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Another sad story

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Now sit right back and you’ll hear a tale, a tale of a fateful trip.

Well, not really.

In the summer of 1995, Joel Seligman left his position on the University of Michigan law school faculty to become dean of the University of Arizona’s law school. I had dinner with him that fall at his new Tuscon home — it was my idea of a mansion — and went to an Arizona football game with him the next day. Seligman was pitching his new school, and he spoke of his hopes of getting a “transformational gift” from the father of someone who had just graduated.

His hopes were realized three years later, when James Rogers pledged the mind-boggling sum of $115 million to his own and his son’s alma mater. It was at the time by far the largest gift anyone had made to a law school.

When you have as much money as I do, you can’t spend it on yourself,” said Rogers, 60, owner of the Las Vegas-based Sunbelt Communications media empire. ”After investing in your own business, giving money to education is the best investment you can make. If everybody did what I did, we would be the best educated people in the world.” . . .

The main objective of Rogers’ gift is to hold down the cost of attending the law school, while bolstering its faculty with more top-level legal scholars, said Joel Seligman, UA law school dean.

UA is 40th among American law schools, according to U.S. News & World Report’s 1998 ratings.

Its tuition – $4,538 per year for Arizona residents and $11,490 for non-residents – is among the five lowest of the top 50 law schools.

”We’ll soon have the lowest tuition in the top 50. We’ll be the best value in legal education,” said Seligman, who announced yesterday that he plans to step down.

How’d that work out?

It worked out great for Seligman, who parlayed his fund-raising coup into the deanship at Washington University St. Louis’s law school, and from there to the presidency of the University of Rochester, where three years ago his compensation was just under one million per year.

It worked out nicely for Rogers, who got the law school named for him (“look on my works, ye mighty, and despair!”), and then went on to be appointed the chancellor of the entire Nevada university system, although his four-decade-long post-law student background in higher education consisted solely of having given immense piles of cash to various institutions. (BTW Rogers made his fortune the old-fashioned way, by acquiring property rights in the enormous income stream generated by a government-created and protected monopoly, in the form television broadcasting licenses).

As for future law students at the University of Arizona, who were supposed to benefit from Rogers’ largesse in the form of cheap tuition and increased institutional pre$tige . . .

Amazingly (this is a rhetorical device, there’s really nothing surprising about it) resident tuition began to skyrocket at the law school almost before the ink was dry on Rogers’ gift, doubling over the next five years, and then doubling again in the next five after that, so that by 2009 it had risen from $4,538 to $20,895. Non-resident tuition also went through the roof, albeit not quite as quickly in percentage terms, rising from $11,490 to $35,807.

2008 and 2009 were the years of the Great Recession, so the university’s administrators decided to give students a break by . . . raising tuition even faster, so that by 2012 resident tuition was $27,272 — six times higher than thirteen years earlier, when Rogers made the largest gift in the history of American law schools in order to keep tuition at the school affordable — while raising non-resident tuition to a cool $42,283.

What did all this activity do to the law school’s revenue streams? Well in 1998 the school was generating about $2.5 million per year from tuition along with another few hundred thousand in gift income.

By 2012, massive tuition hikes, along Rogers’ gifts and those of others (he gave $50 million over 20 years, along $15 million in matching gifts to those from other donors, and he left a $50 million endowment bequest in his estate), had increased the school’s annual revenue from tuition and gifts alone to around $15 million.

Of course the other intended effect from the opening up this immense faucet — really more of a water-cannon — of cash flow was that it would rocket the law school toward the top of the national rankings:

Yale, Stanford, Harvard and . . . Arizona?

Communications mogul James E. Rogers hopes the University of Arizona will be mentioned among those elite law schools after he more than doubled his gift to UA yesterday to $130 million.

”This will put Arizona’s law school on the map,” Rogers said yesterday. ”It will signal that it’s a law school on the move.”

Oh well.

