Thursday, February 16, 2012
Higher Tuition and Higher Education
He who enters a university walks on hallowed ground.
—James Bryant Conant, Notes on the Harvard Tercentenary [1936]
The increasing cost of obtaining an education was highlighted when President Obama revealed his latest budget on February 13, 2012. According to the Bureau of Labor Statistics, in recent years college tuition has gone up at roughly twice the rate of inflation. Addressing this issue in a speech at the University of Michigan on the Friday before he released his budget the President said: “You can’t assume you’ll just jack up tuition every single year. If you can’t stop tuition going up, your funding from taxpayers will go down.” Among other parts of his proposals vis a vis tuition issues, the President suggested tying the amount the federal government gives to universities to their tuition policies. Of course, tuition policies vary from institution to institution but it can be useful to examine how at least one state university has responded to the decreasing support from the state legislature and increasing tuition costs.
In the past four years in-state tuition at the University of Colorado has increased between 8.8 and 9.3 percent each year. For the upcoming year the university administration proposes a $1,203 increase of in-state full-time student tuition which would be an increase of almost 16% from the preceding academic year. The tuition increases are undoubtedly necessary given the increase in the decrease of support the university receives from the state legislature. Nonetheless, as a result of the tuition increases some students may be forced to leave the university because of their inability to pay the increased tuition costs. There is one group at the university who will not be forced to leave because of the university’s difficult financial circumstances-the Chancellor and a number of other top administrators.
In early February it was reported by the Daily Camera how funds from the 9.3% tuition hike that was put in place the preceding year were spent. When the tuition rise was announced it was described as being used to fund a merit-based salary pool for faculty and staff to provide 3% raises. As a result of the 2010-2011-tuition increase the university received approximately $36 million in revenue. The regents said they understood that of that amount $11.8 million would go into compensation for top faculty, staff and administrators. In a memorandum to faculty and staff the Chancellor said that those meeting or exceeding expectations would receive a one time pay increase from what he called a “3 percent merit pool.” What he neglected to point out was that some people got to swim in the deep end of the pool whereas others were in the very shallow end. Those in the deep end included the author of the memorandum who received a 14% pay raise increasing his salary from $350,000 to $389,000. Swimming in the deep pool with the Chancellor was the chief human resources officer whose salary went from $210,000 to $240,000. These are only representative increases. Several other high level administrators including chancellors at the two other campuses received increases that were significantly larger than 3%. According to the paper’s report, considerably more administrators than faculty had access to the deep end of the pool. Whereas 51 percent of faculty members received raises (having had none for the preceding 3 years,) 71 percent of eligible professional staff members received raises. The president of the university explained why the salaries went disproportionally to high-level administrators. He said: I’ve got to pay for good people. I want quality. You’re not going to have quality if you don’t have quality people working for you.”
Within days after the distribution of increases in pay was publicly disclosed it was learned that the university had discovered a way to save money. It pertains to tuition waiver benefits for eligible faculty and staff dependents. The plan to implement the new plan was announced in 2011 and the hope was that it could be implemented by the summer of 2012. It permits employees to transfer their eligibility for free tuition to children and spouses. The plan had been recommended by the university’s faculty council and its adoption was announced in early February 2011. As finally promulgated, however, a minor concession was made to the realities of tough fiscal times. That was to take away most of the benefit from faculty and staff dependents at the home campus of the university in Boulder (but not other campuses). Those faculty and staff dependents will only be able to transfer their tuition waivers for summer courses and not those offered during the normal academic year. As Ken McConnellogue, a university spokesman explained, “the goal of the overall program is to be cost neutral in a down economy. What cost neutral translated to for the Boulder campus was to offer summer courses only.”
Mr. McConnellogue did not say how the increase in administrative salaries was cost neutral in a down economy. He did not explain why increasing pay for administrators so they would not leave the university for other places was more important than doing the same for faculty. Perhaps no one asked.
Tuesday, February 7, 2012
My Mistress-My Daughter
Oh my son’s my son till he gets him a wife,
But my daughter’s my daughter all her life.
