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You were saying something about best intentions

[ 26 ] April 3, 2015 |

pulp fiction

Michael Simkovic thinks I don’t understand how grant-funded research works. He also thinks I criticized him for failure to disclose that the S&M million-dollar degree articles were funded by Access Group and LSAC. I didn’t criticize him for failing to disclose this, since I never claimed these articles was funded in that way:

So great is [Access Group’s and LSAC’s] enthusiasm for these findings that they are, as the intrepid scamblogger Dybbuk reveals, generously funding their further propagation. (emphasis added)

As for how grant funding works, Prof. Simkovic is much troubled by the suggestion that the sources of his funding could affect the character of what I believe are referred to in the relevant literature as “deliverables:”

Frank and I are interested in methodological rigor, not in particular results or outcomes, which in any case are unknowable until after we analyze the data. We believe in maximizing the transparency of the methods we use for our research so that it can be replicated or challenged by future empirical researchers. There has never been any effort by LSAC or Access Group to influence or censor our results.

Yet Prof. Simkovic and his co-author have levied exactly the same criticisms regarding how the funding of research might influence the conclusions reached that I suggested might be applicable to their work:

Two professors at Seton Hall University, Frank Pasquale and Michael Simkovic, have been tracking studies released by Lumina-funded think tanks that criticize federal student lending, which is Sallie Mae’s direct competitor. For example, Lumina has given the New America Foundation, a nonpartisan think tank that focuses on issues ranging from national security to technology, nearly $3 million since 2008… “It’s hard to make sense of a lot of what Lumina is advocating on student loans unless you think of how it would benefit Sallie Mae,” says Michael Simkovic, an associate professor at Seton Hall… There is “no connection at all” between Sallie Mae and The New America Foundation, said Kevin Carey, director of the Education Policy Program at the New America Foundation, who said two of the three studies that criticized federal student loans were funded exclusively by the Gates Foundation.”

A number of recent Brookings studies have been singled out for criticism by academics and others… One study, released in June, analyzed Federal Reserve Board data that tracks student debt and income levels in young households to conclude that typical student borrowers were no worse off now than they were a decade ago and that reports of a student debt crisis may be overblown. The study contradicted arguments from critics of the for-profit student-loan industry… Michael Simkovic, a visiting associate professor of law at the University of North Carolina at Chapel Hill and an expert on lending issues, said that if Brookings’s reports on student debt were to dictate policy, they would “boost the profits of the student lenders like Sallie Mae.” Critics pointed to a potential tie between Brookings and the lending industry: $1.9 million in donations since 2009 from the Lumina Foundation… Lumina did not underwrite the June study, according to co-authors Matthew M. Chingos and Beth Akers…. Lumina’s director of strategy, Zakiya Smith, said suggestions of meddling were “mind-boggling.”

Prof. Simkovic also says the money from two groups who are, to put it mildly, eager to see certain sorts of results from S&M’s further work is only going toward their salaries, as well as some research costs, so what’s the problem? This is a remarkably naive (to put it charitably) interpretation of what benefit Seton Hall and S&M are getting, respectively, from the grant-funding of this research. Grant-funding of their salaries, or part of their salaries, takes that money off the rest of Seton Hall Law School’s budget, which, given the fact that the school was recently on the verge of laying off its untenured faculty (including, presumably, Prof. Simkovic), adds up to a pretty powerful incentive to come up with the right results at the remains of the day.

But as the quotes from him above illustrate, he understands all this perfectly well, or at least he does when it’s not in his self-interest to forget it. (“It is difficult to get a man to understand something when his salary depends etc.”).

Prof. Simkovic gives some anecdotal examples, off the top of his head, of grant-funded law school research, to illustrate that I supposedly don’t understand how common such research is. My statements in regard to this aren’t made off the top of my head: they are based on studying the budgets of several dozen law schools over the past couple of years. Those budgets reveal that grant-funding, on average, covers a tiny percentage (usually much less than five percent, and often less than one percent) of these schools’ operating costs.

*An amusing side note: Prof. Simkovic doesn’t actually link to LGM, but rather to a PDF of my post. Apparently the landlord who is leasing his cyber-real estate out for Prof. Simkovic’s benefit cannot bear the thought of providing LGM with any link love.

Also, if you laugh at this you’re going to Hell.

