Strategies for Challenging Shared Services/AST: Arguments and Counterarguments

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In what follows, we list a number of common arguments in circulation about how to challenge the administration’s plans to implement “shared services”/AST, and offer a series of responses. These counterarguments are based on what SUM has learned about the administration’s financial operations and crisis management techniques by reading statements, records, and documents that are publicly available on the internet. Some of the information here was presented at the recent “Teach-In” and will probably be discussed more in depth at the upcoming Organizing Meeting on December 5.

Argument #1: The university is in crisis, which means that we have to cut costs somewhere. Public universities are being defunded by the state and if we want to avoid tuition hikes we have to implement “cost containment” programs like AST.

a) We just need to make it out of this difficult period. If we cut some costs now, things will get back to normal.

The university will never leave this so-called “crisis” period of having to “cut costs” (which is corporate lingo for firing people, cutting salaries, and stripping benefits) because its financial model is built upon doing just that. The following quote comes from a recent U-M financial report, in which the university administration advertises its continuous efforts to attack labor:

“A disciplined approach to long-term cost containment is a driving force behind our ability to limit tuition increases, provide more financial aid, and continue to invest in teaching and research. The university’s deans, directors, faculty, and staff reduced and reallocated $235 million in recurring general fund expenditures from the Ann Arbor campus budget over the period FY 2003–2012. Beyond that, we’re planning to reduce or reallocate recurring costs by another $120 million by 2017. Our cost containment efforts currently underway include information technology rationalization, strategic sourcing, and administrative services transformation.” (p. 6)

If the university can demonstrate to Wall Street that it is dedicated to “cost containment,” it can attract the attention both of Wall Street capitalists, who might be interested in purchasing their debt, and of bond raters, who determine the university’s credit rating. It’s clear that the Wall Street lenders the university is trying to attract are interested in whether the university is tough on labor. For example, in the bond prospectuses that the University of Michigan issues to entice Wall Street lenders to purchase their debt (bonds), they list all the unions present at the university and when their contracts expire. Unions are seen as a threat, and control of the union is seen as a strength.

b) Universities are being defunded by the state. That money has to be made up for somewhere, so we need to think about “efficiency.”

The administration is no longer interested in getting more money from the state in order to cover the university’s costs, because the state can tell them what to do with the money. In fact, in the same financial report linked to above they proudly advertise to their Wall Street friends that they are successfully achieving a model of “revenue diversification”:

“Revenue diversification has long been an important strategy for the university to achieve financial stability in light of unpredictable economic cycles. In the 1960s, for example, nearly 80 percent of the university’s general fund revenues came from state appropriations, compared to the projected 17 percent in the FY 2013 general fund budget. The current mix of revenue can be seen on the charts below, which show the FY 2012 operating revenue sources with and without the health system and other clinical activities.” (p. 5)

This chart shows a much more complicated picture than simply that the university is lacking in state funding and needs to make it up by cutting the university staff. Their revenue is not just dependent on state funding but rather a complicated mixture of incomes, which many times fundamentally rely on the labor and operating capacity of staff.

Additionally, the university is increasingly dependent on bonds to fund its construction sprees. The administration sees bonds as advantageous because unlike its other sources of funding, which carry frequent restrictions, bonds have none. So, while the state could (and has) put conditions on funding (for instance we won’t give you this funding unless you have a certain amount of racial diversity at your school, or unless the building you want to construct costs under some set amount of money), bonds let top executives at the university use the money for anything they want and run the university any way they desire (the way that will provide those at the top with the most profit).

c) If we don’t cut costs somewhere, they will continue to raise tuition.

The university is dedicated to consistently raise your tuition whether they cut costs or not. Through the shady agreements that they have made on Wall Street, they have promised to continue raising tuition. When the university makes a loan agreement (issues bonds), it has to offer something as collateral, and the university has offered your tuition. In an article titled “They Pledged Your Tuition to Wall Street,” UC Santa Cruz professor Bob Meister’s explains the ties between university construction projects, bonds, credit ratings, and tuition hikes:

“Because UC pledges 100% of tuition to maintain its bond rating, it has also implicitly assured bond financiers that it will raise your tuition so that it can borrow more. Since 2004, UC has based its financial planning on the growing confidence of bond markets that your tuition will increase. (Why? Because you’ve put up with this so far, and because UC has no other plan. Its capacity to raise tuition is advertised in every bond prospectus.)”

