. In that instance race was not only the precipitating factor, but the Missouri president also hailed from the private sector, and even had a mini version of the Harvard MBA that graces Harreld’s resume. So you can imagine that glimpsing that kind of fermenting online volatility may have given his lordship a scare.
As to Harreld’s belief that everyone should sit down and talk openly about issues and concerns, what Harreld really means is that he wants to know what everyone is thinking, so he knows the right lies to tell. Despite having paid rapt attention to Harreld over the past three-plus years, I have lost track of the number of times he promised to listen to the UI community, then did whatever he wanted to do anyway. (Had he run roughshod over the campus that would have been better than letting people know he routinely plays them for suckers.)
From the fake presidential search that led to his hire — which included the regents asking for, then disregarding, feedback about Harreld’s candidacy — to summarily killing off the 150-year-old Alumni Association, to his determination to destroy the Labor Center on a pretext, J. Bruce Harreld is the living embodiment of insincerity. And that’s before we get to the time he tried to steal $4.2M from UI students and families, by reneging on scholarships that Iowa was legally obligated to pay. Over three and a half years there has been no end to the duplicity, yet Harreld clearly feels like the aggrieved party.
At which point he once again returns to the cultural houses:
One notable difference between all of the human beings on the University of Iowa campus is that J. Bruce Harreld is being paid $800K per year ($200K deferred), while the vast majority of students are having money stripped from their bank accounts by Harreld and the regents. In that context, it is beyond insulting that Harreld accused everyone of failing him, when it is literally his job to lead by example in resolving such problems. All of which leads to this — from Mr. Higher Standards and Face-to-Face Communication:
Having been caught flat-footed by the follow-up, which revealed that Harreld couldn’t be bothered to meet face to face with anyone, he granted himself psychic access to the mind of Melissa Shivers, the UI VP for Student Life. Having thus preserved his dignity, Harreld then went meta on the core problem with education itself:
From the moment Harreld took office, it was clear that the obligation to actually provide an education in exchange for the right to fleece students would be an impediment to his grand designs. To be fair, however, there are plenty of people who feel that way on any university campus, and that’s particularly true at research institutions, where many employees have no educational role. From managers and administrators who push paper, to professional research staff, to cranky faculty burnouts who buy their way out of most of their teaching load, there are plenty of employees at UI who would be happier if the campus was not littered with young students who had a lot to learn — literally and figuratively.
The key difference between all of those people and J. Bruce Harreld, however, is that those people know they should never put those sentiments on the record, because education is not only the core mission of any university — whether involved in research or not — but students increasingly pay the bulk of the salaries for those disgruntled ingrates. That Harreld is gouging the students for more and more money is galling enough, but that he feels put upon by the need to “do it all over again” with the next crop of students is obscene.
Once again Harreld comes close to salvaging a little dignity, but because he is not a real university president he can’t get there. From the point of view of businessman Harreld, or Purdue-engineer Harreld, and Harvard-MBA Harreld, the very nature of education short-circuits his need to see organizations as systems and processes. Because there will always be more students who do not understand themselves or the world, in the end Harreld has to throw up his hands and admits that educating students is just something he will have to endure….
For Part 2 of J. Bruce Harreld and the 03/12/19 Daily Iowan Interview, click here.
This is Part 2 of J. Bruce Harreld and the 03/12/19 Daily Iowan Interview. For Part 1 click here.
The next question from the DI dealt with an issue that has gained national prominence, largely because the Trump administration and right-wing legal groups are using free speech as a means of expanding religious rights. This constitutional tug of war is particularly relevant to the University of Iowa, which has not only been targeted with lawsuits by outside plaintiffs, but now faces a new campus free-speech law in Iowa, which was recently signed by the governor. (That law was almost certainly passed to tee up additional litigation.)
Having been down this road with Harreld before — including his 05/03/16 DI interview, in which Harreld dismissed concerns about hate speech by saying “sometimes hate speech for one person is love speech for somebody else” — here we go again….
It is entirely possible that J. Bruce Harreld is a super-sensitive guy, and that every day people do say things to him that he finds offensive. It is objectively impossible, however, that on a daily basis people say things to Harreld which are actually offensive. Again, the man is the president of a $4B public research university, who pulls down $800K per year ($200K deferred), while living rent-free in a state-owned mansion. Yet to hear him tell it, he is constantly bombarded with insults.
Who are these people who are insulting Harreld, and what are they saying? Are they saying things like, “Hey — Bro Bruce! Why did you try to steal $4.2M from students and families in early 2017, by reneging on scholarships that UI was legally required to pay?” Because while I’m sure Harreld would not enjoy hearing that, that’s not an insult — that’s a fact.
A related concern would be the admission, albeit unintentional, that Harreld believes his popularity has tanked over the past few years. From a rare local-media interview with KWWL-TV, on 05/17/16:
In just under three years Harreld has gone from having five or fewer people on campus who “don’t like me”, to being personally insulted on a daily basis. Then again — and here we are assuming this is not just one person ragging on him every single day — that may mean the UI community is taking notice of all the damage he is doing, which would obviously be a sign of improving health for the institution. But enough jocularity….
