Saturday, May 28, 2011

Turning a profit

The paper raised an interesting question a few days ago about my university.  In 2003, under the previous administration, UCA built a retirement community about a block away from campus and a half-mile from my house.  At the time we were told that this was a growing trend among universities.  Now it has been revealed that the debt incurred to build the 100-bed facility was over $8 million, of which (after a 2006 refinancing), more than $7 million is still outstanding.

Since 2007 the facility has turned a profit -- sometimes small, sometimes large -- but the very idea of a public university operating a business that seeks to turn a profit and competes with private entities doesn't sit well with some in the legislature, who have made inquiries about the propriety of the arrangement.

The article provided details about businesses serving the public affiliated with other universities in the state, from the hotel and restaurant associated with the University of Arkansas's hospitality degree programs, to a retirement home on land leased by the University of Arkansas at Monticello.  The relationships between the businesses and the universities vary, with UCA's facility being owned by the school and exempt from taxes, while Fayetteville's restaurant and hotel get tax breaks for their involvement in training students, and the Monticello home is not owned by the university and gets no exemption.

Lawmakers are uneasy about a university using its privileged position as a public trust to gain a competitive advantage against area businesses.  UCA has responded that it's "common" for public universities to run golf courses, detail clinics, bookstores, hospitals, and other operations that cater to ordinary consumers.

What's your experience with auxiliary businesses being operated for a profit by public universities?  Do you see any problem with such arrangements?  Does it matter whether the business serves as a training ground or provides opportunities to students?  Does this constitute an unfair advantage over the competition?

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