Regent-gate: Up to 22 Board of Regent employees may have gotten raises.

The controversy surrounding pay raises at Malloy’s new Board of Regents goes well beyond the one Vice President who received a $49,000 pay raise last week.

Unconfirmed reports are that up to 22 Board of Regent employees received pay raises, some well into the tens of thousands of dollars.

As the CTMirror is reporting, “the second-highest ranking official in the state’s merged public college system will forego a controversial $49,000 pay raise, the system announced Tuesday morning.”

The CTMirror, CTNewsjunkie and Courant have all updated their stories within the last hour, although the fact that the raises are widespread is just leaking out now.

Check the following links for the latest;

http://ctmirror.com/story/17683/meotti-forfeits-controversial-49000-raise

http://www.ctnewsjunkie.com/ctnj.php/archives/entry/education_executive_forfeits_wage_increase_after_media_reports/

http://www.courant.com/news/education/hc-regents-salaries-1010-20121009,0,3886105.story

Anyone remember Gilda Radner (as Emily Litella) “Oh,Never Mind”

Gilda Radner as Emily Litella:

“What is all this fuss I hear about the Supreme Court decision on a “deaf” penalty? It’s terrible! Deaf people have enough problems as it is!”
.
.
The news anchor (Chevy Chase or Jane Curtin) interrupted Litella to point out her error, along the lines, “That’s death, Ms. Litella, not deaf … death.” Litella would wrinkle her nose, say something like, “Oh, that’s very different….” then meekly turn to the camera and say, “Never mind.”

 

THIS PRESS RELEASE JUST IN…

STATEMENT OF BOARD OF REGENTS CHAIRMAN LEWIS J. ROBINSON

AND PRESIDENT ROBERT A. KENNEDY

 (Hartford, CT) – Chairman of the Board of Regents, Lewis J. Robinson, and President Robert A. Kennedy today issued the statement below responding to recent media reports.

“First, Executive Vice President Michael P. Meotti has chosen to forgo his raise in salary. We appreciate this action, and have agreed to it. The Board of Regents will be reviewing all other personnel salary adjustments that were made on the basis of additional duties, responsibilities, and roles assigned resulting from the consolidation.

“Secondly, it’s important to us to apologize for any miscommunication that has occurred between the Board of Regents central office and the community college presidents. In trying to provide any community college presidents who do not support our change agenda a way in which to depart amicably, it was instead mistaken for a buy-out or, worse, a push-out. That was never the intention, and for that, we apologize.

“Let us be clear, too, that the presidents who may not support the Board of Regents’ agenda should not have their commitment, motives and dedication questioned. Change is difficult and our agenda – meeting the needs of every student in Connecticut through the consolidation of governance structures, a reform of remedial education and the implementation of a new transfer and articulation policy to name a few – may not be for everyone. However, we continue to thank each of the 17 presidents for their work and effort on behalf of public higher education in the state, and, most importantly, our students.

“The facts are these:

1.      Presidents who choose to depart from the Board of Regents organization will do so under the existing personnel policies in the community college system.

2.      It is not true that those presidents who choose to stay will automatically be terminated. Presidents who do not choose to depart will be subject to a performance review process which has traditionally taken place in June.

3.      None of the community college presidential positions will be eliminated, merged or consolidated.

“Unfortunately, this issue has taken away from the real reform efforts the Board of Regents has already undertaken on behalf of our students.

“The Board of Regents has approved a seamless transfer and articulation plan which will allow our students to transfer between our institutions more easily. In addition, the BOR has identified $5.5 million in central office savings, and has redirected that funding to the campuses for at least 47 tenure track faculty and direct student support positions. We are in the midst of formulating a longer-term, strategic plan that will help focus our organization on training and preparing students for the rigors of a global economy, while supporting workforce development initiatives across our state.

“We are proud of what we’ve been able to accomplish in 10 months, but clearly we have much further to go. We look forward to working with the presidents, the faculty, staff and students on our campuses to ensure that the Connecticut State Colleges & Universities are an accessible and affordable option for our state’s students.”

