In part I, printed February 26, Inside Chico State, Hauser provided background to the CETI agreement.
The finances of CETI have raised questions. In a meeting of the Trustees Ad Hoc Committee on Technology on January 12, Trustee Stanley Wang stated that the draft CETI financial outline seems "too good to be true." He pointed out that (1) a projected ten-year gross profit margin of 15 percent, (2) exiting the first ten (or twelve) years of the LLC debt- free, and (3) the CSU's ability to purchase exactly what it wants at the "best possible price" are mutually incompatible premises.
The net revenue projected in the initial CETI financial documents accumulates to nearly $250 million at the end of ten years. A revenue stream of the same cumulative size is anticipated from "schools and colleges." However, initial feedback from K-12 and community college leaders indicate that the CSU has not laid the groundwork for this projected revenue stream. Some believe that this could turn into a severe problem.
A joint legislative informational hearing was held January 6 in Sacramento before the key committees that pass judgment on the CSU budget. Led by Assemblymember Ted Lempert, a spotlight of public disclosure was thrown on the CETI idea and its process. As a result and at the direct urging of the new chancellor, Charles Reed, any action to initiate the CETI has been delayed until May.
A mechanism for public disclosure and open discussion now will be available. Final negotiated details are promised a forty-five day review period. I urge the widest possible examination and comment. These details will also enable legal counsel to provide a second, less preliminary opinion of the constitutionality of the CETI. (In January, the legislative counsel raised questions concerning public participation in the management of private ventures.)
Members of the legislature have raised concerns about any exclusivity provisions in the final CETI agreements and about the possible chilling impact of CETI on competition in the telecommunications portion of the private sector. Two lists of "100 questions and answers," which resulted from the informational hearing are available at the CETI Web site: ceti.calstate.edu .
If CETI is initiated, the legislature apparently intends to exercise its oversight responsibilities for the expenditure of public funds. Legislators also have requested that their concerns be addressed prior to CETI's initiation. Finally, they have asked the proposed corporate partners to attend a second hearing in April and to demonstrate their commitment to the public scrutiny that is necessary for them to perform as public-private partners.
One thing is crystal clear. The CETI is of national importance. Public investment in public higher education has returned immense dividends to our nation. The question becomes: Is it better to invest in technology in a way that supports the long-term interests of all of us, or is it better to tilt the short-term benefits of this type of financing in the direction of a few, selected corporate interests?
Rolland Hauser, Geosciences