U-M does the same thing, since it pledges general fund revenues, the pool in which tuition is deposited, as collateral for its construction bonds. It’s true, as the university states, that tuition is not used directly to pay for “most construction projects.” But it is always used indirectly, both as collateral on the university’s debt and as funds with which to service the debt (i.e. pay interest).

Argument #2: Disruptive actions will only make the situation at the University of Michigan worse. In order to accomplish anything for the staff and for ourselves, we have to include the administration in our conversations. Only through bringing them into the room with us and consulting them will we be able to reach the top where these decisions are being made.

In fact, this is exactly want the administration wants. They want to placate and silence us as quickly as possible. Why? Because protests and disruptions at the University of Michigan threaten the administration’s plans for running the university. Where does this power to make them so afraid come from? For one thing, the credit rating.

In advertising itself to Wall Street as an attractive investment, the single most important factor in this self-promotion is the credit rating, which shows how likely the university is to repay its loans. If the University of Michigan’s credit rating is high, Wall Street will be more likely to lend it money, and the interest rates on those loans will be more favorable. What factors into this credit rating? Not only the liquidity afforded by tuition (and thus ever higher student debt) but also the ability to contain, control, and exploit labor will allow the company (oops, university) to continue generating revenue and thus repay the loans.

If there is turbulence in the labor environment or even the general campus environment, however, any investment becomes more risky and credit ratings go down. The administrators, in other words, are terrified of us. Why beg them to listen to us when we have the upper hand? Only demonstrating our capacity to create turbulence can we begin to make headway in this struggle.

In thinking about the administration’s goal to dismantle and placate any dissent as quickly as possible to salvage their credit ratings, it is insightful to take a look at an administrative guide to “managing resistance.” As the first tip in this guide states:

“Consider the following change management activities:

  • Utilize a structured change management approach from the initiation of the project

  • Active and visible participation by senior leaders

  • Advocacy by management levels including middle managers and front-line supervisors

  • Communications that describe the need for change, the impact on employees and the benefits to the employee (answering ‘What’s In It For Me?’ or WIIFM)

Each of the four change management tactics, all of which are part of a structured change management approach, directly address some of the main sources of resistance and can actually prevent resistance from ever happening if they happen early in the project lifecycle. Front-line employees understand the ‘why’ behind the change and see the commitment from leaders throughout the organization. In many cases, this will prevent resistance from occurring later in the project when it can adversely impact benefit realization, project schedules and budget.”

We are seeing that the university has already employed several of these tactics in order to “manage our resistance.” However, as we have indicated above, the “why” that they are trying to sell us (cutting costs is inevitable and has to be done somehow) is a sham that they are spinning in order to keep the university running on debt and funneling pools of money in the university’s top positions of power. The administration is not acting in good faith. By going to the table with them, we are actually assisting the administration in “managing” the very resistance that we might imagine we are trying to incite. Negotiating with the administration means we have to start with their argument — “change is inevitable,” which ultimately means that returning to their system of university financial operations is inevitable.

What would it be like if we refused this argument from the opening moment of resistance? We will not accept that your way of running the university (hiking up tuition and creating a luxurious campus in order to draw wealthy out-of-state students, while simultaneously drastically reducing the university’s racial and class composition) is inevitable. What if we decided to create our own demands that radically diverge from the terms on which they decide we should be talking? One thing is for certain, if we really want to challenge the major issues we see, it cannot be by sitting at the table in the boardroom during the regents meeting and listening to their proposals for how they will mask their ongoing violent attack on labor and diversity with alternative solutions. Instead of sitting, however, what if we stood defiantly and silently in the boardroom meetings refusing negotiations and demonstrating that we will define the terms of the argument and that the only things that have to be “inevitable” are the changes that we seek?

