Thanks to the self-aggrandizing presidents at the University of Central Arkansas and their enabling boards, we are forever learning how higher education works. We were happier ignorant.
Dr. Allen Meadors, the freshly minted president of UCA, wanted more luxurious quarters than the old manse the school provides its presidents, the better for him and his wife to entertain dignitaries. The school was reluctant to spend $700,000 more from scarce university funds to renovate and refurbish the big house and grounds on top of two expensive rounds of improvements the past 10 years, so the president and the chairman of the trustees announced that a generous business— which happened to have the contract to provide food services to the school’s 11,000 students and faculty—was going to donate $700,000 out of the goodness of its heart to spruce up the mansion.
It turned out that Aramark, the big food vendor, was not being philanthropic at all. At the school’s request, it was, in effect, going to lend the school $700,000 in exchange for the school extending its contract for a few years without bidding. Aramark would recover the $700,000 over the next seven years plus much more. These campus food-service contracts are enormously profitable everywhere.
When the truth came out, owing to some nosey newspaper reporting, the president apologized for misleading the board and the public and he agreed to resign if the school paid him the $525,000 he otherwise would earn over the life of his contract. The trustees quickly obliged.
But newspapers and the Arkansas Legislative Council wondered whether Meadors was right when he said everybody was doing business that way, and they inquired of the other Arkansas universities if they were awarding contracts for campus services without bids and getting kickbacks in some form.
Well, yes, the chancellors and presidents of the other schools said, except in their cases it was entirely legal and aboveboard. They do not always require regular competitive bidding for the contract services and they negotiate with the vendors to supply the schools with “gifts” that pay for buildings and other facilities that serve students. The difference is that they would never spend the money on something like the president’s house but rather on facilities that actually serve students. And the institutions’ trustees and anyone else who was interested knew that it was going on.
We thought—and legislators seemed to have the impression, too—that competitive bids were required by law to award remunerative contracts to sell services and commodities to any governmental unit. It turns out that it isn’t the case on university campuses. It ought to be.
G. David Gearhart, the chancellor of the University of Arkansas, pleaded that the practice was not just legal and aboveboard but advantageous for the schools and students—mutually advantageous because obviously it is highly advantageous (profitable) to the companies as well.
He is right in a way. Universities must have parsimonious ways and artifices because it is hard to get state lawmakers and taxpayers to provide enough money to meet the capital and operating needs of the schools, and raising student tuition and fees is unpopular.
The kickback arrangement with contractors achieves a tuition increase through the backdoor. Students are paying for the new buildings and facilities—in UCA’s case greater opulence in the president’s quarters—when they buy their meals, books and other services that are contracted out to private corporations. It just doesn’t occur to them what is happening. Thanks to UCA and some diligent reporting, they now should know.
But would it not be much better—more efficient, more economical, more honest—to be upfront? Take bids on a regular basis, perhaps every four years, to insure that students are served at the lowest possible cost, and then apply tuition and fees openly to pay for auxiliary services—food service as well as housing.
Transparency and honesty make for a happier clientele, and they’re cheaper, too.
