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Tuesday, July 31st, 2012

Predatory For-Profit Colleges Pay Executives Based On Corporate Profitability, Not Student Outcomes

Author:     PAT GAROFALO
Source:     Think Progress
Publication Date:     Jul 30, 2012 at 9:35 am
 Link: Predatory For-Profit Colleges Pay Executives Based On Corporate Profitability, Not Student Outcomes
Stephan:   All these privatization schemes, be it prisons, schools, or hospitals, have only one real priority -- profit. People do this because they think they can make large sums of money. In every case, inevitably profit conflicts with the supposed actual purpose of the project, and purpose is compromised. Privatized prisons, schools, and hospitals, study after study has shown, always cost tax payers more, and most produce inferior outcomes. All of this arises from the fantasy that government is 'bad' inherently, and can never do anything well. This is a complete contradiction to what the Founder's believed and tried to create... but who cares about facts. It is hard to believe anyone believes such nonsense, but millions do, and it is destroying the country.

According to preliminary findings of an investigation by Rep. Elijah Cummings (D-MD), the ranking member of the House Committee on Oversight and Government Reform, many for-profit colleges pay their executives based almost exclusively on corporate profitability, without taking into account student outcomes. Cummings’ office received documents from 13 for-profit schools, which showed just where the schools place their proirities:

The documents obtained during the course of this investigation indicate that the single most significant measure for determining executive compensation at these schools is corporate profitability, including factors such as operating income, earnings, profits, operating margins, earnings per share, net cash flow, and revenue. Companies use various combinations of these factors to determine the majority of executive compensation.

As discussed below, some companies provided no documents demonstrating links to student achievement when determining executive compensation, other companies provided documents with vague references to student achievement, and other companies provided documents that included specific compensation percentages linked to student performance measures. In all cases, however, the majority of compensation paid to company executives is based on measures relating to corporate profitability rather than student achievement.

As ThinkProgress has documented, predatory for-profit schools rely heavily on taxpayer dollars […]

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