This is not just some idealistic dream. Students and workers (and student-workers!) at universities across the country and the world have won important victories by standing up to their administrations. In 2012, well-organized student groups in Quebec staged several student strikes that succeeded in forcing the repeal of tuition hikes and even led to a new provincial government. (SUM itself was inspired by the success of the student unions in Quebec.) Or to take a US example, in the University of California system where Professor Meister teaches, “students . . . organized successfully to beat back a proposed 81 percent tuition hike in 2011.” And the year before that it was campus protests that led the Governor of California to shift funding from prisons to higher education: “Those protests on the U.C. campuses were the tipping point.” Few victories have come from negotiation and compromise with administrators whose only goal is the corporatization and financialization of higher education.

Here are some of the people who have publicly endorsed “shared services”/AST and probably shouldn’t be consulted:

1. Regents
2. President Mary Sue Coleman
3. Provost Martha Pollack
4. EVP CFO Timothy Slottow
5. Associate VP of Finance Rowan Miranda
6. Executive Officers
7. Deans

Argument #3: It would be better for students and workers to step back and let faculty members negotiate with the administration about solutions to AST. They have better relationships with the administration and better understand the processes that are occurring.

Our strength comes from confronting the university on our terms, not theirs. It is difficult for them to have large communities come together in opposition to bad and corrupt policies outside of officially sanctioned forums and spaces. Not only is it embarrassing, but it threatens their credit rating and future ability to exploit us as students and workers.

We lose that strength if this struggle is displaced into the official, bureaucratic channels controlled by the administration. We also lose if the discussion happens in conference rooms where administrators are allowed to dominate discussions with their talking points and subtle threats. The problem with AST is not (or not only) that faculty was not allowed to weigh in and modify the proposal to their satisfaction — the problem is that AST exists at all.

We cannot forget that this struggle is also about students and workers having a say in the policies that they fund and uphold. Relegating all decision making to faculty, especially after so many department chairs upheld gag orders, is wrong and unacceptable. This is not being moderate or willing to compromise, it is a violent act of exclusion. Students, lecturers, and staff would all be left out of this supposedly inclusive conversation. We do not want faculty to “represent” us in these discussions. We represent ourselves and we are saying “NO,” not “maybe if you change its name and description.”

Argument #4: AST should be stopped and we should implement “Unit-Centric Services” (UCS) instead. UCS is a reasonable, efficient solution to the problem and a good alternative to AST. It would provide a decentralized, democratic process that the university administration could accept.

While we support the call to stop AST in the Open Letter to President Coleman and Provost Pollack, we strongly disagree with alternative it proposes: something called “Unit-Centric Services.” The UCS proposal cedes all our ground to the administration. It accepts, to begin with, the notion that taking advantage of “efficiencies” is the best way to deal with budgetary pressures, while ignoring the possibility that the problem might lie elsewhere (such as executive salaries and expensive construction projects). It takes the administration at its word that staff are a significant drain on resources and that by consolidating (and later eliminating) them we can save significant amounts of money. We know this isn’t true.

Furthermore, no one seems to know what UCS involves because, frankly, it doesn’t actually exist (the Google search below was done the day after the Open Letter was made public: it gives only two hits, both to the letter itself). It doesn’t seem very strategic to invent a name and then, without fully defining it, declare it a useful alternative. An empty term like that could be easily seized and contorted by the administration, in closed-door deals just like they did with AST. There would be nothing democratic about that process.

Some have suggested that the UCS proposal makes it easier for the administration to back down, because they won’t have to admit that they were wrong, just that they picked the wrong process with the wrong consultant. But that’s not enough. If we want to roll back AST permanently, we need the administration to fully acknowledge that this call for austerity is a farce in order to protect ourselves from a repeat in the future.