— Dinah Maria Mulock Craik, Young and Old
I have received a number of inquiries from people who are interested in exotic estate planning techniques. Their inquiries were prompted by a relatively new estate planning technique explained and perhaps used by Daniel M. Bachi, an attorney in Florida who represents John Goodman. Mr. Goodman is the founder of the Polo Club Palm Beach in Florida and is a man of considerable wealth. The judge, who was involved in implementing the new strategy that Mr. Bachi invented, said the strategy bordered “on the surreal.” Such a description does not come as a surprise to lawyers who do estate planning since there are many techniques used by the more sophisticated among us that the less sophisticated would describe as surreal. Before describing the technique, however, a word about Mr. Goodman.
Mr. Goodman is presently a defendant in a civil wrongful death lawsuit in Florida that arose out of a car wreck that occurred in 2010. In addition to being a defendant in the civil action he is, according to ThePalm Beach Post, facing criminal charges of DUI manslaughter, vehicular homicide and leaving the scene of an accident. Both these matters arose because in February 2011 Mr. Goodman ran a stop sign, struck another car and killed the driver, Scott Wilson. When arrested Mr. Goodman had a blood alcohol level more than twice as high as the legal limit for driving while intoxicated in Florida.
Mr. Goodman is a very wealthy man. According to a statement released by Mr. Bachi on February 2, 2012, in 1991 Mr. Goodman created the JBG Children’s Trust and made a cash gift of just over $1.5 million to that trust. That trust is for the benefit of Mr. Goodman’s descendants. Thanks to shrewd investments made by the trustee the trust grew in value to more than $100 million during its first 7 years and today is worth several hundred million. According to Mr. Bachi, none of the trust assets is available to the plaintiffs in the civil action since the trust was set up years before the drunk driving incident and Mr. Goodman is not a beneficiary of the trust. So much for Mr. Goodman’s financial affairs. Now to his personal affair.
In 2009 Mr. Goodman began an affair with Heather Laruso Hutchins. That relationship gave Mr. Goodman so much pleasure that he wanted to strengthen it. One way he could have done that would have been to marry Ms. Hutchins, a step often taken by people who, during an affair, decide to make a more permanent commitment to each other. Mr. Goodman, however had already been in a marriage that ended in divorce and did not want to risk that a second time. And this is where the clever estate planning technique comes in. He adopted Ms. Hutchins, who was then 42 years of age, as his daughter.
The JBG Trust is said to be for the benefit of Mr. Goodman’s descendants. When created he had two minor children and they were the only trust beneficiaries. By adopting his mistress, she became his child and is now entitled to distributions from the trust just as Mr. Goodman’s other children are. Ms. Hutchins will presumably continue to live with Mr. Goodman, and he will now probably have the benefit of her share of any distributions made to beneficiaries of the trust since a dutiful daughter would certainly share with him if her father needed help. Mr. Bachi offers a different explanation for the adoption. He says she was made a beneficiary so she could influence actions of the corporate trustee in which Mr. Goodman no longer has confidence.
Ms. Hitchens signed an agreement with Mr. Goodman that is not customary in an adoption. In it she agrees that when the trust ends his natural children will get 95% of the trust assets. How he was able to change the terms of an irrevocable trust by a side agreement with his daughter is not explained.
Mr. Goodman probably assumes that no one is going to invoke Florida Statute 826.04. That statute says that anyone engaging in sexual intercourse with someone related by “lineal consanguinity” is guilty of a felony of the third degree. It is impossible to know whether Mr. Goodman and Ms. Huthins are now engaged in a meretricious relationship or whether they have assumed a more typical father-daughter relationship. If the former, Mr. Goodman may soon find a charge of incest added to the other criminal charges now facing him. That is probably the least of his worries.
(Hugh Heffner may wish that Mr. Bachi had been his lawyer. On June 16, 2011 his 25-year-old fiancée, Crystal Harris, called off their wedding 5 days before the eagerly awaited event. Had Mr. Bachi been his lawyer he might have suggested that Hugh adopt Crystal. That would have enabled them to maintain the close relationship they had theretofore enjoyed without limiting her ability to enjoy other male companionship of the non-father daughter variety.)
