Rollie Hauser on the California Educational Technology Initiative


The late Professor Harlen Adams' words ring within me. He could articulate important things clearly. He said, "The funding of public education is a public responsibility." This important dictum is enshrined in the California State Constitution. It is its evasion by the California political process and by the CSU chancellor and trustees that lies at the California Education Technology Initiative (CETI).

The CETI is a scheme born in early 1993 when then-Chancellor Munitz and his twenty campus presidents had to respond to state budget reductions.

CETI is not traditional corporate philanthropy. It proposes a type of creative financing in order to purchase, install, maintain, and update high-speed information technology infrastructure (a backbone of wiring, optical fiber, switches, computers, computer programs, etc.) designed to link the now twenty-three CSU campuses.

In April 1996, Chancellor Munitz invited about one hundred large, successful corporations to form teams of potential corporate "partners" with the CSU. Several such teams competed with each other behind closed doors last summer, and the winning team was announced last September. GTE Data Systems-Worldwide Telecommunications Systems, Fujitsu Business Communications Systems, Hughes Global Services, Inc., and Microsoft Corporation were declared the winners, and the CSU began negotiating a deal with these proposed partners last fall, and negotiations continue today.

I cannot comment on many important details of the CETI. These details do not yet exist in reliable, final negotiated form. However, the bones of the deal are these: the CSU would form a new, not-for-profit "auxiliary" for the purpose of becoming a "member-owner" of a new, for-profit limited liability corporation (LLC), which may be called CETI LLC; the partners would use the LLC to provide $36 million of "start-up" money; during the first three years of a ten-year agreement, the LLC would provide $300 million from bonds it floats to "build out" the "minimum baseline infrastructure" on and connecting all CSU campuses; the corporate partners would guarantee the repayment of the bonds; the CSU would assist the LLC in a set of profit-making activities; a portion of the LLC's profit would be returned to the auxiliary for updating the baseline infrastructure; the auxiliary could make other uses of its share of the LLC's profits; the rest of the LLC profit would be used to repay the $300 million in bonds, be retained by the LLC, or be distributed to the corporate partners.

There is no disagreement that the proposed minimum baseline infrastructure, once completed, will enable new capabilities in the CSU and, used effectively by talented faculty and students, has the potential to increase the quality of education in the CSU. However, California's economy has rebounded since 1993. In the CSU budget request for 1998-99, Chancellor Munitz and the trus-tees consciously chose not make a case to the legislature and the governor along the lines that Harlen Adams posited. I believe that this omission violates their public trust.

Last year, the students at Sonoma State and Cal Poly, San Luis Obispo voted in a referendum to reject an increase in their fees to "fund technology." Currently, the CETI plans to fund itself, in part, by marketing commercial goods and services to CSU students, alums, and faculty. Is this not, in effect, just a way to collect the rejected technology fees through sales strategies that permit international corporations to take a slice of a "rejected, narrowly targeted tax" in the form of profit or corporate tax avoidance?

Some campus presidents have chosen to delay investment in their campus's baseline telecommunications infrastructure. These presidents are pushing hard for CETI-style aid to help them solve their local problems and are urging the other campus presidents to "get on board." Unless the LLC is formed, they argue, their campuses will continue to suffer by having to "stand in line for twenty more years before joining the twenty-first century."

In Part II of his commentary, Hauser will discuss the finances of CETI, its possible impact on telecommunication competition, and the issue of long-term versus short-term technology planning.

Rolland K. Hauser,
Geosciences

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