Is this a good time to ask a completely ridiculous question?

[ 106 ] April 3, 2015 |

m

Erik’s post about media discourse regarding higher ed is related to an aspect of Steve Solomon’s “is this a good time to go to law school” piece that itself reflects . . . wait, this sentence is getting too complicated.

Why do people ask questions like “is this a good time to go to law school?”

Compare:

Is this a good time to get a Ph.D. in political science?

Is this a good time to go to college?

Is this a good time to get married?

Is this a good time to write a novel?

Is this a good time to buy a house?

All these questions are the same, in that they’re asked at a uselessly high level of abstraction.

Good questions are things like:

Is this a good time to see Jerry Bruckheimer’s new film?

Is this a good time to take Bill Kristol’s advice regarding foreign policy?

Is this a good time to put ketchup on the hot dog I plan to wash down with a vodka “Martini” [sic]?

These questions are specific, and have real, specific answers.

The passage of time

[ 21 ] April 3, 2015 |

cricket

On Wednesday Steven Solomon, a law professor, published a column in the NYT on why, despite the claims of certain hysterical alarmists, things really are actually pretty good these days for law grads. He cites stats for Georgetown’s 2013 graduating class, showing that 93.2% of the class is “employed” and that something something something $160,000 median salary something.

Kyle McEntee is not amused:

If a law school talked about employment as Solomon does, it would violate the ABA’s accreditation standards — and risk a hefty fine. Instead, Solomon manages to publish his misleading statements in the paper of record. Let’s look at the tricks that Solomon pulls:

*Deceptive salary information. Solomon uses Georgetown’s class as an example. He celebrates “a median starting salary of $160,000” for the private sector, but neglects to tell us the response rate. All told, about 40% of the class made that much or close to it. Beyond that 40%, just a small percentage of the class made six figures. The drop-off is quick and, if you’re in a lot of debt, painful. (I don’t, by the way, have anything against Georgetown; it’s Solomon who features the school’s employment statistics throughout his column. Georgetown itself is quite transparent and Solomon could have easily reported the correct figures. Doing so would not have allowed him to make his point, however.)

*Counting school-funded jobs without comment. Georgetown paid for jobs for 83 of its 2013 graduates — that’s 13% of the class. More than 75% received a stipend of just $1,000 per month, earnings that put them barely above the poverty line in 2014 ($11,670 for an individual). Solomon appears to believe that “things are returning to the years before the financial crisis” when 1 in 8 graduates at this top law school are so desperate that they’re willing to accept poverty wages.

*Including part-time, short-term, and non-professional jobs in an overall percentage of “employed” graduates — again, without disclosing that fact. Once we exclude those jobs, along with the school-funded ones, Georgetown’s employment rate falls to 79%.

How 2009.

Not to mention that Georgetown is an elite law school, which means that citing the employment stats of its grads for the proposition that law school reformers are exaggerating the difficulties facing new graduates is more than a bit disingenuous.

What’s even more disingenuous — and kinda pathetic and sad — is that Solomon mentions that employment stats are even better at UC-Berkeley, where he’s on the faculty, and which is higher ranked than Georgetown. He mentions this, he says, in the spirit of “full disclosure,” which will allow readers to take into account that his perspective might be shaded by the fact that he’s on the faculty at a top ten law school. So perhaps he doesn’t have the clearest perspective on what happens to graduates of less exalted law schools, being that he’s on the faculty at UC-Berkeley, which is a top ten law school, where he’s on the faculty.

Solomon actually got to Berkeley seven minutes ago. He spent the first decade of his legal academic career climbing a very steep ladder, going from Wayne State, to UCONN, and then to Ohio State. His rather extended residence in these declasse neighborhoods is not mentioned on his new faculty webpage, although his much more distant employment with Wall Street and Magic Circle firms is.

Consider Wayne State’s most recent graduating class stats, which look a bit different than Georgetown’s and Berkeley’s. Less than half the class got any legal job at all, while nearly a third of the class was either unemployed, working in part-time and/or temp jobs, or doing barista-type work. One (1) graduate got a job in Big Law (500+ lawyer firm) — the only employment outcome that pays a salary even vaguely commensurate with the average law graduate’s educational debt.