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UConn Budget Whacked Again and Again and Again….

(Storrs) With the University of Connecticut Foundation picking up the tab for Governor Malloy’s trip to Davos, Switzerland, it seems like an appropriate time to look back at how the UConn budget has done this year – a year in which Connecticut finally has a Democratic Governor and a Democratic Legislature.

Note:  Educational attainment has always been a critical indicator of the quality of a state’s workforce. States like Connecticut and Massachusetts may have somewhat higher energy costs, higher real-estate costs, high transportation costs and even higher labor costs but they made up for it by having a workforce prepared and able to help any business succeed.

Background:

Twenty years ago, when the Democrats lost control of the governor’s office, Connecticut and Massachusetts led the nation with 27.2 percent of its workforce holding a bachelor’s degree or higher. But over the past two decades, Connecticut’s failure to provide sufficient funding our colleges and universities has begun to take a terrible toll.  While Massachusetts has stayed at the head of the pack (almost 37% of its residents now have college degrees), according to census data, Colorado, New Hampshire, Maryland, and New Jersey have passed Connecticut by and the rate things are changing the percent of college graduates in Vermont, Virginia and Minnesota will push those states past Connecticut in the next few years.  In the end, the quality of Connecticut’s workforce will have more to say about the future of Connecticut’s economy than trying to lure businesses here with grants and loans.

Democratic Regain Control of the Governor’s Office:

Last year (FY11), the state of Connecticut provided the University of Connecticut with a block grant of $233 million. Tuition and fees brought in another $675 million while Federal funds, research grants and donations added another $140 million to Connecticut’s $1 billion dollar public research university.

Faced with rising costs, the University of Connecticut would have needed a state block grant of $255 million simply to maintain its current level of services.

However, last February when Connecticut’s new Democratic Governor Dannel Malloy presented his budget to the General Assembly he proposed giving UConn $229 million.  An amount that was below what UConn had received last year and significantly below what the University needed to maintain services.

A few months later, the Connecticut General passed a new state budget and sent it to the Governor for his signature, but not before it cut an additional $4 million from UConn’s appropriation.

Once the budget and the Malloy/SEBAC Agreement were signed into law, Governor Malloy’s Administration went back and reduced every agency and department’s budget to reflect the purported savings from the union agreement.

Although UConn’s share of that agreement was at most $11 million dollars, Malloy’s budget office reduced UConn’s block grant by an additional $19 million.  By cutting deeper than necessary they were able to reduce the reductions to other agencies they deemed more important.  When the dust settled, UConn with left with a state grant of only $207 million.

Then earlier this week, when the Governor’s budget office finally admitted that the state was headed for a deficit instead of a surplus, Governor Malloy ordered another round of cuts. This time UConn’s hit was an additional $2.1 million.

At this point, UConn’s budget has been cut to $205 million. That amount is $50 million less than what was needed to maintain UConn’s level of services and $28 million below what the University received last year.

Malloy and Legislature made the deepest cuts to Connecticut’s public colleges and universities in history and additional cuts are scheduled for next year.

There has been a lot of talk about economic development.  Just today the Governor called back to reporters in Connecticut telling them that he “has been in various stages of talks with more than 20 companies that potentially could qualify for “substantial benefits” under existing state programs designed to assist companies prepared to create new jobs”.

And yet, with the exception of a handful of individual students, faculty and staff, you can search far and wide but you won’t hear any state officials, legislators, members of the UConn Board of Trustees or UConn administrators decrying these extraordinary cuts and the direct damage they will have on the future capability of Connecticut’s workforce.

The UConn Board of Trustees did recently approve the phase in of a 28-percent increase in tuition but they assured everyone that those funds would only be used to hire new faculty.

