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TEL building demands York's money & soul

$88 million project raises questions about privatisation, financial priorities, & governance

by Robert MacDermid

The Teaching Enhanced Learning Building, or TEL Building, still under construction between Seneca College and the Atkinson residence, is already causing controversy about corporate involvement in education, about apparent University secrecy over financing of the building and even about the now less-than-bright future of technology-enhanced learning and all of the issues such experiments raise for students and YUFA members.

The TEL Building is an important component of the University's plans to absorb the double cohort enrolment of September 2003 and beyond as projected enrolments climb in the next decade.

The University has not provided all of the details about the cost and funding of the TEL Building nor the sources of the private partnership money needed to meet the terms of the SuperBuild application. It is not clear what has been given away in return for corporate involvement. Statements from the administration suggest that the project is still changing, perhaps as a result of the search for private sector money.

How we know

Much of what we now know about the TEL financing has come to light as a result of persistent digging by Professor David Noble. His original Freedom of Information request to the Ministry of Training, Colleges and Universities to see the York-Seneca SuperBuild application was denied by the Ministry because York, even though a publicly-funded institution, is not subject to the Freedom of Information Act. While communication with the Ministry might be open to such requests, York claimed that the application contained details that could give an advantage to competing universities applying to the same funding programmes.

The administration stance on the issue suggests it sees York as something like a private company contracting with the government to deliver a service, despite the fact that more than 43% of the University's revenue comes from government grants and just under 40% from tuition payments (see York 2001 Financial Statements p.4). Professor Noble's attempt to see the SuperBuild application was initially denied, then rejected again on appeal and only afterwards was the main part of the application released by York's administration.

A special supplement to the April 2002 issue of the student newspaper The Atkinsonian also pursued the issues raised by the TEL Building.

SuperBuild, P3, and the application

York and Seneca made a joint application to the Province's SuperBuild programme to finance about 68% of the cost of the new building.

SuperBuild is the Harris Government's attempt to centralize all of the province's infrastructure spending, moving it out of ministries and placing it under the control of a single organization. SuperBuild was also intended to realize the Government's philosophy of Public-Private Partnerships (P3) that would force public institutions to seek private sector investors, donors, or even to privatize services.

The York-Seneca proposal was one of the largest grants to universities and colleges. Queen's got $40 million and Western $43 million to expand existing space or construct new buildings.

In line with its P3 philosophy, SuperBuild has a Board of largely private sector members. Two of those, Helen Sinclair and Robert Martin are also members of York's Board of Governors. York Sociology PhD student Jamie Beaton has shown that York's Governors' have more corporate ties than any other Canadian university board. (William Carroll and James Beaton, "Globalization, Neo-liberalism and the Changing Face of Corporate Hegemony in Higher Education," Studies in Political Economy Vol 62, 2000 pp. 71-98)

TEL is not just a building, but an initiative that the application states "responds to demands for graduates in applied science and technology, IT and applied computing, e-business and financial services, the health sector, and communications/multimedia." The proposal also speaks of a "founding partnership" with the York Region Board of Education to develop the Centre for Technology Enhanced Learning Institute that will develop and presumably exploit internet education possibilities.

It is hard to believe that these programmes are as rosy now as they may have seemed two or three years ago. Banks are bailing out of e-commerce, school boards are strapped for cash, hi-tech companies are cutting back or disappearing and the purchasing of technology related equipment is almost at a standstill.

The cost

The York-Seneca SuperBuild application priced the project at $77 million and asked for $52 million. Of the balance, $6.5 million was to come from private funding and $18 million was to be provided by the two institutions. There was no breakdown of how York and Seneca would share this cost but the grant application contained assurances that "preliminary discussions with York's existing bankers (Bank of Montreal) have resulted in a positive assessment of York's ability to finance its requirement..." The grant stated that Seneca has a "financing arrangement with Great West Life." In the spring, York raised $200 million dollars in the private bond market and indicated this money would help finance the new Schulich, and TEL buildings as well as new parking structures.

SuperBuild gave York and Seneca less than they had asked for, about $47 million in total. We now know that the cost of the building has risen to about $88 million as indicated in an open letter from Dean of Arts, Bob Drummond.

Who will pay

The SuperBuild application indicated that $6.5 million would be provided by the private sector. The application even indicated that naming rights to the building would raise $3.0 million, naming rights for large classrooms an additional $1.5 million and the rights to name smaller classrooms and computer labs would bring in an additional $2.0 million.

Sales of naming rights are becoming quite common at Canadian universities and one only has to tour U of T's new pharmacy building to appreciate that everything that is nailed down, even the elevator, can be "named" and thus commodified. I suspect that too often these rights are sold for too small a percentage of the total funding with, in this case, over 90% of the funds coming from the public purse. But we seldom speak of this as being publicly subsidized memorials or corporate advertising.

