Tag: regime

  • Why Universities Must Not Capitulate to the Trump Regime

    Why Universities Must Not Capitulate to the Trump Regime

    The $221 million settlement with the Trump administration by Columbia University (and a similar $50 million deal by Brown University) represent a terrible capitulation by these campus leaders. AAUP president Todd Wolfson called the settlement “a disaster for Columbia students, faculty, and staff, as well as for academic freedom, freedom of speech, and the independence of colleges and universities nationwide. Never in the history of our nation has an educational institution so thoroughly bent to the will of an autocrat.”

    Columbia and Brown had slam-dunk legal cases against the Trump administration, which clearly violated the processes required under Title VI when they suspended funding. (Brown was never notified of any reasons for the funding to be cut off, and there wasn’t even the pretense of a finding of antisemitic discrimination.) By making a settlement, universities give up their legal rights to challenge this repression, agree to impose massive censorship and pay a huge sum for the privilege of sacrificing their values.

    It’s possible that the leaders of Columbia and Brown made this agreement because they concluded that Trump is a pathological liar, a petty dictator, a petulant lawbreaker intent on taking revenge against any perceived enemy and a president who will simply ignore any adverse judicial rulings. That analysis is accurate. But if you think Trump will ignore the law and violate any rules, then trusting his regime to obey a legal settlement is just as crazy.

    The settlements include a bizarre amount of federal micromanagement of private universities, requiring Brown to provide single-sex floors in student housing, ban admissions decisions using personal statements that mention race and conduct a survey about antisemitism by the end of the year and take “appropriate action” in response. Even the smallest violation of the numerous requirements could be used to justify a future cutoff in federal funds.

    The same officials who made ludicrous accusations of antisemitic discrimination to punish these universities will get to decide if the colleges are violating the agreement and deserve to be punished. While the agreements settle the old baseless charges, nothing prevents new baseless charges from being filed and leading to the same illegal funding cuts. Colleges that settle with the Trump administration have no guarantee of safety from further retaliation, and Trump officials will actually use these settlements to demand a tighter reign of censorship.

    The New York Times reported about those praising the Columbia agreement, “Many have focused on a provision that said no part of the settlement ‘shall be construed as giving the United States authority to dictate faculty hiring, university hiring, admissions decisions or the content of academic speech.’” Far from being a positive protection for intellectual liberty, this language is actually a terrible threat to free expression on campus.

    By only protecting academic speech, this provision leaves the door wide open for government-imposed repression. Most expression on college campuses is not academic speech. The extramural utterances of faculty, along with virtually all student speech, is not academic speech and therefore is open to any suppression by the government under this agreement. But protecting extramural utterances is an essential part of academic freedom and has been a fundamental aspect of its definition since the AAUP’s 1915 Declaration of Principles.

    While the provision says that the government can’t “dictate faculty hiring,” there’s nothing about dictating faculty firings. By solely protecting hiring decisions, Columbia leaves the door wide-open for purging faculty, staff and students who are deemed undesirable by the Trump administration.

    In an email to the campus, Brown president Christina H. Paxson wrote that the first key aspect of the settlement was that “no provision of this Agreement, individually or taken together, shall be construed as giving the United States authority to dictate Brown’s curriculum or the content of academic speech.” (Brown apparently didn’t bother to follow Columbia and get a ban on federal control over its hiring decisions, which is an alarming omission.)

    Some people might think that paying $221 million to get $400 million in research grants is a good bargain. Federal grants aren’t free money for colleges. All of the funding goes to research expenses. Now that the Trump administration has arbitrarily lowered the indirect cost rate to 15 percent, government-sponsored research is much less profitable for colleges—and possibly an expense they must subsidize. Certainly, Columbia will be losing money by paying $221 million to get access to $400 million in grants.

    Paramount bribed Donald Trump a mere $16 million (and purged a few critics) in order to get approved an $8 billion merger that can’t be undone. As terrible as Paramount’s submission to Trump was, Columbia purged far more students and spent 13 times as much to get a deal worth 1/20th the value that increases ongoing federal control over Columbia. Paramount and Columbia executives may share a moral gutter, but at least Paramount’s bribe made financial sense.

    Worse yet, by making a settlement, Columbia loses that $221 million forever, with no opportunity to prevail in court and receive the full funding their researchers are entitled to. By agreeing to obey the government, Columbia hurts its legal options to challenge future funding cutoffs, because the government can claim that Columbia failed to live up to the terms of the settlement. If the courts rule against the Trump administration’s illegal actions, Columbia and Brown will still be forced to pay these millions, impose repressive censorship and face retaliation without legal recourse.

    The Columbia capitulation sets a precedent for Harvard to pay an even bigger settlement, estimated at up to $500 million. Unfortunately, hapless apologists for repression such as former Harvard president Larry Summers are urging Harvard to follow Columbia’s model, and Summers praised the Columbia capitulation as “the best day higher education has had in the last year.” Summers claimed, “The prestige of the university is not to be arrogated by faculty members in support of any set of political convictions, particularly those in leadership positions of academic units.”

    Let me translate this: Professors should not be allowed to express political views. For believers in censorship such as Summers, the desire to suppress academic freedom finds a convenient partner in the Trump administration.