A final note: when I read Solomon’s piece on Wednesday, my reaction was — well, I really didn’t have one. Law school prof engages in egregious self-interested stat-spinning, Part 743. Whatever, as the kids say. Then I saw Kyle’s take down, and I felt a little ashamed. Kyle is still a very young man, and I’m very much not, and all this reminded me of a passage from Orwell:

WHEN I read of the goings-on in the House of Commons the week before last, I could not help being reminded of a little incident that I witnessed twenty years ago and more.

It was at a village cricket match. The captain of one side was the local squire who, besides being exceedingly rich, was a vain, childish man to whom the winning of this match seemed extremely important. Those playing on his side were all or nearly all his own tenants.

The squire’s side were batting, and he himself was out and was sitting in the pavilion. One of the batsmen accidentally hit his own wicket at about the same moment as the ball entered the wicketkeeper’s hands. ‘That’s not out,’ said the squire promptly, and went on talking to the person beside him. The umpire, however, gave a verdict of ‘out’, and the batsman was half-way back to the pavilion before the squire realized what was happening. Suddenly he caught sight of the returning batsman, and his face turned several shades redder.

‘What!’ he cried, ‘he’s given him out? Nonsense! Of course he’s not out!’ And then, standing up, he cupped his hands and shouted to the umpire: ‘Hi, what did you give that man out for? He wasn’t out at all!’

The batsman had halted. The umpire hesitated, then recalled the batsman to the wicket and the game went on.

I was only a boy at the time, and this incident seemed to me about the most shocking thing I had ever seen. Now, so much do we coarsen with the passage of time, my reaction would merely be to inquire whether the umpire was the squire’s tenant as well.

See also.

Haggling over price

[ 32 ] April 1, 2015 |

borat

One of the disappointments of my professional life is that no one has yet tried to bribe me. Around the time The Obesity Myth came out I did dozens of interviews, and to the best of my recollection I was only asked once if I had accepted money from any interested parties in the course of researching and publishing my views. I had to report regretfully that no one had thought it worthwhile to attempt to purchase my good opinion.

Happily, it appears that Michael Simkovic, a young and energetic Seton Hall law professor, has already avoided at least this species of disappointment. Simkovic co-published a study last year, purporting to show that the average present value of a generic “law degree” is just shy of one million dollars, and he and his co-author have just published a draft of another paper, claiming that this impressive figure is hardly affected by business cycle fluctuations, and that therefore “the best time to go to law school is the earliest point possible after which you make the decision that you’d eventually like to go. By waiting, you’re spending more of your limited working life working for lower wages.”

It goes without saying that these conclusions are exactly what the legal academic establishment would like to hear. So great is their enthusiasm for these findings that they are, as the intrepid scamblogger Dybbuk reveals, generously funding their further propagation:

Simkovic is a junior law professor at a second-tier law school, and therefore a finding that a law degree is an extremely risky proposition would be adverse to his employer’s interests, and his own — it doesn’t take an econometrics study to deduce a causal connection between the decline in tuition-paying lemmings and the decline in cushy lawprof jobs. But perhaps even more saliently, Simkovic has received grants totaling $220,000 from the Access Group and Law School Admissions Council (LSAC) to fund his ongoing studies of the great value of a law degree. Simkovic collected $120,000 from the Access Group and $100,000 from the LSAC. . .

The Access Group is a nonprofit membership organization comprised of 196 ABA-approved law schools. It touts itself, on its website, as a “leading provider” of student loans for aspiring professionals. As such, it has served as a national originator, holder and servicer of federally guaranteed and private, credit-based loans, funding more than $18 billion of education loans since 2001. On its IRS Form 990, Access Group lists its “primary activity” as being to “support. . . the organization’s student loan borrowers in facilitating timely repayment.” It also seeks to “promote access to higher education through lending programs offered.” . . .

The Law School Admissions Council is the nonprofit that administers the LSAT and facilitates the law school application process on behalf of its 200+ member law schools. According to its Form 990, LSAC exists to “provide services” to member law schools. These services include staging “national forums” to acquaint students with their “legal education alternatives” and holding training and educational programs for law school admissions professionals. LSAC’s gross receipts in fiscal 2013 totaled about 49 million dollars.

One of the many complaints made about legal academic scholarship is that, unlike most research in the social sciences, nobody is interested in paying for it via grants. It’s nice to see Prof. Simkovic demolishing this myth as well.

