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Supreme Court Hears Arguments in Research Patent Case

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On Monday, the Supreme Court heard oral arguments for Stanford University v. Roche Molecular Systems et al.. At issue is whether the Supreme Court will agree with the argument made by research institutions to expand the current interpretation of what is known as the Bayh-Dole Act (1980’s University and Small Business Patent Procedures Act), which requires that royalties received from patents awarded based on federally funded research are retained by universities and used to fund research, education, and payments to inventors.

The case originated as a dispute between Stanford University and Roche, a company that required a Stanford researcher to sign a consultant agreement  containing language regarding patent rights (“do hereby assign”) that was stronger than the language contained in the Stanford contract he had signed a year earlier  (“I agree to assign”). Stanford sued Roche in 2005 after they refused requests to acquire a license to Stanford’s patents relating to the researcher’s work.  A federal district court initially ruled in Stanford’s favor, but that ruling was overturned by a federal appeals court, which determined that the Roche contract language  superseded the Stanford contract language, giving Roche a rightful patent claim.

While universities can be more careful with contract language going forward, a Supreme Court decision in favor of Roche could call  into question decades of patents that have provided billions of dollars in royalties to institutions. At the urging of the President and Justice Department, the Supreme Court agreed to hear the case. In addition to the support of the Obama administration, many institutions and organizations have filed amicus briefs. Notably, former Senator Birch Bayh, co-sponsor of the Bayh-Dole Act in question, filed his own amicus brief emphasizing that the federal legislation was never meant to allow ambiguity about whether universities had exclusive rights to patents generated by federal funded research.

Monday’s oral arguments provided no clear indication of how they might rule in the case. A decision is expected by July.

Federal Budget Proposals Affect Higher Education

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The UW Office of Federal Relations has posted detailed summaries of how recent federal budget proposals may affect higher education. As the House Republicans propose major spending cuts for FY 2011 that target Pell grants and funding for federal agencies that support academic research, President Obama has released a FY 2012 proposal that largely protects financial aid and research and development.

Visit Federal Relations often for updates on federal budget negotiations.

Are the States Alright?

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You may have read a widely circulated New York Times article today concerning the possibility of the federal government creating a pathway for states to seek protection in federal bankruptcy court if their debt burdens spiral out of control. Some policymakers think that the severe economic strain created by the Great Recession has revealed deep structural problems in state budgets that may be unfixable without intervention.

However, in Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Created Unnecessary Alarm, the Center on Budget and Policy Priorities puts current state budget woes in historical perspective, and emphasizes that, while the near-term future for state budgets across the country remains grim, we must exercise caution in conflating the short term problems caused by the recent recession with the very long term structural issues associated with revenue systems and pension plans.

Supreme Court Decision on Medical Residents Upholds Status Quo

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As reported by Inside Higher Ed and many others, the Supreme Court decided this week that medical residents do not qualify for student payroll tax exemptions and must pay into social security and medicare as other employees do.

This ruling upholds U.S. Department of Treasury regulations issued in 2004, which the UW has been in compliance with since. Had the ruling gone the other way, medical residents across the country would have been reimbursed for taxes collected since 2005, and their institutions would have been able to cease collection in the future.

Federal Scrutiny of For-Profit Colleges Turns to Recruitment of Veterans

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Senator Tom Harkin, Chairman of the US Senate HELP Committee, has released another report on the practices of the for-profit higher education industry, this time focusing on whether or not such institutions are taking advantage of US veterans in an effort to capture newly increased GI Bill education benefits (read our earlier posts on this issue: Senator Tom Harkin and the HELP Committee Continue to Investigate For-Profit Colleges, and  Under Federal Fire, For-Profit College Point Finger at Publics).

The New York Times published Wednesday a detailed article on this topic, Profits and Scrutiny for Colleges Courting Veterans, that included a host of primary source documents.

Senator Harkin has moved a hearing on the topic from early December to a yet to be determined day in early 2011. Because the Senate will remain in Democratic control, Harkin will continue as Chairman of the HELP Committee and is expected to carry forward his investigation of this rapidly expanding sector of higher education, which relies almost entirely on federal student aid dollars to generate large profits for shareholders while many students drop out  and face high levels of education loan debt. Some speculate that recent Republican gains in the Senate and House may hamper the likelihood of passing strong regulatory legislation in the coming year.

