Michael Hiltzik | LA Times columnist
July 4, 2010 -- It's not unusual for government agencies with budget problems to start outsourcing services to private industry.
Computer maintenance, prison management, landscaping — all are among the services that state or local bureaucrats have handed off to private firms over the years.
What about college education? It turns out that California is trying to outsource our public higher education system to the for-profit college industry. What is surprising is that this is happening without any evidence that the affected students would be well served.
The issue has been cast into high relief by a two-year agreement struck last year between Jack Scott, the chancellor of the California Community Colleges, and Kaplan University, an aggressively marketed institution that does most of its pedagogy online.
Under a memorandum of understanding, or MOU, students who need a course to meet their associate degree requirements but can't get it at their community college — say because of space constraints related to state budget cutbacks — would be able to take it at Kaplan.
There are some catches, however. One is that they'd have to pay Kaplan's tuition, which even with a 42% discount offered by the institution is far higher than the community college system's fees. Kaplan's discounted fee is about $646 for a three-credit class, compared with $78 at the community colleges. Another is that Kaplan will have to reach an "articulation agreement" with the student's community college, ensuring that the latter will accept the Kaplan course for full credit. (The California community colleges are more a confederation than a centrally managed system like the University of California, but they all get state funding and look to the chancellor for leadership.)
Finally, there's no guarantee that the Kaplan course will be accepted by any four-year college the student transfers to, such as a UC or Cal State University campus.
These are among the factors that have put the community college faculty's collective nose out of joint over the Kaplan deal. But there's more. The deal was reached behind the faculty's back, even though such arrangements are customarily brought to the teachers for discussion.
Then there's the financial situation underlying the MOU. Put simply, the Legislature has cheaped out on the community college system. The 112-college system, which serves nearly 3 million Californians, sustained a budget cut of $520 million, or 8% of its budget, in 2009-10. Course sections were reduced by 5% statewide, Scott's office says, with as many as half of new students trying to enroll in a class being turned away at some campuses.
"The state put us in the position where we cannot serve our students," Jane Patton, an instructor at Santa Clara's Mission College who is head of the system's academic senate, told me, "and it's getting worse by the year."
Kaplan saw an opportunity in the resulting vacuum. "We recognized the challenges that the community college system is experiencing," says Gregory Marino, president of Kaplan University Group. "Kaplan University being a student-centered institution, we thought there was a way we could help."
He says there is less advantage for Kaplan in the deal than for students needing courses, as single-course arrangements are secondary to Kaplan's core business of granting degrees. But Kaplan does get access to a community of 3 million students who might transfer to its degree program, as well as the image of having the community college system's seal of approval.
Indeed, the system "underestimated the extent that Kaplan would use the MOU as a marketing tool, which they did very effectively," says Terri Carbaugh, the community college system's vice chancellor. "The public perception was that we're hand in glove with Kaplan."
Campus officials say no articulation agreements have yet been reached, perhaps because some campus officers have been repulsed by Kaplan's crude overtures; one says Kaplan offered a free box of See's candy to the first 10 campus officials who agreed to talk about an articulation agreement.
That brings us to the question of just what kind of institution Kaplan is — and to whether the community colleges should be doing business with such institutions at all. Kaplan, an outgrowth of what used to be the Stanley Kaplan SAT prep service, is one of the faster-growing for-profit universities in the country.
Some for-profit proprietors may have rushed into the college biz less out of a mission to prepare young people for gainful employment than in the quest for gainful investment. The sector's growth coincided with the relaxation of federal regulations governing the quality of their course offerings (drifting lower) and how far they could shove their snouts into the federal trough (ever deeper).
In 1998, for instance, Congress raised the maximum portion of its revenue that any school could derive from federal student assistance to 90% from 85%. Those exceeding the limit lose their eligibility to receive the government aid.
Kaplan University's ratio in 2009, according to the annual report of its parent, Washington Post Co. — yes, that Washington Post — was "less than" (in other words, "close to") 87.5%. The Kaplan subsidiary collected about $1.3 billion in federal student aid last year, which helped make it the largest and most profitable unit of the company.
A congressional inquiry is underway into whether such institutions are gaming federal aid programs to their students' disadvantage — based on evidence that they "spend a large share of revenues on expenses unrelated to teaching, experience high dropout rates, and … employ abusive recruiting and debt-collection practices," in the words of a report by Sen. Tom Harkin (D- Iowa). A Kaplan spokesman said in an e-mail that such critiques are "filled with inaccuracies and old stories."
Kaplan is accused by former faculty members in a federal lawsuit in Florida of recruiting possibly unqualified students, pumping up their grades to keep them enrolled, and giving its own employees "scholarships" to keep the school's federal aid ratio below 90%. Kaplan calls the accusations "baseless" and "totally without merit."
As for "online learning," there's certainly room for new techniques in education. But how much is too much? Patton, who teaches public speaking, points to a Kaplan public speaking course in which students can deliver their speeches to a webcam.
I can't say for sure that learning public speaking online is less effective than learning it, well, in public. But as an experienced speaker, I can tell you there's a big difference between delivering a talk in person to a live audience and sitting in front of a webcam in your underwear, even if you put on a nice shirt for the camera.
Carbaugh says that for-profit institutions are a fact of life — nearly 13% of students transferring from community colleges already are choosing them — and that the MOU represents a step toward ensuring that those students will get what they pay for. She observes that, in the vein of customer protection, the MOU imposes new conditions on how Kaplan can market to the system's students. "To say there are problems in this industry so we're going to ignore it would be irresponsible," she says.
But there's a better way to protect the students — by giving the community colleges adequate state funding, so they're not forced to fill their course requirements at institutions that keep one eye on academics and the other on the main chance.