Unemployed Northeastern, indefatigable chronicler of the griftier aspects of contemporary higher ed, has some choice words about a particularly grotesque aspect of all this:

Michael Simkovic himself has gone on the warpath multiple times about how funding from the Lumina Foundation, which Sallie Mae cofounded and gave $700 million in funding, drives think tanks like Brookings and New America Foundation to create neoliberal studies that recommend federal lending be curtailed, PSLF be repealed, and PAYE be jettisoned in favor of old IBR. See, for instance:

1. ““It’s hard to make sense of a lot of what Lumina is advocating on student loans unless you think of how it would benefit Sallie Mae,” says Michael Simkovic, an associate professor at Seton Hall.” http://www.buzzfeed.com/mollyhensleyclancy/how-a-private-foundation-with-deep-ties-to-the-student-loan#.oqnVbMa1nn [the linked article relates how Lumina, which was cofounded and solely funded by Sallie Mae, gave New America $3 million and now NA rails against PSLF and federal student lending]

2. “Michael Simkovic, a visiting associate professor of law at the University of North Carolina at Chapel Hill and an expert on lending issues, said that if Brookings’s reports on student debt were to dictate policy, they would “boost the profits of the student lenders like Sallie Mae.”” http://www.washingtonpost.com/politics/at-fast-growing-brookings-donors-help-set-agenda/2014/10/30/a4ba4e8e-48ef-11e4-891d-713f052086a0_story.html [article relates how Lumina gave Brookings $1.9 million and now Brookings claims there is no student loan crisis]

And here he is, taking in hundreds of thousands of dollars from entities with direct stakes in the law school revenue game and writing studies that claim that law school graduates are immune to the laws of supply and demand, wage suppression, bear markets, elitism, etc. As if. To spell it out really clearly for anyone still confused about Access Group, it was a student lender. Back in the dark ages before GradPLUS (2006, I think), a law student could only borrow about $60,000 in federal loans for law school. Access Group competed with Sallie Mae, Nelnet, Citibank, etc. for the ability to extend $80,000 or $100,000 in private student loans to make up the difference. They would bundle those loans into Student Loan Asset-Backed Securities and sell them on Wall Street, of course. Yes, the law schools jointly own a student lending company, albeit a non-profit one (that sits on about $300 million in cash, if I am reading their 990s correctly). As far as I can tell, they haven’t lent money in years, have outsourced their loan administration to third parties, and seem to exist only to provide salaries for their executives.

April Fools!

pause

pause

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(Not)

Arizona Summit, Charlotte and Florida Coastal downsize their full-time faculties by 39%

[ 16 ] March 26, 2015 |

oliver twist

Earlier this week I was told that in January the Charlotte School of Law had bought out the contracts of a dozen faculty and 15 staff members, and that last month Arizona Summit had bought out an unspecified number of faculty. I was also told students at Charlotte were upset about the sudden faculty departures.

I contacted Jay Conison and Shirley Mays, the deans at Charlotte and Arizona Summit, and they responded as follows: Read more…

Confederacy of dunces

[ 48 ] March 25, 2015 |

american stars and bars

I have a piece on the Confederate flag license plate case:

What’s most objectionable about confederate flag specialty plates isn’t that some people might mistakenly think that the Texas state government is endorsing the political views of people who display confederate flags (they will likely not commit this error). Rather, it’s conceivable that people will conclude that the state is willing to do just about anything to make a buck, including turning its license plates into a free-fire advertising zone, where anybody can sell anything as long as they’re willing to give a cut of the proceeds to the Lone Star State.

There’s a perfectly constitutional way for Texas not to allow people to feature confederate flags on the state’s license plates, which is not to sell the right to advertise their political beliefs on those plates to anyone to begin with. But that would require ever-so slightly raising some tax rate or another to make up for the lost revenue, so the state would rather try to violate the First Amendment.

Grift American style

[ 132 ] March 24, 2015 |

elmer gantry

Salon has an interview with Rick Perlstein, in which Perlstein explains how Mike Huckabee’s hawking of some magic beans that purportedly cure diabetes is all of a piece with the intersection of New Right politics and good old fashioned American hucksterism:

[O]nline publications like Human Events and Newsmax— which is files and files of their horrible con games— would rent out their good name and their lists. You’d see something in your email like, Dear Human Events reader… and something about a 99-cent cancer cure. You never could tell where the grift begins and the politics end because there would always be rhetoric about how there’s a liberal conspiracy to hide this knowledge from the public; that this particular cancer cure was used by Ronald Reagan, et cetera, et cetera. . .