Meanwhile, the US Department of Education is in the process of implementing new regulatory rules aimed at tightening oversight on the sector (see previous post: New Federal Higher Ed Regulation Published Today).

We will continue to monitor this ongoing story, as well as some calls for the federal government to extend their scrutiny to traditional institutions.

Federal Maintenance of Effort Requirement Makes State Financial Aid Programs Vulnerable

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Both the American Recovery Act (ARRA) of 2009 and the 2010 Education Jobs Fund provided federal funding for education. In exchange for accepting federal funds, both fiscal relief vehicles came with Maintenance of Effort (MOE) provisions requiring states to continue financial support for higher education institutions at certain minimum levels. However, some forms of state support, such as capital projects, financial aid, and research support are exempt from MOE calculations.

The UW received ARRA funding in the state budget in the 2010 fiscal year. As a result, MOE requirements from both federal actions helped protect higher education funding in Washington State from what may have been even deeper budget cuts. Last year, the State reduced higher education spending down to the federally-required MOE floor for fiscal year 2011. Federal MOE requirements expire after FY 2011.

Due to a state budget deficit that continues to grow, the Governor has called a special session to achieve another round of mid-year budget cuts for the current fiscal year. If the state further reduces funding for higher education, it must choose to violate the federal MOE mandate, or reduce state support for higher education activities exempt from federal MOE, primarily the State Need Grant (SNG), Washington’s need-based financial aid funding program.

In her proposed special session cuts for FY 2011, the Governor chose the latter, recommending that the state delay $76 million of SNG funding until July 1, 2011 (start of FY 2012), with institutions temporarily funding the gap to protect students. The UW’s share of this funding shortfall would be $15 million. While the Governor’s proposal assumes reimbursement on the first day of the new fiscal year, delay of this payment would require the University to cut $15 million to balance its current FY 2011 budget. In addition, given the $5.7 billion state deficit that remains for the upcoming 2011-13 biennial budget, it is not at all certain that this delayed payment would be made to institutions in 2012, when the federal maintenance of effort provision will no longer be in effect.

Any option that reduces or delays funding for higher education will impact University of Washington faculty, staff and students. The Office of State Relations and the Office of Planning and Budgeting will work hard to keep the UW community up to date on special session, and important state budget related news in the coming days.

Should Federal Government Support a Regional Approach to Public Higher Ed?

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The Center for American Progress released a new report, Easy Come, EZ-GO: A Federal Role in Removing Jurisdictional Impediments to College Education, that presents a bold argument for the creation of Education Zone Governance Organizations (EZ-GO), which would provide federal resources to help ease barriers to higher education for citizens of metropolitan areas that cross state borders (20 out of 44). The Center argues that a more regional approach to higher education in such areas is necessary to reach ambitious new college attainment goals.

While higher education policy has historically been formed at the state-level due to state funding of institutions, the report asserts that this strategy is no longer sufficient given the growth of higher education participation coupled with the increased mobility of Americans. This is especially illustrated in the 20 metropolitan areas they identify as crossing state lines. In these locations, citizens are often restricted in their access to affordable, quality higher education based on their state of residence, primarily due to:

  • State based financial aid
  • Residency based tuition pricing
  • Credit transfer policies between institutions

One of five Americans live in such areas, including in Portland, a metropolitan area that reaches into Washington State. The majority of the institutional capacity in the Portland metropolitan area is located in the State of Oregon, which means that your specific address has real ramifications for your access to affordable higher education, which these authors argue is suboptimal for increasing attainment.

Ultimately, they recommend that the federal government create EZ-GO areas (overseen by an EZ-GO Commission) to:

  • Provide technical support to develop EZ-GO-wide articulation agreements
  • Support capital investments to built up institutional capacity
  • Assist in matching postsecondary programs to local labor markets
  • Encourage partnerships between institutions and across sectors

Expect a lot of proposals like this one to surface as stakeholders across the nation grapple with how to, in a relatively short period of time, raise the percentage of Americans with a two-year or four-year degree from 38% to 60%.