Oh, and finally, while other states have been forced to deal with the Great Recession by cutting government services few have targeted their colleges and universities for cuts.  In fact, while reducing government expenditures, Illinois, Indiana, Nebraska, North Carolina and Texas all actually increased their funding for higher education.  And other states such as Alabama, Arkansas, Mississippi and Ohio spared their colleges from budget cuts.

Hopefully the companies that Governor Malloy is trying to entice to Connecticut with taxpayer-funded corporate welfare won’t realize that Connecticut state government is doing just about everything it can to undermine our ability to have provide businesses with the educated workforce they will need.

STATE FUNDING FOR UCONN:  FY11 – FY12

FY11 –  State Funding for UConn

$233 million

This year FY12

Needed to maintain current services

$255 million

Malloy’s recommendation (Feb ’11)

$229 million

General Assembly cut to UConn’s budget

-$ 4 million

UConn budget signed into law

$225 million

“Hold-Back” Cut to UConn as a result of Malloy/SEBAC Agreement

-$19 million

UConn budget after “Hold-Back” cut

$207 million

Malloy’s January 23, 2011 Rescission

-$2.1 million

Present UConn state budget for FY12

$205 million

Summary:  This year the state of Connecticut is providing UConn with $50 million less than what was needed to maintain current services and $28 million below what was provided last year.

Time to Run Government Like A Business…

(Cross-posted from Pelto’s Point at the New Haven Advocate)

How many times have you heard that one…

While UConn spends money on consultants, Governor Malloy continues the corporatization of higher education by appointing high-ranking business executives to the new Board of Regents.

Last week, Governor Malloy appointed financier Gary Holloway of New Canaan and five others to Connecticut’s Board of Regents.  Among them was a former General Counsel at Travelers, the Chairman and Chief Executive Officer of Magellan Health Services and a former Goldman, Sachs and Silver Point Capital executive.

The consolidation of Connecticut’s higher education system was one of Malloy’s most controversial initiatives and the newly created Board of Regents will be responsible for the consolidation and governance of the four Connecticut State Universities and the state’s twelve community colleges.

Putting wealthy corporate leaders on university boards of trustees, in order to get their donations, is nothing new.   In fact, there are lots of impressive buildings and programs as a result.

But more and more often these business leaders believe that their role goes beyond posterity building and instead they seek to contribute their corporate expertise to the basic operation of universities.

The attitude seems to be, since I successfully managed a multi-million dollar company, I can certainly do the same for an institution of higher education.

Of course, universities are fundamentally not about making money and the “product” they create is hard to measure by traditional business standards.

A prime example of the corporatization of higher education is the growing use of consultants.  A traditional business practice in the corporate world, university trustees are now demanding that “academic professionals” bring in real experts to determine financial and policy issues that, in turn, have a profound impact on a university and its activities.  As noted in a previous post, the UConn Board of Trustees, for example, retained a Washington DC based consultant for $3.9 million to identify how UConn can be more efficient.

So now enters the new Connecticut Board of Regents, Gary Holloway and the Governor’s other appointees.

Although lacking in public higher education experience, one thing is clear when looking at Gary Holloway’s career, he is premier player in the Advanced Capitalist System in which we live.

In fact, Holloway’s career is an amazing case study of how today’s financial investment world actually works.

Gary Holloway is a founding partner of Five Mile Capital Partners, an investment firm headquartered in Stamford, Connecticut and New York City.

According to the firm’s website, “Five Mile Capital Partners LLC is an alternative investment and asset management company…that specializes in investment opportunities in real estate, debt products, structured finance, asset-based lending and financial services private equity.”    They manage over $2 billion in assets.

Prior to forming Five Mile Capital Partnerships, Holloway was a leading force behind Greenwich Capital.  There he turned it into one of the country’s “premier investment banks in the fields of fixed income securities and structured products.”

Greenwich Capital was acquired by the NatWest Group in 1996 and four years later, NatWest was purchased by the Royal Bank of Scotland (RBS).  As Mayor of Stamford, Dan Malloy helped attract RBS to Connecticut with taxpayer subsidies.