    Universities are making these deals with the Trump regime not in spite of the requirements for censorship, but because of those restrictions. The provisions in these settlements enhance administrative power to suppress dissent, and that’s precisely what makes them so appealing to some campus administrators.

    Columbia and other colleges are trapped in a no-win situation, but even difficult moral dilemmas have wrong answers, and that’s what Columbia’s leadership has chosen. Let’s hope Harvard is not the next lemming to throw itself over the cliff and sacrifice its core values, its donor money and its common sense in the vain hope that fawning obedience and bribery can satisfy the vengeance of a mad leader.

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  • Higher education in England needs a special administration regime

    Higher education in England needs a special administration regime

    Extra government funding for the higher education sector in England means the debate about the prospect of an HE provider facing insolvency and a special administration regime has gone away, right?

    Unfortunately not. There is no additional government funding; in fact the additional financial support facilitated by the new Labour government so far is an increase to tuition fees for the next academic year for those students that universities can apply this to. It is estimated that the tuition cost per student is in excess of £14K per year, so the funding gap has not been closed. Add in increased National Insurance contributions and many HE providers will find themselves back where they are right now.

    It is a problem that there is no viable insolvency process for universities. But a special administration regime is not solely about “universities going bust.” In fact, such a regime, based on the existing FE special administration legislation, is much more about providing legal clarity for providers, stakeholders and students, than it is about an insolvency process for universities.

    Managing insolvency and market exit

    The vast majority of HE providers are not companies. This means that there is a lack of clarity as to whether current Companies and Insolvency legislation applies to those providers. For providers, that means that they cannot avail themselves of many insolvency processes that companies can, namely administration, company voluntary arrangements and voluntary liquidation. It is debatable whether they can propose a restructuring plan or be wound up by the court, but a fixed charge holder can appoint receivers over assets.

    Of these processes, the one most likely to assist a provider is administration, as it allows insolvency practitioners to trade an entity to maximise recoveries from creditors, usually through a business and asset sale.

    At best therefore, an HE provider might be able to be wound up by the court or have receivers appointed over its buildings. Neither of these two processes allows continued trading. Unlike administration, neither of these processes provides moratorium protection against creditor enforcement either. They are not therefore conducive to a distressed merger, teach out or transfer of students on an orderly basis.

    Whilst it is unlikely that special administration would enable survival of an institution, due to adverse PR in the market, it would provide a structure for a more orderly market exit, that does not currently exist for most providers.

    Protections for lenders

    In addition to there being no viable insolvency process for the majority of HE providers, there is also no viable enforcement route for secured lenders. That is a bad thing because if secured lenders have no route to recovering their money, then they are not going to be incentivised to lend more into the sector.

    If government funding is insufficient to plug funding gaps, providers will need alternative sources of finance. The most logical starting point is to ask their existing lenders. Yes, giving lenders more enforcement rights could lead to more enforcements, but those high street lenders in the sector are broadly supportive of the sector, and giving lenders the right to do something is empowering and does not necessarily mean that they will action this right.

    Lenders are not courting the negative press that would be generated by enforcing against a provider and most probably forcing a disorderly market exit. They are however looking for a clearer line to recovery, which, in turn, will hopefully result in a clearer line to funding for providers.

    Protections for students

    Students are obviously what HE providers are all about, but, if you are short of sleep and scour the Companies and Insolvency legislation, you will find no mention of them. If an HE provider gets into financial distress, then our advice is that the trustees should act in the best interest of all creditors. Students may well be creditors in respect of claims relating to potential termination of courses and/or having to move to another provider, potentially missing a year and waiting longer to enter the job market.

    However, the duty is to all creditors, not just some, and under the insolvency legislation, students have no better protection than any other creditor. Special administration would change that. The regime in the FE sector specifically provides for a predominant duty to act in the best interest of students and would enable the trustees to put students at the forefront of their minds in a time of financial distress.

    A special administration regime would therefore help trustees focus on the interest of students in a financially distressed situation, aligning them with the purposes of the OfS and charitable objects, where relevant.

    Protections for trustees

    Lastly, and probably most forcefully, a special administration regime would assist trustees of an HE provider in navigating a path for their institution in financial distress. As touched on above, it is not clear, for the vast majority of HE providers, whether the Companies and Insolvency legislation applies.

    It is possible that a university could be wound up by the court as an unregistered company. If it were, then the Companies and Insolvency legislation would apply. In those circumstances, the trustees could be personally liable if they fail to act in the best interest of creditors and/or do not have a reasonable belief that the HE provider could avoid an insolvency process.

    Joining a meeting of trustees to tell them that they could be personally liable, but it is not legally clear, is a very unsatisfactory experience; trust me, this is not a message they want to hear from their advisors.

    A special administration regime, applying the Companies and Insolvency legislation to all HE providers, regardless of their constitution or whether they are incorporated, would allow trustees to have a much clearer idea of the risks that they are taking and the approach that they should follow to protect stakeholders.

    In the event a special administration was to be brought in, we would hope it would not need to be applied to a market exit situation. Its real value, however, is in bringing greater legal clarity for lenders and trustees and more protection for students, in the current financial circumstances that HE providers find themselves in.

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