APLU Releases Regional Meetings Report

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In advance of the 123rd annual meeting in Dallas on November 14, The Association of Public and Land-Grant Universities (APLU) has released the final report resulting from five regional meetings to discuss key concerns about the future of public research universities, one of which took place at UW Seattle on April 26, 2010.

The report, Ensuring Public Research Universities Remain Vital, outlines the important contributions that public research institutions like the UW make to knowledge, society and the economy. The report also reaffirms the need for institutions to remain committed to their public mission of providing world class education that is affordable and accessible, and for the states to remain committed to facilitating that mission by restoring and protecting the public investment in higher education.

Additionally, the report addresses ways that the federal government can help keep US public research institutions vital. First, by reforming indirect cost reimbursement rate setting policies and regulations associated with federal research grants. Second, by exploring ways that the federal government can partner with institutions to provide operating support, including endowed faculty chairs, funding for doctoral trainees, and new targeted research funding.

New Federal Higher Ed Regulations Published Today

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Having weighed tens of thousands of public comments, the US Department of Education released today a final set of regulations governing various aspects of higher education. While primarily aimed at what are widely seen as abuses within the for-profit higher education system, the regulations apply to all institutions and are driven by the federal government’s interest in protecting the integrity of the federal government’s $170+ billion annual investment in higher education via student aid programs (governed by Title IV of the US Higher Education Act).

Notably, final regulations regarding the controversial gainful employment rule were not published today. Having received over 90,000 public comments and facing an intense for-profit sector lobbying effort, the Department has indicated a need for more time before it is able to finalize gainful employment regulations. The Department will host public meetings on the rule on November 4th and 5th.

Inside Higher Ed has a good overview of the regulations released today, which will take effect in July 2011, as well as links to the rules and a list of the revisions made since the initial rules were proposed. Major changes include:

  • Eliminates loopholes allowing institutions to provide incentive pay for admissions and financial aid employees. The rules now explicitly state that incentive payments for employees can not “in any part” be based on enrollment or financial aid metrics.
  • Revises the definition of a credit hour for the purpose of awarding federal student aid.
  • Clarifies the timeline for returning federal student aid when a student is no longer enrolled.
  • Requires for-profit institutions to provide easily accessed graduation and job placement statistics, as well has college cost calculators.
  • Requires institutions to notify DOE of new non-degree certificate programs, some of which DOE may determine require a formal application for federal approval (note that this is an area where feedback/lobbying had a significant impact as the original rule required DOE approval for all such programs).

These rules represent a large step for the federal government in regulating higher education in the US.

For more information on the federal government’s intensifying scrutiny of the for-profit higher education sector and why it matters to traditional institutions, see our previous posts: Senator Tom Harkin and the HELP Committee Continue to Investigate For-Profit Colleges, and Under Federal Fire, For-Profit Colleges Point Finger at Publics.

Berkeley Report Provides Roadmap for ‘Smart Growth’ in Higher Ed

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John Aubrey Douglass of UC Berkeley’s Center for Studies in Higher Education has issued a new report on the current status of higher education, and potential paths for growth and change into the future.

In Re-Imagining California Higher Education, Douglass argues that the existing model for higher education in California (here representative of higher education in states across the US) has changed only incrementally over recent decades and is ill suited, due primarily to the combination of declining per student funding and increased enrollment, to meet the near-term demands of the economy, much less US stated goals of dramatically increased participation and attainment for the future.

Douglass proposes that California boldy reimagine its higher education system by building on the existing strengths of its current tripartite system (two year community colleges, the four-year California State system, and the four-year UC research institutions). Among his proposals:

  • An expanded community college sector that includes a set of institutions offering four year degrees and a set of institutions with a more explicit ‘transfer focus’.
  • A new poli-technic institution sector that focuses on applied degrees in science, engineering and technology.
  • A new online ‘open university’ that focuses on adult and/or placebound learners in California.
  • Increased focus on international recruitment to attract funding dollars and top talent to the state.
  • Increased focus on partnering with the federal government in funding institutions beyond basic research and financial aid to students.

With arguably the best– and certainly the largest– public higher education system in the country, if not world, the old saying ‘So goes California, so goes the nation’ comes to mind while reading Douglass’ report.