I believe that in the 1990s, The New Republic did an exposé of how Pat Buchanan had turned running for President into a business, so it didn’t start with Ben Carson or Mike Huckabee.

One of the many things I admire about Perlstein’s work is that he’s not contemptuous toward the people who are getting conned by this sort of thing, but rather understands the worldly success of the likes of Pat Robertson and Glenn Beck as a product of structural social and cultural factors, rather than evidence of individual stupidity and/or culpable naivete on the part of their marks:

A lot of this stuff comes from Evangelical culture, which is a culture of witness, so the hawking of miracles is absolutely baked into the cake. Someone like Pat Robertson was followed by a figure like Pat Buchanan or any number of candidates in the last two or three Republican primary seasons, who make a lot of noise by doing decently well in early polls but then fade out once the seasoned pros take over and the money becomes preeminent.

If this historical pattern holds, Mike Huckabee, if he does well early, will flame out before the second or third inning but I see no impediment whatsoever for him to be disqualified by the conservative rank-and-file, simply because this stuff has been going on without much complaint since the 1970s. This is part of the hustle, right? If Huckabee can claim to have been victimized because of his activities, he can always claim it’s the conspiracy of the liberal elites… and then it’s off to the races. . . .

Glenn Beck is a Mormon and this stuff is baked into Mormon culture even more than Evangelical culture. There’s the whole culture of multilevel marketing— or pyramid schemes, as they’re more derisively known— which is basically a system where you buy a franchise for some kind of product but you really only make money by selling a chunk of the franchise to your neighbor. The further down the line you are, the less likely you are to realize any profits, and most people lose lots of money on this stuff. MLM, some people joke in Utah, stands for “Mormons losing money” and so these guys are masters of the stuff. There’s also a culture of Evangelical or Mormon witnessing; being able to cry on cue when telling the story of your victimization is very important. This goes back to Elmer Gantry as portrayed by Burt Lancaster in the film of the same name.

There is or was a right-wing talk radio station in Denver, and awhile back I listened in rapt fascination to the Michael Savage show while stuck in a traffic jam. I was particularly struck by how between all the frothing at the mouth, Savage would pitch every kind of snake oil imaginable — miracle medical cures of course, but also financial miracles via no money down real estate pyramid schemes, gold bug propaganda, survivalist kits, you name it.

Anyway, all this makes me think of (what else?) law schools, but really you can apply a grifter-style frame to a huge number of social institutions, from the most disreputable to the most respectable. (For instance climate change denialism lends itself very well to this typology.)

I propose the following typology, using the current crisis in legal education as an exemplar. Any successful sustained grift (the term of art is a “long con”) will feature three sorts of promotional characters. These character types have fuzzy boundaries, and indeed a single person may at any one time exhibit traits of two or all three of them, as well as moving between types over time.

The Wise Guy

This guy (or gal) is on the grift and knows it. He therefore has a certain purity to him. Example: The people running Sterling Partners, the Chicago private equity firm that figured out how to gorge itself on federal loans by opening up for-profit open-enrollment law schools. Sterling Partners knows exactly what it’s about, which is profit-maximization courtesy the American taxpayer.

The Bullshitter

These are the classic sales types. Asking them if they believe their own pitches is like asking an actor if he really is the character he’s playing. In other words the question itself involves a category mistake. Examples: Basically every law school dean when he’s playing the role of a law school dean.

The Zealot

This person really believes. It’s of course extremely tempting to believe things that one wants to believe are true, and plenty of people give in to that temptation, even if doing so requires performing certain unnatural intellectual acts (Flaubert: “To be stupid, selfish, and have good health are three requirements for happiness, though if stupidity is lacking, all is lost.”).

I could add plenty of illustrative links but reading Perlstein makes me feel a certain sympathy for the devils, so readers can come up with their own favorites.

I do wonder where Erwin Chemerinsky fits into this maze however.

Billy Joel and the law

[ 61 ] March 23, 2015 |

glass houses

This is real.