Through all of those years and iterations, Gary Holloway served as CEO or Co-CEO of Greenwich Capitol.

In 2001, Holloway, then Chairman of Greenwich Capitol retired when RBS announced that they were “integrating their global debt business.”

Soon after, Holloway and three others formed Five Mile Capital Partners.

So what do firms like Holloway’s do?

The story of the John Hancock Tower in Boston, Massachusetts reveals their approach to making money;

In December 2006, a company named Broadway Partners Fund Manager LLC purchased the John Hancock Tower for $1.3 Billion; about $400 million more than the previous owner had paid for the building three years earlier.

Broadway Partners’ funding came from a standard mortgage and $724 million from a “mezzanine debt package”

A mezzanine debt package is a form of financing that is secondary to the debt provided by banks and other standard lenders.  Instead of being secured by a mortgage, the mezzanine lender has the right to take an ownership interest in the company being financed if the loan is not paid back.

Or as one reporter put it, “mezzanine loans aren’t secured by real estate, but by the company that owns the building or owns the company that owns the company that owns the building.”

In this case, Lehman Brothers Holdings Inc. (now-bankrupt), and Gary Holloway’s old company, Greenwich Capital (the subsidiary of the Royal Bank of Scotland) provided funding and oversaw the creation of the mezzanine loans.  In the deal, Greenwich Capital was the mortgage holder.

According to news reports about the Hancock Building’s fate, as early as June 2008, 18 months after Broadway Partners purchased the building, a private equity firm called Normandy Real Estate Partners,
along with Holloway’s present company, Five Mile Capital Partners, began buying up the various mezzanine debt tranches (at discount prices since the value of the debt fell with the collapse of the commercial real estate market).

The news reports indicated that Normandy Real Estate Partners and Five Mile Capital purchased about $340 million of the face value mezzanine debt including “the senior-most tranche, the next two tranches, one-half of the third and a piece of the sixth.”

When Broadway Partners defaulted, as expected, on their loans in January 2009, Normandy Real Estate Partners and Five Mile Capitol were able to swoop in and buy the building at auction for $20.1 million (along with the assumption of the unpaid $640.5 million building mortgage from Greenwich Capital).

Apparently when these types of bankruptcies occur the various tranche holders got together to determine a course of action.  In this case, the media reported that “going in, lawyers and bankers assumed that Normandy and Five Mile would control the sale, be the only bidders and bid no more than the outstanding value of its loan. For an outside bidder or junior creditor to prevail, it would have to first pay off Normandy-Five Mile and all creditors senior to it at par.”

In English that means no other bidder could possibly have come up with the money necessary to out bid Normandy and Five Mile.

It isn’t clear what happened to the remaining “junior creditors” when Normandy and Five Mile closed the deal but the implication was that they didn’t get very much, if anything, on their investments.

At the time of the sale, Normandy and Five Mile put out a statement saying “This transaction completes in 18 short months the long term objective that Normandy and Five Mile Capital had for The John Hancock Tower…That swift conclusion is a testament to the hard work and effort of all our team – from the careful planning and execution of the acquisition … and ultimately the successful monetization of the investment realizing a significant profit for our investors.”

It all paints an incredible picture of how investors become winners and losers in today’s marketplace.

And that, in turn, brings us back to Connecticut’s new Board of Regents.

It will be “interesting” to watch how Gary Holloway and the other corporate executives approach their task of “re-inventing” Connecticut system of public higher education.

For More about the Hancock Tower see; http://www.thedeal.com/newsweekly/features/a-faulty-tower.phphttp://www.crunchedcredit.com/2010/06/articles/credit-crisis/the-hancock-tower-a-distressed-debt-success-story/, http://online.wsj.com/article/SB123851237251273961.html, http://www.normandyrealty.com/normandycorporate/News/tabid/55/ctl/PressReleaseDetail/mid/376/ReturnToList/False/id/84/Default.aspx

 

Oh for those who want to know more about one of our newest public servants…

Gary Holloway’s 12,000 square foot house in New Canaan is assessed at $4.6 million.  His annual property tax bill ($62,194.86) is far greater than the salary of the average unionized state employee.

