Hedge Funds Are Bankrupting Higher Education

Many universities across the United States are cash-strapped because they have prioritized paying high fees to hedge funds—largely unregulated, high-cost investment vehicles run by the ultra-wealthy—while asking students, faculty and staff to pick up a bigger part of the tab, an explosive new report shows.

Hedge Clippers protestorsThe report, “Endangered Endowments: How Hedge Funds Are Bankrupting Higher Education,” released Feb. 8 by the AFT and the Hedge Clippers campaign, is the first of its kind to examine the harmful influence of hedge funds in higher education endowments. It exposes a troubling trend that has emerged over the last decade: Hedge funds are managing larger portions of endowments and charging high fees for poor returns. The result is increased wealth for hedge fund managers and potential income loss for colleges—which in turn means higher tuition, fewer resources and reduced accessibility for students.

Universities now face a choice, the report claims: Either continue to reward hedge fund billionaires set on siphoning money out of the higher education system, or divest from hedge funds entirely.

Key findings of the report include:

  • Hedge funds collect billions of dollars in fees from U.S. colleges and universities—and produce little in return. Hedge funds collected an estimated $2.5 billion in fees from university endowments in 2015 alone, even though 2015 was reportedly the worst year for hedge fund performance since the financial crisis.
  • Hedge fund managers take up a disproportionate share of seats on college and university boards, influencing the endowments to make larger and riskier allocations to hedge funds. The average university endowment has nearly 20 percent of its pool allocated to hedge funds, and some universities now have upward of 40 percent of funds in this single asset class.
  • Hedge fund managers make large, tax-free donations to private endowments, placing a huge burden on taxpayers and driving inequality within the higher education system. Hedge fund managers often make headlines for giving large sums of money to university endowments, yet these donations are almost exclusively aimed at rich Ivy League institutions, not the public institutions that serve the majority of low- and middle-income students.
  • Hedge funds invest endowment funds in an array of harmful industries and use the investment gains to further a political agenda that harms students and communities. Hedge funds have a pattern of investing endowment funds in problematic companies and industries that destabilize communities and environments across the globe, from fossil fuels, private prisons and pharmaceuticals, to foreclosed homes, student debt and for-profit universities.

“Michigan State University’s mission is to allow students who would not have been able to afford private education a chance at higher ed,” says Kelly Stec, vice president for contract enforcement at the Graduate Employees Union at MSU. “To know that so much of our endowment is placed in hedge funds is horrifying to me.” MSU is one of the schools singled out in the report for investing more than 40 percent of its endowment in hedge funds. “To risk money that is meant for improving this university is to go against every value that MSU was founded on.”

“Universities suffered huge losses during the great recession because of their investments in risky, high-fee investment strategies,” says Bob Samuels, president of the University Council‒AFT and a lecturer at UCLA, another of the heavily invested schools. “It looks like many institutions are gambling on the future of their institutions, students and faculty again.”

“This report exposes hedge fund managers for what many of them are—financial vultures looking to use their extreme wealth and power to gamble away higher education institutions’ endowments, while charging unconscionable fees for their flawed advice,” says AFT President Randi Weingarten. “These billionaires have rigged the economic system for their benefit, and continue to prevent working people and the institutions that serve them from bouncing back after the worst recession of our lifetimes.”

The AFT is demanding a full accounting of hedge fund fees and returns, to determine whether hedge funds truly provide value relative to their high cost.

[AFT/Hedge Clippers press release/photo courtesy Hedge Clippers]

– See more at: http://cfe.ca.aft.org/news/hedge-funds-are-bankrupting-higher-education#sthash.5SgSlUin.dpuf

Negotiations Update: November 2015

Negotiations Update – November 10, 2015

CFE and District management are going to pre-impasse mediation. We agreed with management to use a state appointed mediator. The mediator helps both sides find common ground that could help us come to an agreement.

CFE Position

Benefits – CFE agreed that all health plans will not trigger the Affordable Care Act “Cadillac Tax” by 2018. This agreement would save the district an estimated three million dollars.

Salary and Flex Days – CFE proposed two (2) all college (on campus) flex days and one (1) virtual flex day (online, on campus, or off campus activity). The proposal includes additional pay for each day.

Management Position

Benefits – Management proposed a “hard cap” on health benefits premiums.

This means that employees would pay (100%) of all future premium increases above the cap.

The district projects these increases could be between 7% and 9.5% per year. Under the district proposal these increases could be taken out of faculty salaries….Their proposal means that faculty salaries could be cut by 2% – 5% every year because health benefit increases would be passed along to faculty.

Salary and Flex Days – Management proposed two (2) new all college flex days (on campus) and one (1) virtual flex day (online, on campus, or off campus activity. Management proposal does not provide additional compensation for the flex days.

In an effort to fight for our salary and benefits, CFE may be asking you to provide input, to take action, and to support the negotiation team.

We will be updating faculty regularly.

Please check for additional updates at www.cfe1911.org and follow us for up to the minute updates @CFE1911 on twitter, Facebook, and Instagram.

If you have any questions or comments please email us at coastCFE@gmail.com or cfejacque@outlook.com.

Sincerely,

CFE Staff

Your Voice Matters!

CFT_Count_Me_In_commitment-card CFT_Count_Me_In_commitment-card

The California Federation of Teachers is committed to building power. You faculty union, Coast Federation of Educators (CFE), AFT Local 1911 is assisting with this campaign on Coast District campuses: Golden West, Orange Coast, and Coastline Colleges. If you want to join fellow colleaugues and make your voice heard, please sign our commitment card and send it to the CFE/AFT union office at Orange Coast College. We look forward to building solidarity with you.