The University has not released any information about private sectors contributions, although a CD sent to potential donors showed a virtual reality tour of the building with the corporate logos of CanWest Global, Microsoft, Web CT, Motorola, Xerox, Bell, Molson, Novell, Hummingbird, Rogers, Minolta, McGraw-Hill, Adobe, Dell, Silicon Graphics and Hewlett-Packard. One can only suppose that because these logos are included in the virtual tour those must be actual or very likely contributors to the building. If that were not the case, the University might find itself in hot water for implying support through using the logos without permission.

The administration has not yet announced any private partners for the project but maintains it is in negotiation with a number of interested companies and will eventually reach or exceed the $6.5 million. I read these assurances as an indication that fundraising amongst technology and media companies is now a very tough job and the lack of announcements can only mean that a small portion of the needed funds are in hand.

Dean Drummond's open letter says that 'It was decided that a portion (about 11%) of the originally projected building space should be rented out to firms that were described as "incubating" research. The rental income would help defray the higher-than-expected building costs, and the space would revert to the university if and when enrolments required/permitted that change."

The original SuperBuild proposal did not set aside any space in the building for rental to private firms. The application noted that the 27% of the new building would be composed of classrooms, 14% would be new laboratories, 13% would be for faculty offices and 14% would be set aside for administrative office space. Subsequent descriptions of the building appear to change this makeup. It now seems as if rental space may come out of classroom and lab space and either reduce the number of students or else pack them in more tightly. (This is difficult to confirm with the partial information to hand.) Renting space to private companies is not new at York and is common at many other universities. They now occupy space in science buildings and other buildings around the campus and of course in retail outlets.

The original TEL application states that both would share equally in the 4,000 full-time student spaces created by the building. Both partners signed the application and while not stated explicitly, they appeared to be sharing costs equally. Recent comments by members of York's administration have not mentioned Seneca's responsibility for any extra costs. It now appears that the arrangements in the original application have changed and York will be the sole owner of the building and Seneca a tenant. How this will affect the use of the building and why Seneca withdrew from the project are both unclear.

Seneca's withdrawal from joint ownership of the TEL building also means that York must now supply all of the funding gap between the SuperBuild money and the final cost of the project. That would leave York responsible for providing from its own resources and from the private sector something like $41 million, assuming that the final cost stays at $88 million. This is a much larger sum, possibly as much as three or four times larger than what York committed to in the original application. This may have been part of the reason for borrowing $200 million dollars in the private bond market.

The added costs of the TEL building above and beyond the original SuperBuild application have significantly added to York's long-term debt. The interest costs of carrying that long-term debt will surely increase as a percentage of total expenses. The 2001 Annual Financial Statements show debt servicing costs declining over the last few years to about 2.0% of total expenses. It would be surprising if that number did not double in future years even if some of the new borrowings are used to retire higher interest loans and mortgages.

Will the financing of the TEL building and other new buildings at York have an affect on academic budgets or are we already feeling those affects? We have Dean Drummond's statement that "the cuts planned for the period 2001-2005, do not in my opinion derive from the decision to seek new buildings". That question probably needs some more detailed answers, ones that might be sought through the Joint YUFA administration committee on Financial Information (FISC).

Curriculum control

A York-Seneca pamphlet designed to solicit contributions from private sector partners eagerly notes that "your contribution can launch a new business relationship with both a university and a college. And create a piece of the future." The pamphlet also implies that those who contribute can

"Help shape and keep programs current with your business sector through advisory committee opportunities."
"Access a targeted pool of well educated and highly trained graduates."
"Get in on the ground floor of education with your company's new technology."

It is hard to know whether this is just the hopeful prose of a fundraiser trying to sell an investment opportunity with a very uncertain return or whether it is more.

A few university programmes and many college programmes have outside advisory committees and these may be a good thing where applied skills are a large part of a student's education. My limited experience with such committees suggests that they are usually put together by the programme itself. While large donors may be on advisory committees, Mark Nathanson is on the Advisory Board of the Mark Nathanson Centre for the Study of Organized Crime and Corruption and Seymour Schulich is on the Dean's Advisory Council of "his" business school, making a contribution to the school or programme is not usually the only criterion for being a member. Now of course, the possibly throw away line on the pamphlet does not say that donors will automatically have a place on an advisory committee. But if that implication is wrong, there may be some upset donors.

Perhaps a sentence or two in a fundraising pamphlet is not the evidence of a full-scale assault on academic freedom, but nonetheless, it does make one wonder why such questions did not arise for those directing the project.

Conclusion

Is TEL the Trojan horse for corporate involvement and internet learning? Probably not on its own. More likely it is the product of provincial education policies and incentives that began more than ten years ago and have accelerated under the current government. I do not think that York's administration has embraced these incentives any more eagerly than elsewhere, but the end result, whether they are aware of it or not, may well amount to a kind of privatization by stealth.

There will still be a public education system but it will begin to look increasingly like a private system as the needed private sector investment at the margins increasingly drive the look and high-profile pursuits of campus programmes.