J. Bruce Harreld is a white male, who, shortly before he was fraudulently hired at UI, owned at least four multi-million-dollar homes. Whatever believes he is enduring at the University of Iowa, or in American culture at large — let alone on a daily basis — no one has ever called him the n-word unless he also has a history of dressing in blackface. In fact, given Harreld’s race, gender and wealth, he has probably never been subjected to any of the common derogatory terms that are commonly used to intimidate and discriminate against far too many members of the UI community on a daily basis. But again, in Harreld’s world he’s always the victim.
That’s who Harreld is, and no matter how long he remains in the president’s office at the University of Iowa, he will never break free of the gravitational pull of his own ego. If he could, he would have skipped his own claims of victimhood and led with this:
It’s always sketchy when rich old white men tells others how to interpret threats, because rich old white men don’t usually have many foes to contend with. Instead, they live the kind of entitled existence that convinces them they can, with impunity, steal the presidency of a major public research university — and they’re right. If four minority students pilfered a vending machine on campus, they would end up expelled, with a criminal record. Because Harreld abetted three other rich white guys in stealing the job he now holds, he gets $800K per year ($200K deferred), and his minders get someone who always takes their calls and does what he is told.
Having said that, there is some reasonable thinking in the quote above, and it’s to the detriment of the university that Harreld can’t go there more often, fulfilling his obligations as a leader and healer. Unfortunately, when you’re a rich old white guy, you tend to draw from rich-old-white-guy experiences….
To refresh your memory, here is the question Harreld was originally asked:
In his extended reply, Harreld deftly accomplishes the following:
* Patiently explains to students that when they think they’re encountering hate speech, they’re probably overreacting.
* Invokes the relatable imagery of strolling around a “wonderful park in London”.
* Reminds all of the UI students that he’s sending one of his kids to school in Europe, in part on money he’s making at UI, which in part comes from the remorseless tuition hikes that he has imposed since he took office.
* And finally — as if that wasn’t enough — Harreld manages to tell a story about a “speaker’s corner”, which is the exact opposite of the new law that was being debated in Iowa at the time, and was recently passed.
From a Gazette staff editorial on 03/29/19:
What the Gazette applauds at a theoretical level was pushed through by right-wing judicial activists, so campus trolls can disseminate hate speech throughout institutions of higher learning, instead of being limited to a “speaker’s corner” — as in Harreld’s nostalgic, heartwarming recollection. As for Harreld’s advice about whether to engage or not, that is the eternal question of human society. Should you ignore hate speech, or confront it? Should you counter trolls — online, or in real life — or deny them that exchange?
There is no all-purpose answer, but there often is a point at which people do have to show up in opposition. That’s the lesson of the Civil War, of World War II, of the Civil Rights movement and many other critical moments in American history. There are times when you just can’t sit back and assume that cultural craziness will run its course, yet once again Harreld can’t get there. Instead, as a self-interested, old, white and very wealthy male administrator, the advice that Harreld offers to the campus make his own life easier.
Continuing with the next interview question:
In the entire interview this is the one question that Harreld seems to resonates with, precisely because he’s been through similar programs in the private sector. He’s also right about the provocative workshop title, which almost certainly contributed to the program being rescheduled amid the larger conversation about campus free speech. Again, this kind of response should be almost effortless, but instead it’s the exception.
As Harreld notes, Trump’s habit of signing meaningless executive orders is firmly established. That and the fact that there was no plan attached makes clear that nothing will change in the immediate future. (That the Iowa governor and legislature pushed through their own campus free-speech bill, however, has more immediate ramifications, though that had not transpired at the time of Harreld’s interview.)
The next question from the DI, and a follow-up, concerned a story that will pick up steam at some point (ha), and probably sooner rather than later. In early February, the University of Iowa announced that it would explore a public-private partnership (P3) with an energy company, which might last as long as half a century. That idea was modeled on a similar deal that was put together at Ohio State, which was largely sold as a windfall for the school, while ignoring the steep back-end costs.
[As this post was being written, the university announced that its aggressive timeline for discussing, approving and implementing the P3 power-plant project would be delayed. There were no specifics, but one explanation is that Harreld wants to grind out the rest of the semester, then push ahead over the summer, when there are fewer people on campus who might object. To that end, on Thursday notice was published that the university would meet its begrudging obligations under shared governance by holding several listening sessions just prior to finals. Unfortunately, in October Harreld said that “shared governance does not mean shared decision-making“, so these listening sessions are nothing more than ass covering.]
In the proposed public-private partnership, an energy company would run the UI power plant, and in return the school would receive a large up-front cash payment, which would then be used to fund an endowment. And if you’re thinking right now that a deal like that makes no sense, you’re right — but that is how the deal is being pitched. From the UI press release announcing the possible partnership, on 02/08/19:
If the university signs a “professional services agreement” with an energy company, to run the UI power plant, then the university will pay for that service — meaning money will flow from UI to that company. As to how why the energy company would provide UI with “an upfront payment that the university will place into an endowment”, that’s an entirely separate part of the deal which involves borrowing a massive amount of money, then paying it back with interest over time. That may indeed be advantageous to the lender because it allows them to take a tax break the university can’t profit from, but the bottom line is that the university will simply be borrowing money at a cost. And yet nowhere in the initial press release, or in subsequent reporting by the press, do Harreld and his administrative minions acknowledge that fact.
