Wisconsin’s Way Out of UCLA’s Taxable Hotel Dilemma: But We Really Have to Hurry!

In an earlier post today citing an online lesson from Stanford, we pointed to UCLA’s hotel tax dilemma. We learned about Unrelated Business Income (UBI) and Unrelated Business Income Tax (UBIT). It appears that much of the proposed use of the UCLA hotel is in fact taxable and yet commercial-type business is forbidden in the UCLA case due to the way the hotel is to be financed.

Now some readers might say that our blog just harps on the negative side of the UCLA hotel proposal and never offers anything positive. That isn’t really true since we did offer a realistic alternative to the proposal until UCLA got the donors to write a letter saying it was the hotel or nothing. So – searching for a solution – we continued our internet exploration and have found a way out for UCLA, courtesy of the University of Wisconsin.

The University of Wisconsin, like Stanford, has posted online guidance on the tax issue. But Wisconsin provides the one example in which a university hotel can take the kind of business UCLA proposes and yet not be taxable. Below in italics is the example from Wisconsin for a hypothetical university hotel that could be nontaxable:

A University receives an off-campus restaurant as a gift. The restaurant is managed and operated by students in Hotel/Restaurant Management. (Not taxable because contributes importantly to the educational mission.)

Source: http://www.bussvc.wisc.edu/acct/policy/rpa/rpa2ops.html

So there you have it. All UCLA needs to do is create a new School of Hotel Management and degree and use only hotel school students (free labor!!) to staff the proposed hotel for college credit!

Of course, any such school and degree program will need Academic Senate and Regents approval before the September Regents meeting where the final approval for the hotel project is to be on the agenda. But since the Regents are in a mood now to approve anything related to the hotel, getting a rubber stamp approval for a new school should be no problem. And since UCLA’s administration likes to say that the Academic Senate is just fine with the hotel plan, the powers-that-be on campus shouldn’t have any problem getting quick Senate approval for the new Hotel Bachelor of Management(HOT-BM) degree.

Such a simple idea! I know you’re asking:

Seriously, folks, when the September Regents meeting rolls around, check to see if there is presented any solution to the tax problem.

UCLA Among Top 10 Universities in R&D Spending in Fiscal Year 2010

Inside Higher Ed reports that UCLA is among the top ten universities in research and development spending. It has been in that group for some time. Basically, the key determinants are having a med school and getting a lot of federal research funding.

The top ten are:

Johns Hopkins
U of Michigan (Ann Arbor)
U of Wisconsin (Madison)
U of Washington (Seattle)
Duke
UC-San Diego
UCLA
UC-San Francisco
Stanford
U of Pennsylvania

Data from http://www.insidehighered.com/quicktakes/2012/04/02/hopkins-again-leads-rd-spending. There is a link in this article to NSF data. When you click on the link to the article, go to Table 5.

It’s good to be among the tops:
[youtube=http://www.youtube.com/watch?v=i6oGytt0Hiw&w=320&h=195]

Invasion of the Body Snatchers (in Wisconsin legislature)

Apparently, a strange race of beings has taken over the Wisconsin legislature. They look like ordinary people but…

Plan Would Force U. of Wisconsin to Return $39-Million in U.S. Broadband Grants

June 8, 2011, Marc Parry, Chronicle of Higher Ed

A budget approved by a legislative committee last week would force the University of Wisconsin to return $39-million in federal grants awarded to expand high-speed Internet access across the state, state education officials said. The plan would also require all University of Wisconsin institutions to withdraw from WiscNet, a nonprofit network cooperative that services the public universities, most of the technical and private colleges in Wisconsin, about 75 percent of the state’s elementary and high schools, and 95 percent of its public libraries, according to David F. Giroux, a spokesman for the university system.

The surprise changes were included among a series of amendments to a bill containing the university system’s 2011-13 budget. Those amendments—you can find the actual language starting at No. 23 in this motion—were approved by the State Legislature’s joint finance committee on Friday. But the full budget has yet to be passed by the Republican-led legislature or signed by the Republican governor, opening a window for libraries and others to fight back against the plan.

…The assault on WiscNet, which operates under the auspices of University of Wisconsin at Madison, follows the state’s adoption of a law in March denying collective-bargaining rights to the university system’s faculty and academic staff—a measure that remains tied up in court. It also comes as the Obama Administration is awarding tens of millions of dollars to the national university networking community to expand high-speed Internet access around the country.

The University of Wisconsin is the biggest consumer of services provided by WiscNet. Forcing its campuses to pull out would threaten that network’s survival, state education officials said. “The provision in this legislation will very likely make it impossible for WiscNet to continue offering Internet access,” Mr. Evers said in his memo. “If our schools and libraries must use other Internet providers, most will pay at least two to three times more than what WiscNet now charges.”

Republican lawmakers told the Wisconsin State Journal that the university should not be in the telecommunications business. Telecommunications companies themselves cast the debate as a question of competition. Bill Esbeck, executive director of the Wisconsin State Telecommunications Association, was quoted on Channel3000 saying that WiscNet should be allowed to run only without financial support from the University of Wisconsin.