Arizona’s ranking actually fell between 1998 and 2012, from 40 to 43, and it never rose higher than 38th at any point during these years. In effect the school’s ranking didn’t move at all, nor did the entrance qualifications of its students, or their bar passage rates, or really anything else that’s measurable, other than the school’s radically enhanced revenue stream, and its faculty-student ratio, which went from 14.2 to 10.5 to 1. (I suspect the school’s administrator to student ratio improved much more drastically, but that information isn’t publicly available).

What happened? Did the university’s central administration decide to use the income from Rogers’ gifts to replace some or all of the school’s share of the university’s state tax support? That’s possible, but note that, despite being in a very right-wing state, the University of Arizona’s state appropriations rose from $259 million in 1998 to $362 million in 2007 and $464 million in 2012. So if the university was cutting the law school’s tax subsidy, it was doing so in a context in which the university’s overall subsidy was growing — which would have been a very audacious move, given that $50 million of Rogers’ gift was in the form of a bequest, and could thus be revoked by him at any time. (He died last summer).

In any case, the massive increase in the school’s operating budget, enabled by the combination of radical tuition hikes and Rogers’ gifts, resulted in nothing tangible for the school’s students beyond greatly increased debt loads that averaged, with accrued interest, more than $100,000 in 2013.

Indeed, reacting to plunging applicant numbers, in 2013 Arizona became the first ABA law school in memory to actually cut tuition, from $27,292 to $24,396 for residents, and from $42,902 to $38,856 for non-residents. This apparently didn’t move the needle much, at least in regard to non-residents, as the school slashed non-resident tuition by 30% last spring.

Anyway, this series of events illustrates nicely how empty the administrative rationale is that law schools, at least, have to constantly jack up tuition and grovel before robber barons in order to “compete” in the “rankings.” It also illustrates how little of what is called “affordability” by higher ed administrators has to do with the degree to which higher ed costs are subsidized, since more money just means more spending, at least until the marks customers students actually start to rebel.

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  • Funkhauser

    Coincidentally or not, Joel Seligman has also been a piss-poor fundraiser at the University of Rochester. Heard from a colleague that they quietly ended their capital campaign short of a target. So of course Seligman has been given a pink slip vote of confidence from the Board, because the CEO class must be held accountable given freedom to work.

  • Lee Rudolph

    I’m thinking of saving my voice by finding some old Tibetan prayer wheels and repurposing them, so that every time one revolves, “Christ, what an asshole” is transmitted to all sentient beings.

    • LFC

      I’m not reading LGM very regularly these days, but thank you, Lee R., for this laugh.

  • Seitz

    Those increase numbers are just insane. I actually applied to Arizona in 1998 and I thought it was amazing that out of state tuition at U of A was actually cheaper than in state tuition at the California publics (I live in CA at the time). For a school in the 40s, they actually had fairly difficult admissions requirements, which I assumed was based on the fact that there were only two law schools in the state (IIRC). I got wait listed, and ended up at a school ranked 20 spots higher (though we’ve had a lot of problems since then), and a bit more expensive for an OOS student. I guess it all worked out, but good lord, I can’t even imagine thinking about going to law school today if I wasn’t almost guaranteed a spot at a top 10 school.

  • Mudge

    I’d be interested to know what Arizona State’s law school did during all those years. It is the in-state competitor and I am assuming did not have a Rogers grant, but it does get state support.

  • Unemployed_Northeastern

    My only thoughts are 1) the university took it from the law school through some manner of black box accounting, 2) it *disappeared* a la the planeloads of US currency flown into Iraq in like ’04 or so, or 3) it was eaten by campus construction. As we’ve learned from the TJLS debacle, a new law school building can easily run into nine figures.

    • Downpuppy

      5% payout on $120,000,000 is $6 million. With 400 students, that’s $15,000 / head, or $150,000 per full time faculty member. Given a 10.5 student/faculty ratio, and average class size of 30 – good times.

      (though I see at Adlerville – twice the class size on the same ratio.

    • hey so

      I went to this school; graduated in 2006.