On Labor Day, we honor all of our members

A Message From AFT President Randi Weingarten

In honor of Labor Day, AFT President Randi Weingarten has this to say on why unions matter for working families:

“Our union is our members, and on this Labor Day weekend, I couldn’t be prouder of the 1.6 million hardworking nurses, teachers, paraprofessionals, higher education faculty and public employees who work day in and day out to teach our kids, keep our families healthy and improve our communities. They deserve our thanks and our gratitude.

“Even though, as we celebrate this Labor Day, the attacks on labor are unrelenting, it should go without saying that a robust American Labor movement remains essential to our nation’s democracy and economy. Here’s the truth: Unions built the American middle class, and the benefits of being in a union continue to be undeniable. Union workers make an average of 30 percent more than nonunion workers; 92 percent of union workers have job-related health coverage, compared with 68 percent of nonunion workers; and union workers are more likely to have retirement security. And a new report from the Institute for Women’s Policy Research shows that a union contract significantly reduces the wage gap between men and women.

“Our union has been on the forefront of advocating for great neighborhood public schools regardless of wealth or race. We have made incredible strides in turning around struggling schools and advancing our community schools agenda, and in pushing for better practices for safe patient handling and better staffing ratios for health professionals. And we will continue to press for hardworking Americans to have the right to collectively bargain so they can negotiate for the fair wages and benefits they deserve.

“AFT members dedicate themselves every day to improving the lives of those they serve. We are a union that believes in creating a better future for ourselves, our families and our communities, which is why we champion fairness, democracy and economic opportunity. So on this Labor Day, thank you, sisters and brothers, for who you are, for having each other’s back and for having the community’s best interests at heart. We are our union.”

[AFT press release]

– See more at: http://cfe.ca.aft.org/news/labor-day-we-honor-all-our-members#sthash.6yJ7sAxA.dpuf

University of California Announces Free Tuition – Tell Your Students!

Families with income under $80,000 will now receive a full tuition scholarship.

UC’s Blue and Gold Opportunity Plan will ensure that you will not have to pay UC’s systemwide tuition and fees out of your own pocket if you are a California resident whose total family income is less than $80,000 a year and you qualify for financial aid — and that’s just for starters.

What’s covered

If you are eligible, your systemwide tuition and fees will be fully covered by scholarship or grant money. The plan combines all sources of scholarship and grant awards you receive (federal, state, UC and private) to go toward covering your tuition and fees.

Students with greater financial need can qualify for even more grant support to help defray other educational expenses (like books, housing, transportation, etc.).

You don’t need to fill out a separate application to qualify for the Blue and Gold Opportunity Plan. You will receive the benefits of the Blue and Gold plan automatically if you qualify.

Eligibility requirements

  • Submit a FAFSA or California Dream Act Application and Cal Grant GPA Verification Form by March 2
  • Demonstrate total family income below $80,000 and financial need, as determined for federal need-based aid programs
  • Be in your first four years as a UC undergraduate (first two for transfer students)
  • Meet other campus basic requirements for UC grant aid (for example, be enrolled at least half-time during the academic year, meet campus academic progress standards, not be in default on student loans, etc.)

CFE will be sharing more information about this with faculty in the coming months.
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Not just money: Study shows adjuncts want respect

Adjunct faculty lack many things: office space, opportunities for professional development, influence over course content and fair pay. But what rises to the top of this litany of deficits is respect, according to a new study published by the Journal of Higher Education.

Combining survey results with psychological research on the nature of job satisfaction, researchers concluded that when part-time faculty get no respect on the job, the added insult of what otherwise might be less consequential deprivations heighten their sense of dissatisfaction.

Some needs are categorized as “higher order,” according to the report, “Supporting the Academic Majority: Policies and Practices Related to Part-Time Faculty’s Job Satisfaction.” Among those are satisfying relationships with administrators and colleagues—relationships that convey respect, inclusion and a sense of being valued for contributions—and opportunities for professional development and growth. These satisfy the desire for self-esteem, growth and self-actualization.

When these needs go unmet, “lower order” needs no longer feel inconsequential; they feel essential, and the lack of attention to them feels unjust. Such needs may include access to office space and computers, and to clerical and administrative support. Other areas of concern include job security and contract length, participation in campus governance, the ability to teach other subjects, and even access to parking.

The study uses data from the Higher Education Research Institute 2010-11 Faculty Survey and incorporates underemployment theory as well as existence, relatedness and growth (ERG) theory. And it teases out the important difference between job satisfaction among part-time faculty who would prefer to be working full time, and part-time faculty who prefer an abbreviated schedule: Those in the latter group are much more satisfied than those who would rather have a full-time job—and the full-time paycheck and job security that goes with it.

After analyzing the data, the report suggests improvements that could raise job satisfaction among part-time faculty. Among them:

  • Improve campus climate by including part-time faculty in departmental and institutional decision-making such as textbook and curriculum selection.
  • Recognize good teaching by inviting part-time faculty to apply for teaching awards.
  • Give part-time faculty access to professional growth opportunities.
  • Provide on-campus office space.

With an increasing percentage of faculty working part time—49.3 percent of all college faculty in 2009, according to the National Center for Education Statistics—such changes are particularly important. Without them, faculty cannot serve students as effectively as they might, and turnover will continue to plague college classrooms, disrupting the mission of public higher education: to provide a high-quality experience to students.

[Virginia Myers]

– See more at: http://cfe.ca.aft.org/news/not-just-money-study-shows-adjuncts-want-respect#sthash.1ROOLO5f.dpuf