“WiscNet can continue to offer services, but in the future they are just going to do that on a more level playing field with the private-sector options that already exist,” Mr. Esbeck said.

Another provision in the plan would bar any University of Wisconsin campus from participating in advanced networks connecting research institutions worldwide, according to Mr. Evers’s memo. For example, the Madison campus would have to withdraw from Internet2, a high-speed networking consortium, said Mr. Giroux.

As for the $39-million in federal grants, they were awarded to two efforts: one involving the flagship campus, and another through the University of Wisconsin-Extension. The money is to expand broadband connections for health-care providers, public-safety agencies, community organizations, and schools, among other projects. Some of the money has already been spent, Mr. Giroux said, but he did not have specific figures this afternoon.

Full article at http://www.linkedin.com/news?actionBar=&articleID=566937558&ids=0UdjkTcPASdzkIejwMd3wMdzoRb3kRczwQc3sSdiMVdzgPc3sSdzkIdPoTdzoVdzoR&aag=true&freq=weekly&trk=eml-tod-b-ttle-68

The U of Wisconsin Email Case

Inside Higher Ed today carries a story on the request in Wisconsin for emails of a history professor by the state’s GOP in relation to the passage of anti-union legislation in that state. Wisconsin has a state equivalent of the federal Freedom of Information Act – as does California.

One take-away from this episode is that faculty should not assume emails are private communications. Even if you use an outside service such as gmail, your communications can be forwarded around and wind up on services which are subject to outside scrutiny. Undoubtedly, UCLA would take a position similar to the U of Wisconsin’s on emails but notions of privacy are clearly eroding.

As yours truly has noted in the context of publication of faculty salary and benefit information by name, the university – UC in that case – has not aggressively pointed out the dangers that such information can create for identity theft and other such improper activity. It should be noted that private universities – with which UCLA competes for faculty – are not subject to such requests for internal records. The public-private distinction is eroding as tuition increases. This blog has noted that roughly 7/8th of the proposed UC budget does not come from the state.

Wisconsin Stands Up for Professor

April 4, 2011, Inside Higher Ed, Doug Lederman

If the Wisconsin Republican Party’s perceived attack on the academic freedom of a prominent faculty member at the University of Wisconsin at Madison was seen as a test for Chancellor Carolyn A. (Biddy) Martin — with some wondering whether Governor Scott Walker’s backing of the university’s push for autonomy would compel her to hold her tongue — she appears to have passed. Martin and the university on Friday partially complied with the state open records request that a staff member of the Republican Party of Wisconsin filed last month seeking e-mails sent and received by William Cronon, a historian at Madison whose high-profile writings about Walker’s crackdown on public employee unions had drawn scrutiny from the governor’s allies…

Martin’s own statement to the campus on the matter, while acknowledging the need for professors and the university to obey the law, went further in declaring the extent to which academic freedom is at stake in the case.

“When faculty members use e-mail or any other medium to develop and share their thoughts with one another, they must be able to assume a right to the privacy of those exchanges, barring violations of state law or university policy,” Martin wrote. “Having every exchange of ideas subject to public exposure puts academic freedom in peril and threatens the processes by which knowledge is created. The consequence for our state will be the loss of the most talented and creative faculty who will choose to leave for universities where collegial exchange and the development of ideas can be undertaken without fear of premature exposure or reprisal for unpopular positions.”…

Full article at http://www.insidehighered.com/news/2011/04/04/wisconsin_chancellor_cites_academic_freedom_in_shielding_e_mails_from_records_request

More on the Other Wisconsin Story

Inside Higher Ed has been tracking the story of the pursuit by the University of Wisconsin-Madison for more autonomy from the larger U of Wisconsin system. That story has been submerged due to the controversy over the collective bargaining issue. As prior posts on this blog have noted, this effort has the support of Governor Walker but has not been cheered by the system’s regents. In fact, they were opposed.

However, today’s Inside Higher Ed notes that the system’s regents have now come up with their own plan for more autonomy of the campuses, reproduced below. But, as the bold text towards the bottom indicates, they clearly don’t want substantial campus autonomy.

From the UC perspective, this other Wisconsin story suggests a path our system might end up following in the face of continued budgetary pressures.

= = =

FOR IMMEDIATE RELEASE

March 10, 2011

“Wisconsin Idea Partnership” proposes flexibility for all campuses

Facing $250 million in cuts, UW institutions need tools to sustain quality and access

MADISON, Wis. – Faced with the challenge of trimming budgets by more than $250 million over the next two years, all University of Wisconsin System institutions need new managerial flexibilities to preserve educational quality and maintain broad college access.

The UW Board of Regents today officially endorsed a new proposal – the Wisconsin Idea Partnership – that would build on Governor Scott Walker’s proposal to offer new operational freedom to UW-Madison. The new proposal would preserve the core features and benefits for the flagship campus, while extending the new flexibilities to all UW campuses as part of a unified system.

UW System President Kevin P. Reilly noted that Governor Walker has expressed interest in helping all UW campuses benefit from new administrative flexibilities.