      They renovated the building in 2007-2008 and it’s pretty nice but nothing jaw-dropping and it didn’t look like any additions had actually been built when I visited last year. They’re in a pretty tight plot between the business and engineering schools at the edge of campus and there isn’t much room to go anywhere without surrendering the location and buying up a block in the student ghetto to the north.

      The only fac/staff whose pay I was aware of were the librarians, and they were substantially below-market. Low 40s for a dual-degree, teaching librarian IIRC, though in my experience that tends to happen at law schools where the library is attached to the larger University library system (and thus University librarian pay grades). Supposedly most of the budget went to the faculty rather than the staff (as of 2005ish), which rings true given that Dan Dobbs taught my Torts I class.

      • Unemployed_Northeastern

        I couldn’t find any evidence of new construction (or lack thereof) in my very brief research (read: Wiki) before posing that hypothesis. So it’s probably a combination of 1) and 2).

    • dmsilev

      Out of morbid curiosity, how does one manage to spend a couple hundred million dollars on a law school building? I’ve been (very peripherally) involved in university construction projects that cost that much, but those were buildings with a couple hundred thousand square feet of high-precision laboratory space, with fancy environmental controls, vibration reduction measures, blah blah blah. How do you manage to run up an equivalent bill for something with office and classroom space? Lots of marble everywhere?

      • Lee Rudolph

        Well, there’s that sciptorium in the law library, with the dedicated sheep pasturage out back; not to mention the bespoke gold smelter and gold-leaf manufactory. Throw in the runways, hangars, and control tower for the school’s air forcecorporate jet fleet, and things begin to add up.

      • Unemployed_Northeastern

        Why law school buildings cost that much, I have no idea. But they do. Thomas Jefferson Law School’s new building cost them nearly $150 million – that they defaulted on this summer. Boston University is going to spend an estimated $184 million renovating their hideous concrete tower and adding an annex to it. I’m sure there are many other modern examples.

  • stryx

    It also illustrates how little of what is called “affordability” by higher ed administrators has to do with the degree to which higher ed costs are subsidized

    Well of course silly, they’re not talking about the affordability for the students. Those club dues aren’t going to pay themselves!

    • Unemployed_Northeastern

      “Well of course silly, they’re not talking about the affordability for the students. Those club dues aren’t going to pay themselves!”

      Exactly. It is no coincidence that Infilaw is headquartered in supremely-expensive Naples, Florida. If they charged reasonable tuition to their students, they would have to relocate to like Ocala or Clewiston.

      From Wikipedia:

      “Naples is one of the wealthiest cities in the United States, with the sixth highest per capita income in America, and the second highest proportion of millionaires per capita in the US. Real estate is among the most expensive in the country, with houses for sale in excess of $40 million.”

  • JCougar

    Amen.

    Despite a general tendency to be cynical, I do think a lot of these mega-donors do expect their money to be used for what they intended it for: to make law school more affordable for students.

    The fact that “affordability” money just goes to administrative bloat as law school tuition continues to careen out of control should enrage anyone who tried to make a “charitable” donation to these places.

    Anyways, this is the way to go. Start raising red flags with the donors themselves. Then watch these hyena law deans scurry around, trying to explain why the donors’ money was bulldozed into a pile, doused with gasoline, and turned into a bonfire.

  • Peterr

    Lest the lawyers around these parts get to feeling blue about law schools chasing rankings, you’re not alone. From the KC Star last year . . .

    After decades of struggling to boost its profile beyond that of a commuter college, the University of Missouri-Kansas City finally could call itself a global leader.

    “UMKC ranked No. 1 in the World,” a 2011 university news release said.

    An academic study had ranked UMKC’s business school ahead of Harvard, Stanford and other top colleges in innovation management research — the study of how entrepreneurs turn good ideas into big bucks and jobs.

    “Oh my, have we made a big score,” Chancellor Leo Morton told a crowd at the formal announcement.