The possibilities for “interdisciplinary legal scholarship” grow ever-more exciting.

Is there a law review article yet on Barry Manilow and the Sherman Act? There will be.

Infinite number of monkeys etc. (Good album name)

Touro currently charges $44,520 per year.

Half the 2013 graduating class didn’t get any kind of legal job, and nearly 30% were either unemployed, working retail, or in part-time short-term “jobs.”

The invention of the $250,000 law degree

[ 40 ] March 18, 2015 |

This is a followup to an earlier post about the exploding cost of legal education over the past few decades.

I’m employing the University of California Hastings law school to illustrate both how much that cost has gone up, and why. The latter question is the focus of this post.

Hastings’ total tuition revenue plus its state appropriation is a good rough proxy for the school’s annual operating budget over time. (Until the 1980s the school had essentially no other sources of revenue. Since then, it has gradually developed significant sources of auxiliary income, from endowment and annual gift income — the school didn’t even have a development program until the 1970s!– and from renting housing to students, which it began to do in the 1980s. The income from these sources largely offset lost revenue from tuition discounting, which essentially didn’t exist prior to the 1990s).

This graph thus illustrates, in constant dollars, the growth in the cost of operating the school: Read more…

The destruction of public legal education in America: A case study

[ 45 ] March 11, 2015 |

tapestry

Yesterday I linked to a talk given last week by UC Irvine dean Erwin Chemerinsky on the future of legal education, in which Chemerinsky criticized Brian Tamanaha’s claim that law schools can and should spend much less money than they’re currently spending. Chemerinsky’s argument is that law schools cost as much as they do almost wholly because of personnel costs. Thus, according to him, the only way to cut costs significantly would be to have a law school with a small full-time faculty and a lot of part-time adjuncts, and that, in Chemerinsky’s words, “wouldn’t be a very good law school.”

This is because full-time faculty are better teachers than part-timers, and because full-time faculty are around the building a lot more, and thus are more easily available to answer student questions outside of class (This is actually his argument, in case you’re wondering if the will to sarcasm is getting the best of me).

In other words, a good legal education is by its nature extremely expensive, and indeed there’s just nothing that can be done about that (Again, this really is what he’s arguing).

Chemerinsky is a well-known con law professor of a generally liberal-left orientation. I suspect that if somebody made a similar argument to support the status quo in regard to the extremely expensive American health care system, he would simply laugh in that person’s face, given that many nations with excellent health care systems spend far less than the US does on health care.

Now for various reasons it’s somewhat more difficult to compare legal education systems across nations than it is to compare national health care systems. On the other hand, it’s much easier to compare the same legal education system across time within the same country.

Let us go now, you and I, to gaze upon the financial history of one law school over the past 55 years. This sort of micro-analysis of a single institution within a much larger institutional system has its limitations, of course, but it also offers a vivid particular glimpse of one piece of the general story of what has happened to legal education, to public education, and to public legal education, in this country over the course of the past half century. Read more…

Chemerinsky’s folly

[ 93 ] March 10, 2015 |

ec

Erwin Chemerinsky has a theory, which is his.

His theory is that it’s impossible to provide a good legal education at any less than the astronomical prices currently being charged by American law schools, including his personal vanity project, the University of California-Irvine, of which he is the first dean. To wit:

There is no solution to the high cost of legal education.

Chemerinsky’s goal when he started UCI wasn’t to solve that particular problem. Far from it: instead he intended to create a “top 20″ law school. To that end he has spent a fortune hiring high-priced faculty talent, including most notably himself and his wife — a dynamic academic duo that was pulling down $600,000 in direct comp alone from the school in 2013. (Several other UCI law faculty are making close to or more than $300,000 per year).

In pursuing this precious ranking, Chemerinsky apparently convinced the school’s central administration to, for the moment at least, keep the school’s entering classes very small, in order to bolster its matriculants’ average entrance credentials: Indeed, after admitting classes of 119 and 126 in 2012 and 2013, the school ratcheted back to a class of just 89 this past fall, meaning that in its sixth year of operation UCI’s total enrollment is still just 326 students (when he started the school Chemerinsky indicated the plan was to have a school of about 600 students).

Meanwhile, Chemerinsky’s hiring binge has continued unabated: the school is now up to 43 full-time faculty — a 50% increase from just two years ago.