The Holloways are also major campaign donors including significant amounts to Chris Dodd, Joe Lieberman and a variety of other big-time Democratic senators.  Here in Connecticut his choices have been pretty interesting.  He gave $2,500 to one-time Democratic gubernatorial candidate John Nussbaum and also donated $1,500 to Mary Glassman.

Although Holloway and his wife have primarily donated to Democrats, they did contribute $2,500 to John Rowland, $1,500 Ross Garber and were especially strong supporters of John McCain, providing McCain,
McCain/Palin and the Republican National Committee with a total of $16,700.

Now Gary Holloway and the other corporate leaders will be helping to determine the future of Connecticut’s public system of higher education.

A Giant Step in Connecticut’s Race to the Bottom…

Cross-posted from Pelto’s Point at the New Haven Advocate)

Hidden behind the shadows of this year’s state budget debate is a growing set of actions that will do more damage to Connecticut’s future than anything we’ve seen during this Great Recession.

Connecticut’s fundamental truth is that our most precious natural resource is our people and the only economic development strategy that will work is to ensure that we have the most educated, knowledgeable and capable workforce in the nation and the world in order to successfully compete in the 21st Century global marketplace.

As we lose our educational edge to southern and midwestern states, not to mention China and India, we are seeing a disaster of unparalleled proportions taking shape – a disaster that will make the Rust Belt and its failed manufacturing economy almost look good.

While the debate about taxes and state employee concessions makes headlines, few realize that the state budget Governor Malloy proposed and the Democratically-controlled legislature enacted will make the deepest cuts to our public colleges and universities in state history.

In the coming days, the General Assembly will hide inside a so called “implementer bill” an authorization for a massive re-organization of the Connecticut State University System and Connecticut’s Community and Technical Colleges – a planned merger that fails to consider for what is best for our colleges and more than 100,000 students who attend them.

A story in yesterday’s edition of the CT Mirror offers us a glimpse into the devastating impact these decisions will have on our public institutions of higher education.

As a direct result of Governor Malloy’s budget cuts and policies being championed by the Governor and his Commissioner of Higher Education, Connecticut’s community colleges are on the verge of ending their historic policy of “open enrollment”, a policy that assures that anyone, regardless of background or economic standing has the opportunity to attend one of our state’s community colleges as they seek to acquire the knowledge and
skills to succeed.

Stop for a moment and understand what is taking place.

The Malloy Administration is implementing a change in policy that would take us from a state in which every person has a right to expand their skills and advance their education to one in which, as Higher Education Commissioner Michael Meotti said, the state must focus resources on those who have a real chance of benefiting from taking courses.

The CTMirror article reports that “Meotti said that Connecticut should reconsider offering access to post-secondary education to those who are destined to fail. Three of every four students who enter the community college system lack basic knowledge in math, English and reading and are
required to take remedial courses upon entry into a community college, according to the State Department of Higher Education.”

Meotti adds in his own words that these “are students who are so not ready and have no ability to be successful in a college classroom,”

Wait?  What?

The Democratic Commissioner of Higher Education, serving under a Democratic Governor and a Democratic Legislature, in a state
with the highest achievement gap of any nation, a place that can only succeed if we have a well trained workforce says that our community colleges should be reserved for those who are destined to succeed?

We aren’t talking about entrance to Yale or even UConn (although remember George W. Bush went to Yale and his academic skills certainly didn’t predict his “success”).  We are talking about ability to attend on of Connecticut’s 12 community colleges, institutions whose primary role is not to provide academic degrees but to ensure that every person has the opportunity to learn and grow and strengthen their skill set so they can build a better quality of life for themselves, their families and their community.