Decentralizing governance is a great idea, but you can’t do it halfway. The UCS proposal reproduces the same top-down hierarchy of the status quo that got us into this AST mess to begin with. Take a look at the proposal, as outlined in the letter:

“Once the Central Administration has established the general fund budget for each school/college for the next five years, each Dean should assemble a 10-person committee composed of faculty, staff and administrators to develop a strategy aimed at maximizing the productivity of that school/college. Some schools/colleges may decide to move the process down to departments or groups of departments. The committee may consider the elimination of certain activities or functions because of low academic/financial return, the reorganization of services, as well as the local centralization of services if judged to be advantageous to the overall productivity of the unit. . . . The proposed strategy undergoes a vetting process by inviting input from faculty, staff and administrators. It is then submitted to the Dean, who, as the administrative officer of the unit, has the authority to modify it as he or she sees fit.”

In other words, the administration remains at the top, making all budgetary decisions, setting all the goals, and creating all the committees. Furthermore, the administration retains the final word—all decisions made by committees can be “modified” at will. Finally, both undergraduate and graduate students are explicitly excluded from the decision making process- it is inherently undemocratic and covert. All of this is unacceptable. Do we really want the people who rammed through AST behind our backs, using gag orders and manipulation, to stay in charge of the process?

Submitting to this process of “staff consolidation” does not serve us, regardless of what it is called, and we should reject it unequivocally.

The University of Michigan, Accenture, and Shared Services/AST

SUM has received the following report, written by an Ad Hoc Research Committee of U-M Alumni and Graduate Students, on the University of Michigan’s relationship with the multinational consulting and outsourcing firm Accenture. Talk about conflicts of interest! We are not the authors of the report, but we republish it here as an expression of the kind of changes and restructurings that are happening at public universities today as they become increasingly tied to and dependent on Wall Street and corporate models of management. From the perspective of SUM, the problem is not Accenture alone—any other consulting firm would be equally terrible—but the approaches, objectives, and priorities of the university administration. To find out more about “shared services”/AST and the financialization of the university, come to our teach-in on Friday, November 22 [Facebook event].

Report Regarding the University of Michigan ́s Risk in Continuing the Contractual Relationship with Accenture, LLP and Any of its Past or Present Executives

Prepared by Ad Hoc Research Committee of University of Michigan Alumni & Graduate Students

November 18, 2013

REPORT SUMMARY

This report generated by both Alumni and Graduate Students at the University of Michigan presents evidence from the public record showing that the University of Michigan ́s continuing contractual relationship with the firm Accenture, LLP and/or any of its past or present executives potentially threatens the financial viability and prestige of our beloved University.    Our research comes from sources available to the University of Michigan community, including the global network of Alumni. This record includes local, state, and national newspapers, municipal and government websites at all levels, online IT trade magazines and blogs, legal reports of published court cases, as well as official publications from Accenture.

Up to now, the University has been able to remain financially secure in the face of economic crisis. Recent announcements regarding a transition to “shared services” have prompted closer scrutiny of Accenture from University of Michigan Alumni and Graduate Student Researchers from around the globe about Accenture and its ability to carry out such major changes at what historically has been a financially healthy University. We have questions about the ethics, legality, and financial justifications for the contracts made with Accenture since 2009, particularly the hiring of Rowan Miranda, a former Accenture executive, as the Vice President of Finance for the University. Our multidisciplinary team has documented a disturbing pattern of problematic past performance on the part of Accenture in multiple U.S. States, the federal government, and the United Kingdom. This pattern suggests the company cannot be trusted with the University of Michigan ́s financial management, its IT systems, or with other sensitive information that makes our University so highly ranked. Furthermore, we are concerned that the University ́s relationship with Accenture could damage the prestige of our University and create potential future legal liabilities.

COMMITTEE FINDINGS

Our research-based findings and recommendations for immediate Administrative action are as follows:

  • Any continuing relationship that the University of Michigan has with past or present executives of Accenture should be discontinued. This includes immediate replacement of Rowan Miranda, Vice President of Finance, in order to avoid potential financial and legal liability. The conflict of interest resulting from Rowan Miranda ́s former position as an executive partner at Accenture makes it impossible for him to make any credible decisions on University finance and IT issues. We recommend his immediate replacement in order to avoid potential liability and harm to the University ́s prestige.
  • After having already received over $22.5 million from the University of Michigan, Accenture has demonstrated a record of underperformance; this record falls in line with a pattern of Accenture ́s performance in other contracts with public and private entities in the U.S. and in the United Kingdom. This pattern consists of underperformance and/or damaging performance coupled with ballooning costs over the time of the contract.
  • Past, recent, and ongoing litigation against Accenture show the company ́s participation in corrupt practices including fraud, defective pricing schemes, misappropriation of trade secrets, bid-rigging, and the illegal “harvesting” of IP data from its clients. This makes it clear that the University of Michigan ́s contract places the University ́s well-being at risk.

