FOR IMMEDIATE RELEASE:
April 18, 2018
Alexander Tucciarone, firstname.lastname@example.org, 516-263-9775
NEW ROOSEVELT NETWORK REPORT: MICHIGAN STATE UNIVERSITY OFFICIALS ENGAGING IN EGREGIOUS FINANCIAL MISMANAGEMENT
Student-Led Report Examines Financial Misjudgments and Points to Outsized Role of Financial Actors at Universities, in Broader Economy
EAST LANSING, MI – The Roosevelt Network today released a new report, The Financialization of Higher Education at Michigan State University. The report details the ways that Michigan State University (MSU) administrators have mismanaged the school’s finances to an extent that harms students by depriving them of resources and making the cost of university attendance more onerous.
While the report focuses on the example of MSU, it describes financial behavior within the university as part of a broader trend. It specifically blames financialization—the phenomenon by which the growing size and power of the financial sector infiltrates and harms other parts of the economy and society—for MSU’s financial challenges.
Instead of prioritizing equitable, accessible public education as its core mission, MSU today focuses on competing for students as consumers, engaging in risky borrowing practices, and investing in questionable financial strategies. For instance, debt levels at the university have exploded, with a 210% increase in long-term debt between 2001-15, as well as a 672% increase in interest payments between 2002-16 put toward funding new construction projects on campus. MSU today also invests nearly a third of its $2.6 billion endowment in hedge funds, despite poor returns, high fees, serious ethical concerns, and limited oversight.
The report details how the decline in state funding has impacted the university and its students. As a result of financialization and declines in state support, universities have both increased student costs on campus and redirected existing institutional resources away from scholarships, wages, and benefits. At MSU, the university’s decisions to decrease annual endowment spending, invest in hedge funds instead of the S&P 500 index, and gamble on interest rate swaps have cost the university $493.6 million, enough to provide the full cost of attendance for 20,111 in-state students for one year.
After detailing the ways that MSU mismanaged its finances, the report concludes by outlining several policy solutions that would help at MSU and could potentially be replicated at other universities facing similar problems. These include student and faculty representation on the board of trustees, a tuition freeze, and the restructuring of the university’s investment portfolio.
“As we researched this report, it became clear to us that MSU’s leadership have not been effective stewards of the university’s finances,” said Aman Banerji, Program Manager at the Roosevelt Institute and a co-author of the report. “If these issues were limited to MSU’s campus, that would be bad enough. But the fact that this is happening across the country amounts to a crisis for higher education in the United States. Policymakers and university officials have failed our young people.
Thankfully, there is a way out of this mess. Our hope in drafting this report was to provide students with a greater understanding of how their universities operate and a set of concrete demands they can make at their own schools.”
“Students have a right to greater transparency on campus and to know how administrative decisions affect them,” said Brigid Kennedy, a member of Roosevelt @ MSU and a co-author of the report. “This report details both a national trend and its implications for MSU, as well as a set of recommendations to address this problem. Our research comes at a critical juncture for MSU in the national spotlight, giving students and faculty the perfect opportunity to demand accountability and change.”
In September 2016, the Roosevelt network released The Finacialization of Higher Education, a report that received coverage in major media outlets, including Bloomberg and TIME. This report focused on the finances of 19 universities that had become embroiled in interest rate swaps. Today’s report builds on recent research conducted by the Roosevelt Institute on the topic of financialization, including a January 2018 report, Corporate Financialization and Worker Prosperity: A Broken Link, from Roosevelt Institute Senior Economist and Policy Counsel Lenore Palladino that focuses on the outsized role the financial economy plays within America’s largest public companies. A July 2015 report, Defining Financialization, examined the phenomenon of financialization and the ways it harms the broader economy.
About the Roosevelt Institute
Until the rules work for every American, they’re not working. The Roosevelt Institute asks: what does a better society look like? Armed with a bold vision for the future, we push the economic and social debate forward. We believe that those at the top hold too much power and wealth, and that our economy will be stronger when that changes. Ultimately, we want our work to move the country toward a new economic and political system: one built by many for the good of all.
It takes all of us to rewrite the rules. From emerging leaders to Nobel laureate economists, we’ve built a network of thousands. At Roosevelt, we make influencers more thoughtful and thinkers more influential. We also celebrate –and are inspired by– those whose work embodies the values of both Franklin and Eleanor Roosevelt and carries their vision forward today.
Also published on Medium.