“The good news here is that Governor Walker recognizes that universities need to do business differently. We’ve been asking for new administrative and managerial flexibilities for years – decades perhaps – and this Governor gets it,” said Reilly. “We want to offer the Governor and the Legislature a way forward that is simple, reasonable, and equitable.”

“We propose an approach that does not require wholesale changes to large sections of existing State Law. We want to preserve the vast majority of language in Chapter 36, including all the shared governance rights of UW faculty, academic staff, and students. We want to be reasonable, so we will not ask for any more flexibilities than what the Governor has already shown he’s willing to do as part of his budget provisions concerning UW-Madison,” said Reilly.

“Most important, we want a budget alternative that is equitable – offering all the management tools to all UW campuses during the 2011-13 biennium. We will put forward a package of statutory changes that gives all UW campuses the necessary flexibilities to manage all the limited resources available, as members of a unified System,” said Reilly.

The Regents formally endorsed the proposal and UW System officials promised to provide detailed statutory language to the Governor’s office and the Legislature before the Joint Committee on Finance begins deliberations on the UW System budget.

Under the plan, each local UW campus would have new statutory authority in budgeting, tuition, human resources, capital planning, purchasing and other functions. Regents want the new framework to include specific performance measures, building upon the UW System’s annual accountability reports.

“We need to be on record supporting these vital flexibilities for all UW institutions, and we need to clearly state our intent to delegate those flexibilities to each institution,” said Regent President Charles Pruitt. “At the same time, we express our firm opposition to fracturing what is arguably one of the best Systems of public higher education in the country if not the world.”

The Board of Regents will discuss the matter again in April at a regularly scheduled meeting to be held on the UW-Platteville campus.

= = =

The document above refers to the “Wisconsin Idea Partnership.” It can be found at:

http://www.wisconsin.edu/assets/growth_agenda/docs/2011-13/2011-03-10_wip-summary.pdf

= = =
We will have to see whether it is the regents or the governor of Wisconsin who get their whey:

More on the U of Wisconsin Autonomy Story

As prior posts have noted, while the current big drama in Wisconsin revolves around Gov. Scott Walker’s plan to curtail collective bargaining for public workers, there is a second story in Wisconsin dealing with the U of Wisconsin. In fact, the two stories are joined. Insider Higher Ed pointed yours truly to Gov. Walker’s budget address given yesterday in which he said:

Competing globally also means enhancing higher education. To do this we will give our flagship, the University of Wisconsin-Madison, the tools it needs to remain a world leader in research and instruction – while continuing to be a driver of economic development for our state. This is a decision that we discussed at length with Chancellor Biddy Martin and the leadership at UW. For the past several years, she and other UW leaders have pushed for greater flexibility. Now they will have it and soon the University of Wisconsin-Milwaukee will as well.

Throughout the budget process I am open to working with lawmakers from both political parties on expanding this concept to the other campuses throughout the University of Wisconsin system. A few weeks ago, I met with all of the UW chancellors and expressed my willingness to work with them and the members of the Legislature to improve our higher education system.

The Regents of the U of Wisconsin system are not happy with the proposal to give special status to one campus (and apparently maybe two campuses).

The full speech is at http://www.wisgov.state.wi.us/journal_media_detail.asp?prid=5668&locid=177

A spokesperson for the U of Wisconsin-Madison later explained what the University wanted:

More Futurology, Courtesy of the U of Wisconsin

In a previous blog entry, we noted another Wisconsin story, different from the one playing out in the capital. This one involves an apparent effort by the flagship campus of the U of Wisconsin at Madison to break away from the rest of the system. The issue for UC is whether, under similar budgetary strains, the same pressures will arise here in the future.

Insider Higher Ed has further developments today. The full story with links to relevant documents is at http://www.insidehighered.com/news/2011/02/23/qt#252043

Excerpt: The president of the University of Wisconsin System, along with the president and vice president of the Board of Regents, on Tuesday sent Biddy Martin, chancellor of the Madison campus, a public rebuke for promoting a plan that they say would separate Madison from the rest of the system. The regents also called an emergency meeting for Friday to discuss the issue. Martin has been pushing (in public, and generally with support from the system) for more autonomy for Madison from various state regulations. But she also has been discussing with Governor Scott Walker, a Republican, a plan that would create more formal independence from the system…

Will it happen here? Futurology is not always accurate:
[youtube http://www.youtube.com/watch?v=_RlxiTalTow&w=480&h=390]

Things to Come for UC?: Wisconsin Debates Separating Madison Campus from Others in System

Insider Higher Ed reports today on the apparent efforts of the chancellor of the University of Wisconsin-Madison to separate from the larger multi-campus system over the objections of the systemwide president. The chancellor is quoted as saying, “In my view, it is dangerous not only for UW-Madison, but for the entire System and the state to have the System administration and the regents oppose the possibility that its flagship campus, or any other campus, be given the tools it needs to preserve quality and contribute to economic recovery…”

The article with links to various related items is at http://www.insidehighered.com/news/2011/02/17/qt#251537

Well, things will work out in the end – maybe…
[youtube http://www.youtube.com/watch?v=bRN6d-QUa5c]