Conflict of Interest with Accenture and Any of its Past or Present Employees

The lack of transparency surrounding the University of Michigan’s contractual relationship with Accenture is troubling, both because it limits the ability of the community to weigh in on the changes taking place at the University, and because such opacity can be extremely costly. One of the most troubling aspects of the University’s relationship with Accenture is the role played by Rowan Miranda, the Associate Vice President of Finance, and, from all reports, the driving figure behind AST (Administrative Services Transformation) and the Accenture contract. Prior to coming to Michigan, Miranda served as an executive partner at Accenture, the firm that was hired to provide AST services at Michigan. Miranda’s past employment relationship with Accenture creates an intolerable conflict of interest. Accenture ́s contracts with the university expanded markedly from the outset of Miranda ́s tenure with the University, raising the specter of a serious conflict of interest. Such conflicts of interests are in direct violation of University policies. More importantly, similar conflict of interest cases involving Accenture have been documented in Ohio and Massachusetts, where public state officials have admitted to steering state contracts towards the company. The Administration must assess this conflict of interest together with Accenture ́s problematic pattern of performance as well as its record of corrupt practices discussed below.

Risk to The University Of Michigan

While the University has already paid Accenture over $22 million dollars, little information has been provided about the work the outside consulting firm has done, let alone information about the value the firm has added to the University. Much more documentation must be provided by the Administration to explain the direct benefits to the University, before any further payments are made. We understand that the University of Michigan IT Governance Council concluded in 2011 that “The savings Accenture estimated are not as large as expected when the details are taken into consideration, and the costs are greater than expected for the same reasons.” These reduced savings estimates from 2011 to 2013, documented by different Administration officials, are part of a pattern in Accenture’s engagements with public institutions.

We have found a systematic bias in Accenture’s claims about savings and costs in such contracts, where costs are underestimated and savings are inflated. This has led to significant financial losses to its clients, and in the case of some public sector clients, irreversible injury to the citizens they are meant to serve, such as inability to access Medicaid in a timely way due to botched enrollment systems or problems with timely voter registration. Accenture’s failure to accurately estimate savings is evident in its relationships with universities, with the case of Miami University being particularly striking. We also are monitoring closely what is happening with the highly controversial Accenture contract at the University of Texas at Austin.

REVIEW OF PUBLIC RECORD

The following cases document performance problems on the part of Accenture that resulted in significant losses to their clients, together with immeasurable damage done to the public who depended on crucial services:

