It has been very quiet on the CETI front during the last several weeks – almost too quiet. The negotiators for the California State University went under the sheets in mid February, telling us that they could have the final deal with GTE, Microsoft, Fujitsu and Hughes wrapped up as early as March 1. There would then be thirty days for "campus comment", administered by the same satraps from the central administration who had put the deal together. A hand-picked consulting firm was to write an "independent" opinion attesting to the fairness of the deal, and after fifteen days of synthesis, the CSU Trustees would vote. The privatization of the CSU’s computers and communications systems would be accomplished fact, and the future of the university securely mortgaged ("leveraged") to Corporate America.
Only it ain’t happening. The CSU’s fancy CETI webpage hasn’t been updated in a month, except for a pathetic plan for continuing education of information technology professionals. ("Our plan is to hold some focus groups to see what the plan should be.")
Word leaks out at Chico State and Fresno that the negotiations will drag on until late March, due to some unspecified snags. http://www.csufresno.edu/ait/ceti/update.htm.
Chancellor Reed, who inherited this mess when he took office last month, indicates that the corporate partners were just beginning to learn about the CSU – and accidentally reveals that the education bureaucrats he inherited from the prior regime had been lying all along about the wonderful strategic fit between the CSU and the corporations.
Word is relayed from Academic Senator <Dan.Whitney@sdsu.edu> that Reed thinks CETI a 50-50 proposition, and that Microsoft and Hughes are on the verge of bailing out.
Then we learn that GTE is apparently having its own doubts whether the scheme will ever make a buck. http://www.sdsu.edu/daztec/archive/1998/03/16/file002.html
The San Francisco Chronicle zeroed in on the problems in a March 18th interview with the new Chancellor. http://www.sfgate.com:80/cgi-bin/article.cgi?file=/chronicle/archive/1998/03/18/MN51281.DTL
Now even the voice of the CETI lobby, the Itsinsite Digest <itsinsight@berry.calstate.edu> has admitted the delay. On March 19th the latest party line materialized:
"Negotiations are still underway among the CETI partners: CSU, GTE, Fujitsu, Hughes and Microsoft. The CETI partners are expected to distribute the partnership plans on April 13, 1998. This date will be the kick-off day for the 30 day review period. CETI assessment criteria and feedback guidelines will be issued along with the documents for review. Campus feedback will be sent to the campus President's offices for consideration prior to Presidents forwarding campus assessment comments to the Chancellors Office. "
Anyone want to bet – dollars or donuts – that they’ll make this deadline?
It now appears that even if the CSU negotiators can someday emerge waving a plan they will be in the same position as a cat proudly presenting the mangled body of a field mouse as a trophy to its horrified owners. The reason for failure is simple: CETI makes no sense, and it never made any sense.
The financial numbers are fraudulent: How can CETI offer CSU computers and equipment at a 40% markup and still claim "best possible prices"?
The layers of bureaucracy are appalling: CETI was supposedly needed because CSU couldn’t act fast enough alone, yet the negotiations have now dragged on for almost a year.
And the whole idea of restructuring the CSU around a bottom line profit making entity contradicts the very notion of a public State University.
The CETI propaganda was full of buzz about "public - private partnerships." What the education bureaucrats overlooked, in their desire to become businessmen, is that nonprofit government organizations are fundamentally different from Corporate America. In the spirit of April 15th, the Internal Revenue Service (of all people!) has chosen to reemphasize the differences with a new ruling, explaining what is permitted and what is verboten in deals between nonprofits and the corporate sector.
Although Revenue Ruling 98-15, 1998-12 IRB deals with hospitals, it drives a silver spike through the heart of the CETI-beast. A tax-exempt nonprofit foundation, explains the IRS, will lose that tax exemption if a private party is allowed to control or use its assets for private benefit (except very incidentally as part of carrying out the charitable mission.) A hospital that forms a joint venture with a business corporation will lose its charitable status if it does not control the Board of Directors, if the joint venture does not put charity first and profits last, if the hospital needs permission from the business to start new community health programs, if the managers have links to the private corporation, and if the managers dominate the decision making. The CETI Operating Agreement, as drafted, fails on every count – unless the education bureaucrats can fool the IRS auditors into thinking that three directors out of thirteen means majority control. The bureaucrats will wave around the puppet foundation to no avail: "Taxation is concerned with substance, not refinements of title." The Foundation can’t be a foundation if it doesn’t get IRS blessing, and the California constitution prohibits the state from itself being an active participant in commercial business enterprise.
It’s almost time to start drawing a moral – if indeed it is possible to extract a moral from a farce. Otherwise, we can only look forward to the usual dreary search for scapegoats. What strikes this observer is the level of mendacity within the administrative bureaucracy: the attempt to sell off-the-books financing as "free money", and to dress up the former Chancellor’s faculty-bashing agenda as a technological leap forward. Oh – and there is no plan "B", no idea of how else to move CSU education into the next century, so I guess that the joke is on us after all.
Build Date 3/21/98 Robert H. Daniels Back to Anti-Ceti