    But a Kansas City Star investigation raises questions about that score and other rankings achieved by UMKC’s Henry W. Bloch School of Management. The Star found a pattern of exaggerations and misstatements that polished the school’s reputation as it sought to boost enrollment and open donors’ checkbooks.

    At the newspaper’s request, independent experts analyzed the No. 1-in-the-world study, which was published in the Journal of Product Innovation Management. One concern the experts cited: a previously undisclosed relationship between the university and the study’s Chinese authors.

    In addition, the experts said, it appears the study may have been structured in such a way to ensure that the Bloch School received the top ranking. . . .

    Even faculty inside the school were suspicious of the ranking.

    Then there’s the role of the chief donor . . .

    Perhaps the only person to whom the Bloch School rankings were more important than [then-Dean Teng-Kee] Tan and [Professor Michael] Song was Henry Bloch himself. The co-founder of the H&R Block tax preparation firm had long pushed for recognition for a school he considered one of his legacies to Kansas City.

    In 2011, he finally made a donation that UMKC had long sought to add a building at the growing Bloch School.

    The $32 million gift, which came a few months before the No. 1 ranking, was the largest in UMKC history. And it was one, Bloch told The Star, that he doubts he would have made absent the other rankings that were coming the school’s way.

    Tan resigned for health reasons last year, and Song resigned his position this past week.

    But please, don’t call it “gaming the system”. It’s simply a very robust, entrepreneurial approach to higher education marketing.

    • Lee Rudolph

      It’s simply a very robust, entrepreneurial approach to higher education marketing.

      Indeed, it’s Product Innovation Management at its best!

    • NewishLawyer

      IMO one of the worst things about the US News and World Report rankings is how they destroyed the idea of being a well-respected local/commuter school. I suspect that there were a lot of local institutions from undergrad on up that did not mind being commuter schools until the USNews rankings became a thing.

      Now there seem to be all sorts of rankings for all sorts of metrics which really don’t have to do with education. I was in Chicago on a business trip in December and saw Loyola Chicago advertising that they received the number 1 Green Campus ranking from the Sierra Club.

      Now there is nothing wrong with trying to be a green campus but I wondered about what kind of student would be influenced by this ranking over say affordability or anything else.

  • DrDick

    Another consequence of running universities like businesses. Top management churns and burns them to maximize their own returns and then goes somewhere else for even more money before anyone catches on to the scam.

  • NewishLawyer

    What I find interesting is how so many field seem to go under powerlaws.

    You have a small group of academics and academic admins who can go from one plush gig to another with great compensation and benefits and have a kind of lovely wandering life. And then you have a lot of adjuncts who are forced to go from job to job and not make a permanent home because they are simply chasing gigs.

    The same can be found in other professions as well including law, the arts, etc.

    • BoredJD

      What body/office is responsible for putting the most pressure on a school to participate in the USNWR clusterfuck? Is it rich/influential alumni, the Board, deans looking for an easy caption for their next job search? Maybe it’s everybody, or it’s some more than others, but there has to be a point at which local/commuter school suddenly decides that it should throw its entire mission statement out the window to try and chase the dragon.

      My own personal opinion is that USNWR just crystallized what would have happened in the legal academy anyway given the easy availability of federal student loan funding. Once deans and professors get to thinking they ought to be paid like CEO’s and Skadden partners there’s not going to be a lot of pushback.

  • JM

    Paul, what is your estimate of the number of entry-level hires into the legal academy this year? My last count over at PrawfsBlawg was something like 24 offers made, with most having been accepted. I don’t know if you have any insider information on this front, or at least a general sense if those figures are accurate.

    I just can’t wait until the day where there are fewer of these people. I don’t think there is anyway to stop the rampant greed that you outlined here, but we can at least look forward to the day where there are fewer individuals occupying these positions.

    • Paul Campos

      My sense is that the Prawfs list is underinclusive, and that the total number of entry level hires this year will be more like 50 or so. This would be around 60% to 75% lower than the typical number prior to the start of the application downturn three years ago. More than half of the ABA schools didn’t even go to the meat market this year.

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