  • British Gas Case: In 2010, the customer billing system of the United Kingdom ́s biggest supplier of gas and electricity was damaged when Accenture delivered a faulty IT system that affected 12.5 million customers. British Gas parent Centrica sued Accenture for £182 million claiming that the billing system Accenture implemented was fundamentally flawed and caused “huge disruption” for the company and its customers. British Gas alleges that errors in the system caused large billing problems and that 770,000 frustrated customers left the company directly as a result of the problem. The public record suggests that litigation may be ongoing in this case.
  • U.K. National Health Service and E-Voting Cases: In December 2003, the U.K. National Health Service contracted with Accenture for US $3.3 billion over 10 years to digitize medical records and carry out 80% of an IT overhaul. Accenture cited sub- contractor delays to explain its failure to deliver services it had been paid for by the U.K. government between 2004 and 2006. It took the U.K. government nine years to recognize that the mass centralization Accenture organized did not reduce cost; rather, it killed flexibility and diminished public confidence in the U.K. government. Accenture ́s handling of the implementation of an e-voting system also invoked controversy.
  • State of Texas: In 2005, Accenture entered into a $500 million contract with the State of Texas’s Department of Health and Human Services in which the company contracted to operate the state’s food stamp authorization system, the Children ́s Health Insurance Program, and Medicaid enrollment call centers. Accenture was then to get $899 million over a five year period of implementation. The Project fell behind schedule, cost $100 million over budget, and did not meet performance requirements. Accenture ́s performance left thousands of poor Texas families without much-needed aid to feed their families. By 2007, Texas terminated Accenture ́s services after having paid the company $243 million dollars.
  • Ongoing Litigation Concerning Accenture ́s Pattern of Ballooning Costs and Nonperformance: In a 2013 lawsuit filed in U.S. District Court in Atlanta, ScanSource sued Accenture, alleging fraud and misconduct. A software project estimated to cost $17 million over 11 months instead mushroomed to $37 million over three years. ScansSource claims it still does not have the promised software up and running. Accenture has estimated it will cost $29 million more to complete the project, according to ScanSource’s lawsuit.
  • State of Colorado: In 2002, Accenture entered into a $40.8 million contract to re- engineer the Colorado unemployment insurance system, which was to be deployed in 2004. The state terminated the contract in December 2005. Accenture had to refund $8.2 million of the $35.7 million paid for the system. In 2004, Accenture received another $10.5 million contract from the State of Colorado to design a centralized voter system (CVRS) in accordance with the Help America Vote Act (HAVA). Accenture failed to meet the deadline set by the law, and the contract was terminated. Accenture agreed to refund the money in exchange for state officials agreeing not to publicly criticize the vendor.
  • State of New York: In 1996, Accenture entered into a $37.5 million contract to develop software used to manage child welfare programs that was to be completed in September 1997. The System was not fully operational until September 2005 with final costs estimated at 300% of original estimates.
  • State of Wisconsin: In November 2004, Accenture received a $13.9 million contract to design, develop, implement, and maintain a HAVA-compliant CVRS. The System was error-prone, and Accenture missed the HAVA deadline. The Contract was terminated in December 2007 because Accenture fell behind schedule. A major controversy developed around alleged corruption in the contract formation stage as well.
  • State of Wyoming: In February 2004, Accenture received a $3.9 million contract for HAVA-compliant CVRS (state-wide voter registration system). It failed to meet the deadline. The Contract was terminated with Accenture having to return most of the money it received.

The following cases demonstrate problematic performance on the part of Accenture that resulted in significant breaches of security data of both public entities and private citizens:

  • State of Connecticut: In 2007, the State of Connecticut sued Accenture for negligence, unauthorized use of state property, and breach of contract in what then Governor M. Jodi Rell called an “unfathomable breach of security.” Both Ohio and Connecticut had hired Accenture to develop computer systems integrating payroll, accounting, personnel, and other fiscal functions. A computer backup tape containing bank account and other unencrypted sensitive financial data for nearly all of Connecticut ́s state agencies was stolen from an Accenture intern ́s car in Ohio. The company apparently used a template for both projects and accidentally mixed data. The tape contained the names and numbers of 440 checking, money market, treasury, savings, and other types of accounts held by the State of Connecticut. It also held memoranda, instructions, and files related to Connecticut’s new computer system. Perhaps even more alarming was that it contained the private identifying information of 58 Connecticut residents and 1.3 million Ohio residents.
  • State of Florida: In cases involving voter registration databases in the early 2000s in Florida, Accenture ́s performance was full of widely-publicized glitches including an error-prone felon purge list, discarded after the court forced its disclosure. The Miami Herald discovered that Accenture had wrongly included 2,119 names on its list for the November 2004 election. The significant cost to public citizens are immeasurable in this case.