Thursday, February 2, 2012
The Undercover Drone
Like one that stands upon a promontory,
And spies a far-off shore where he would tread,
Wishing his foot were equal with his eye.
—Shakespeare, King Henry the Sixth
It’s all because of the little noticed annual report for 2010 from the United States Department of State Bureau of Diplomatic Security (DS). The document was released March 2011. Some especially interesting language is found on page 26 in a section entitled “Unmanned Aerial Vehicles.” It describes how the “Department of State coordinated with the U.S. Department of Defense and other government agencies to research using Tier 1 (low altitude, long endurance) unmanned aerial vehicles in high-threat locations such as Iraq and Afghanistan. This effort led to a successful test in Iraq in December. DS plans to deploy unmanned aerial vehicles to support U.S. Embassy Baghdad in 2011. The program will watch over State Department facilities and personnel and assist Regional Security Officers with high-threat mission planning and execution.” The “unmanned aerial vehicles” to which the document refers are popularly known as “drones” and have already proved their usefulness in killing, among others Abdulrahman al-Awlaki in Yemen. Now the United States would like to use them for spying. But first, Abdulrahman.
Abdulrahman was born in Denver Colorado but moved with his family to Yemen. As reported by Time magazine, on September 15 the 16-year old Abdulrahman left his home in Yemen looking for his father, Anwar al-Awlaki, an American citizen and radical cleric who was hiding in the southern province of Yemen called Shabwa. The United States had long targeted his father and during the time Abdulrahman was searching for him his father was killed by a CIA sponsored drone. Two weeks later another drone attack killed a senior al-Qaeda militant whom the United States had targeted. The luster of the raid was dimmed because Abdulrahman, one of his cousins and six other people were also killed. They were not targets but, as one U.S. official in a clever, if not particularly sensitive turn of phrase put it when referring to Abdulrahman’s death, he “was in the wrong place at the wrong time.” That was, of course, self-evident. Now we are privy to discussions about drones used for spying instead of killing.
For years it has been accepted that countries routinely place their intelligence agents under cover in other countries in an attempt to learn what is going on in those countries that may affect the spying country’s interests. Now, thanks to modern science, a country is not limited in its spying on another country to boots on the ground. Instead, it can use drones. There is, of course, one small problem with that. The country over which the drones fly may not react cordially to the idea that the United States can fly drones wherever it wants. Indeed, it is likely that the United States would not take kindly to learning that Russia was routinely flying drones in U.S. skies for purposes of gathering intelligence.
It has now been disclosed that the United States, which is responsible for the chaos that reigns in Iraq following the successful conclusion of the war it started, plans to fly drones in order to protect what is the biggest United States embassy in the world. Formally opened in 2009, the embassy will house more than 11,000 people and be protected by 5,000 private security contractors and an undisclosed number of drones. The embassy is as big as the Vatican and includes a 16,000 square foot ambassador’s residence and a 9000 square foot residence for the deputy ambassador. At the opening ceremony in 2009, U.S. ambassador Ryan Crocker said the opening signaled a “new era for Iraq and United States relations.” He was probably not thinking of drones. The Iraqis now are and drones promise to become another nail in the coffin in which a “new era for Iraq and United States relations” lies.
The Iraqis are upset at the idea that the United States believes it has the right to fly its drones wherever it wants. They don’t think a foreign country, which the United States is now that its troops have gone home, should have the right to violate its air space. They think the United States should get permission to operate the drones in Iraqi airspace. Commenting on the proposal to use drones, several key advisors to Prime Minister Nuri Kamal al-Maliki said they had not been consulted about the Americans’ plans and one of them who opposes the drone program said: “Our sky is our sky, not the U.S.A.’s sky.” That idea might shock the State Department. Another Iraqi, Mohammed Ghaleb Nasser, an enginer from the northern city of Mosul said: “If they are afraid about their diplomats being attacked in Iraq, then they can take them out of the country.” Of course he probably wasn’t thinking of the fact that the embassy is practically brand new. The United States would be as reluctant to leave the new embassy as Saddam Hussein was to leave his assorted palaces for a prison cell.
Permitting the United States to fly drones wherever it wants is the price a country may have to pay for friendship with the United States. Some countries may think that price too high.