All this means the law school must be currently losing a whole lot of money. How much? Well those 43 faculty are costing the school close to ten million per year in salary and benefits, which means the school’s total operating costs are probably well more than double that, since you’ve still got to pay for non-faculty personnel, physical plant costs, library costs (the school was spending nearly two million per year on the latter item alone a couple of years ago), and the school’s share of the university’s indirect operating costs (that is, university-wide costs not incurred directly by individual academic units).

Meanwhile, how much tuition revenue is the school pulling in this year? UCI is playing the new favorite game of many a financially troubled law school, which is to charge crazy high sticker tuition, but then offer deep discounts off that number to the vast majority of students. Indeed almost 90% of students last year were getting discounts that averaged nearly $25,000 each, and that number is unlikely to have gone down, given how desperate Chemerinsky was to buy another entering class with high LSAT and GPA numbers (critical to the rigorous scientific method of the USN rankings system).

So those 326 students are probably paying an average effective tuition rate this year in the mid to high 20s. Let’s say $27K per capita. That’s $8.8 million dollars. UCI was given $20 million by real estate mogul Donald Bren to found the law school, but that money has probably already been burnt through in large part to buy the school’s first few classes (the original class paid no tuition, and subsequent classes paid, and continue to pay, drastically less than list price). Of course the school has no endowment to speak of beyond that original nest egg, nor is it getting anything in annual giving from its as yet almost completely hypothetical alumni base. So that pretty much exhausts the sources of law school revenues (grants and contracts, so critical to the funding of academic departments which do work that the outside world is actually willing to pay for, remain rare in legal academia).

UCI made its debut in the rankings today, tying with several other schools for the #30 spot, i.e., a very long way from the elite zip codes of “top” law schools, and still a good ways down the road from its sub-elite local competitors UCLA and USC, which are perpetually in the 15-20 range.

Always the advocate, Chemerinsky pasted a smiley face on this outcome:

“I am very proud of UCI Law’s accomplishments in building a top law school in only six years,” said Dean Erwin Chemerinsky. “We have so much to be proud of thanks to the hard work of faculty, administrators, students, alumni and supporters, both on campus and in the legal community. We are so grateful for the generosity and support we have received in building the University of California, Irvine School of Law.”

Dean Erwin Chemerinsky continued: “I expect that we will rise significantly in U.S. News rankings in the years ahead.

As a friend notes, the problem with this kind of thing is that the battle for rankings is unrelenting. Chemerinsky must have convinced the UCI administration to let him run the school at huge loss to this point, on the basis of the promise that he would get it into UCLA/USC territory, at which point they could expand to 600 students and charge $40K per year in effective tuition, rather than offering most of the class massive discounts.

Well he didn’t make it, and now he’s got a big problem, which consists of those 43 very highly-paid faculty, none of which are ready to get pushed out via buyouts (the preferred cost-cutting strategy of schools losing a lot less money than UCI is losing right now). If the class is expanded by cutting matric entrance numbers, that will also hurt the school in the rankings, so it’s all a Catch-22.

UCI’s central administrators are probably experiencing severe buyer’s remorse right now, but they are getting no more than they deserve for buying into the idea that what the utterly saturated California legal hiring market needed was yet another “prestigious” law school.

How law schools priced themselves out of the higher education market

[ 31 ] March 4, 2015 |

canary

‘How did you go bankrupt?’ Bill asked.
‘Two ways,’ Mike said. ‘Gradually and then suddenly.’

— The Sun Also Rises —

Over the past half century, higher education in America has been a spectacularly successful growth industry. At the beginning of the 1960s about 400,000 people were graduating each year with four-year degrees: by 1970, the demographics of the baby boom and the passage of the original Higher Education Act had combined to more than double that figure.

Despite the baby bust (there were fewer 18-23 year-olds in the US in the late 1990s than there had been 30 years earlier), enrollments and graduation totals grew slowly but steadily between the early 1970s and the late 1990s, and then began to zoom upwards again about 15 years ago: annual college graduation totals increased by 56% between 1998 and 2014. American colleges and universities currently produce nearly twice as many bachelor degrees annually as they did forty years ago, and about four times as many as they did 50 years ago. (The traditional college-age population cohort is only about 10% larger than it was in 1974).

Still, there may be storm clouds on the horizon. Read more…

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