A Pattern of Impropriety on the Part of Accenture

Not only are we concerned about Accenture ́s ability to complete its contractual duties in a timely and cost-savings manner as promised, we are alarmed by lawsuits in federal court that implicate Accenture in corrupt practices:

  • Misappropriating trade secrets of a corporate client: In 2013, the U.S. Court of Appeals for the 5th Circuit ruled in the case of Wellogix, Inc. v. Accenture, LLP (716 F.3d 867) to uphold a Texas jury ́s verdict against Accenture for $26.2 million in compensatory damages and found that Accenture should pay $18.2 in punitive damages for misappropriation of trade secrets. Wellogix, Inc. had entered into six confidential agreements with Accenture, which had access to trade secrets uploaded in a confidential portal. Accenture ́s emails spoke of “harvesting IP” from Wellogix while they were engaged in a confidential partnership.
  • False Claims Act Whistleblower Lawsuit Against Accenture: Accenture agreed to pay the U.S. Government $63.7 million to settle a False Claims Act whistleblower lawsuit filed in the U.S. District Court for the Eastern District of Arkansas by a former manager of Accenture and a partner at another consulting firm. The lawsuit alleged that Accenture “submitted or caused to be submitted false claims for payment under numerous contracts with agencies of the United States for information technology services” and that Accenture had “received kickbacks for its recommendations of hardware and software to the government, fraudulently inflated prices and rigged bids in connection with federal information technology contracts.” According to Tony West, Assistant Attorney General for the Justice Department’s Civil Division “kickbacks and bid-rigging undermine the integrity of the federal procurement process.” He also advised that “at a time when we’re looking for ways to reduce our public spending, it is especially important to ensure that government contractors play by the rules and don’t waste precious taxpayer dollars.”

CONCLUSION

The Ad Hoc Research Committee of University of Michigan Alumni & Graduate Students has documented multiple concerns regarding the University ́s contractual relationship with Accenture including:

  • An ongoing conflict of interest at play in Rowan Miranda ́s employment as Vice President of Finance for the University of Michigan and his past employment at Accenture.
  • A pattern of impropriety on the part of Accenture that has been documented in federal cases, particularly Federal Claims Act concerns. This pattern includes corrupt practices such as fraud, defective pricing schemes, misappropriation of trade secrets, bid-rigging, and recently, the illegal “harvesting” of IP information from its clients.
  • Indications in the public record that Accenture has a pattern of non-performance and/or disastrous performance in contracts which are of major import to the public. In those cases, Accenture promises to save the public sector millions but fails to deliver or delivers services that are severely under par, resulting in irreparable damage to the public.

Companies with this kind of record should not be permitted to contract with the University of Michigan, taking over financial and IT management in a system that already functions well. Our committee of Alumni and Graduate Students finds that Accenture cannot be trusted to handle any part of administration of the finances or provision of IT services at the University of Michigan, and the University should take steps to end its contractual relationship with the company immediately. Inaction on the part of the Administration together with a lack of transparency threatens the prestige and well-being of our beloved UM.

Teach-In: Fight Financialization at University of Michigan

Update 11/25: The Michigan Daily has a good article about the event: “Teach-in focuses on causes of increasing financialization.” Even the comments are positive!

The recently announced forced “rehiring” of staff, rising tuition, lack of campus diversity, and the university’s ongoing luxury construction all point to a lack of transparency, the absence of democratic decision-making, and an increasing turn towards financialization. Come learn about the challenges we face and ways to get involved!

The teach-in will cover:

– how cash flows through the university and how these flows affect the students
– the implications of “staff consolidation” for university workers and services
– the impact of luxury projects like the Munger Dorms
– next steps to collectively build an inclusive, accessible university

The teach-in will be held in 1014 Tisch Hall on Friday, November 22, from 5-7 pm. There’s also a Facebook event.

Where Does the Money Go? The Victors for Michigan Campaign and the University’s Dirty Secret

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Today, the University officially kicks off its newest fundraising campaign, Victors for Michigan, aiming to raise the ambitious sum of $4 billion through private donations. Two of the campaign’s stated goals are to “guarantee that a diverse group of the world’s brightest students will be able to study at Michigan,” and to “serve the public good by collaborating on bold new ideas to solve the world’s most challenging problems.” But can we really trust an administration that is increasingly run by wealthy business interests to make the university more diverse and more affordable? Why would these financial interests want to “serve the public good”? What do they even mean when they say that?