From the Daily Iowan’s Marissa Payne, on 02/08/19:
From the Gazette’s Vanessa Miller, also on 02/08/19:
As you can see, the unmistakable impression is that in exchange for allowing a private-sector partner to run the Iowa power plant, the company will give the university a massive pile of cash. But of course that’s not how business works. If you want someone to do a job for you — like run your power plant — you have to pay them. And if you want someone to give you a bunch of money up front, you have to pay them back.
With all that in mind then, let’s check in with UI president J. Bruce Harreld — who has a Harvard MBA, and can squeeze money out of any turnip — and see if he can shed some light on this confusing proposal:
To punchline here is that Harreld’s response runs another 1,099 words, and almost all of it is garbage. For example, here is Harreld once again misstating the UI Strategic Plan, because it benefits him to do so:
No. As regular readers are aware, Harreld constantly lies about both the core components of the UI Strategic Plan and the core components of the university’s mission. Where the press release announcing a possible P3 deal correctly cites the core missions of the school as “teaching, research, and scholarship”, Harreld routinely replaces scholarship with ‘economic development’ or ‘innovation’ — including in presentations to the Board of Regents. Likewise, the three core components of the UI Strategic Plan are Student Success, Research & Discovery, and Engagement, the latter of which does include a peripheral economic development component, but only because Harreld rigged it to include that extra-curricular focus.
Continuing with Harreld’s deceptive reply:
There are so many things wrong with this that I won’t detail them all here, but no company is giving the University of Iowa a nine-figure payout for a tax break, while also running the entire power plant, including taking on the associated labor costs. Speaking of which, the following assertion — which has also been uttered by Rod Lehnertz, UI SVP for Finance and Operations — is yet another lie:
In any business there is no quicker way to improve the bottom line than kicking people off the payroll, because you don’t just save on salary, you save on benefits — and the benefits at the UI are excellent. When Harreld and Lehnertz insist they are “not doing this to save money and actually reduce the workforce”, it is self-evident that cutting employees loose will save money and actually reduce the workforce. (We will never get those two chiselers to admit to their motives, but the inevitable outcome of their proposal is the exact outcome they deny they are trying to achieve.)
Harreld’s reply continues like that, paragraph after paragraph, and if you read the whole thing it’s clear that instead of quickly explaining the P3 deal, Harreld is trying to overwhelm the DI reporters with his reply. To their credit, not only did they respond with a sharp follow-up, but that question prompted Harreld to fall back on the cartoon explanation outlined above.
The fact that this idiotic statement came out of Harreld’s mouth says as much about how little regard he has for the reporters at the Daily Iowan as it does about his instinct to deceive. There is no energy company in the world that is going to run the UI power plant in exchange for the privilege of doing so, but Harreld knows that — which is why he quickly followed up with more words, which still understated the cost to UI:
Harreld keeps rambling like that for another two paragraphs, throwing everything at the wall in the hope that something will stick. Then he runs face first into the wall:
My theory here is that Harreld became punch-drunk listening to himself, so it was probably a good thing that the interview was almost over. Or it would have been, had the Daily Iowan not asked the most devastating question that Harreld has been asked in his three and a half years in office. In fact, when I first read the question I winced, because of how effective it was at ripping off Harreld’s mask.
Harreld was hired with no experience in academic administration or in the public sector. He was fraudulently appointed to be a crony fixer — a tool — who would put the priorities of his minders above all. They could have hired him as a consultant but instead they installed him at the top of the org chart, because not a damn one of them cared about how J. Bruce Harreld would disadvantage the UI community over the next five years.
Well here we are, three and a half years into Harreld’s tenure, and by his own admission very few students know who he is. When the school needs leadership Harreld instead pushes out a press release, lies to the UI community in interviews, or simply goes AWOL — perhaps to London, or to one of his few remaining multi-million-dollar homes.
As for actually engaging with the students, here is a social media photo-op of dedicated university president J. Bruce Harreld passing out snacks in early 2019. Now here is the same president Harreld, passing out the same snacks — in the exact same room — in early 2018. And Harreld wonders why students got upset when the marketing department decided to use them as props in a social media campaign. (Then again, what are students really for, anyway?)
I don’t know who thought of asking Harreld the final question in the DI interview, but it was an inspired decision precisely because it prompted a moment of self-reflection. Harreld’s failings as president of the University of Iowa are manifest, but for a moment he was aware of them as well. Unfortunately, based on the past three and a half years, the only guarantee is that he won’t be humbled for long.
Updated 04/15/19: Funny stuff: https://dailyiowan.com/2019/04/15/student-thoughts-ui-president-bruce-harreld/