Imagine if what Meotti said was uttered by someone like Michelle Bachmann, Sarah Palin, Eric Cantor or Paul Ryan.  Demonstrators in Connecticut would take to the streets decrying their elitist, arrogant positions and suggesting that it was based on some inherent classism or racism.

A claim that only some people are “destined to succeed”?

Certainly Mike Meotti isn’t racist but the policies he is pushing would have devastating consequences on those who need a little more help because they are coming out of failing schools or don’t have the life experiences or network to ensure that they will absolutely “succeed” in college.  Let’s face it, minorities, women, those from poorer socio-economic backgrounds will all be disproportionately hurt by these proposed policies.

And these are just the words of Malloy’s point person on higher education.

As the CTMirror points out, Governor Malloy himself “has a plan to decrease the high use of the state’s community colleges for remedial coursework.”

And the Governor added “We want to draw down [the number of] students who are having to use their time and energy” on remedial courses, he said. “That’s probably the best way to get at this problem.”

One assumes that the Governor is expecting that Connecticut’s public high schools can improve student performance to the point that students graduate with the fundamental skills they need to be successful in college.  However, the challenges facing our schools, especially those in urban areas, schools that will be producing 40% of Connecticut workforce, are significant and improvements will take years, even decades, to fully implement. In the mean time, Malloy’s proposed approach would mean tens of thousands of Connecticut residents would be shut out from the opportunity to go to a community college to acquire additional education and skills.  Hardly the appropriate path to take if we want a stronger economy, not to mention a more equitable and just society.

Instead of ending open enrollment in our community colleges, how about we actually throw the doors wide open and use our scarce resources to give these students the tools they need to succeed, even if they need some remedial work before taking some of the more advanced courses.

How about we don’t cut $20 million dollars from the most efficient and effective part of Connecticut’s system of higher education, our community colleges.

What if we remembered that not everyone begins or even finishes their primary and secondary school experiences with the same set of skills and capabilities, but every person, old or young, white or black, man or woman, rich or poor can always learn and improve their skills as they seek to position themselves to succeed.

And Instead of simply talking about jobs, how about we actually do something to ensure we have a broad based, multi-talented workforce that is prepared for the jobs our businesses will need… oh and Governor, some of those jobs aren’t in state of the art research labs but still require skills beyond what people are getting in high school.

But most importantly, where are the voices of reason on this vital issues?

Why the silence from members of the Legislature’s Black and Latino Caucus and other legislators representing communities whose constituents will be especially hurt by the politics Malloy and Meotti are moving forward with?

Where are the more progressive legislators who claim to truly believe that everyone deserves an opportunity to succeed, not just those who have been born with opportunities dropped into their laps?

Where are the women legislators who understand the barriers that are in place for women trying to return to the job market and how some courses, even if they don’t end up in an Associate Degree, can be the difference between finding and not finding safe, quality work?

Where are those policy makers who were the first in their family to attend college or at least recognize that first time college attendees might very well need – and certainly deserve – some extra help as they work to change the course of their lives?

Where is Connecticut’s business community who complain so bitterly that they don’t have access to enough educated workers, even to the point of needing to import workers from other states and countries?  These economic times are hard enough for Connecticut’s businesses without having our state leaders implement policies that will ensure we don’t have an educated enough workforce as we move deeper into the 21st Century.

And where are the editorial writers whose job it is to speak out on important issues like this?

As Governor Malloy and the General Assembly careen toward the last day of the 2011 legislative session, Connecticut’s future doesn’t rest with how the FY12 budget drama plays out.  Connecticut’s future will depend on whether the Democratic Legislature has the vision, courage and wherewithal to put the brakes on Malloy’s disastrous higher education policies so that they can return next year with a plan that builds, not destroys Connecticut’s most important economic development tool – our colleges and universities.

Watch this issue carefully in the coming day.  How the General Assembly handles Malloy’s efforts to undermine Connecticut’s community colleges will say a lot about their character and dedication to Connecticut’s future.