Despite the recent publicity stir, Victors for Michigan has been accepting donations for about a year now. The recent contributions by real estate magnate, Steven Ross and Berkshire Hathaway Vice Chairman, Charles Munger, respectively, are part of the campaign. If we analyze how the funds from these two donations are being used, we can gain a better understanding of what the real goals of the campaign might be. Ross’s highly publicized $200 million donation went entirely to two places: the football team and the business school. Sports are great: they provide students with an opportunity to relax and relate to each other. At the same time, Michigan has one of the only football programs in the country that turns a profit and the team is already very well funded. Surely the money would have been applied more productively if it were used to lower tuition or fund scholarships.

If the goal of the campaign is truly to “serve the public good” then why accept a donation to the already well-funded business school? Isn’t it the business class that has destroyed the environment, corrupted our democracy and created massive levels of inequality? If the goal is to serve the public good, Ross’s donation could have gone to faculty, students and programs studying social justice and environmental sustainability, among many other areas in need of funding. Ross—who is the campaign’s chair—clearly isn’t committed to its “goals.”

If Ross’s donation is problematic, Munger’s is baffling. A billionaire oligarch, Charles Munger recently gave $110 million to build an unneeded—and unwanted—graduate student dorm based on laughable blueprints that would stuff seven people into every apartment. If you are a graduate student, or if you know anyone who is, then you know that most are adults who do not want to live in dorm-style apartments. Beyond that, the predicted price tag of a room would be $1000; this is 77% of what a GSI earns in a year teaching at the University. Even more outrageous is the fact that the university is taking out $85 million in bonds to finish the project and borrowing against undergraduate tuition. All of this so Munger can have his name on a building. How does spending $185 million on this ridiculous project promote the public good or make the University more affordable?

In the end, the university’s rationale for the campaign relies heavily on a narrative of state defunding. For example, as a Detroit News article relates, “President Mary Sue Coleman called the campaign ‘audacious’ and said no gift is too small since universities need philanthropy with states no longer able to support them to the degree they must for schools to be globally competitive.” This narrative seems difficult to square with the actual role of the endowment in funding university operations. The endowment contributes only 4.5% (of its total holdings) to the general operation funds of university each year. The principal stays invested. Thus, if we look at the breakdown of revenue sources at the university in 2010 the endowment contributed only $253 million. Student tuition however generated over $1 billion, while state funding totaled $315 million.

The endowment clearly has very little to do with making up for lost state funding. Its purpose lies elsewhere. And that elsewhere is in the university’s move to behave more and more like a hedge fund, mobilizing donated capital to secure new revenue streams. It does this by taking advantage of its tax-exempt status to build up a hoard of money that it then invests around the world in shady funds and places it would rather the university community did not know about. In so doing, the university is slowly becoming an important player on Wall Street but to play with the “big boys” it needs more and more capital, which requires constant fundraising campaigns. This money is destined for investment not students. Little of it will ever reach students in the form of scholarships or be used to offset increases in tuition.

This then is the dirty secret of the university: the real money that circulates through it is primarily student tuition and, as a result, student debt. No number of high profile or “mom n’ pop” donations is going to make that fact disappear. Why? Because to lower tuition significantly without making major changes to its business model (i.e. stopping its construction spree or eliminating costly administrative bloat), the university would have to raise between $500 million and $1 billion in donations every single year for the rest of its existence.

Organizer Training on Sunday, 11/10

We wanted to let everyone know about our upcoming organizer training on Sunday, November 10, from 1-4pm. It’ll be held at Vail Co-op, which is located at 602 Lawrence St [map].

This event will be a great way to get involved with SUM! It will give you the tools to jump in and join the struggle for a student-worker-run university here at UM. Here are some of the issues and skills that will be covered:

– A brief overview of the corporatization and financialization of the public university.
– A walk through of how to organize through conversations and relationships.
– An introduction to effective research (where to look for things the university tries to hide, how to build strong arguments against the university’s claims, etc).

We hope you’ll consider joining us. The main projects we’re working on these days include opposition to the university’s debt-fueled Munger Grad Dorm and pushing for student representation on campus. We’ll need your help to win!