It is very good news that the American Academy of Arts and Sciences (AAAS) has received funding from the Andrew W. Mellon Foundation for its Humanities Indicators project.
It is very good news that the American Academy of Arts and Sciences (AAAS) has received funding from the Andrew W. Mellon Foundation for its Humanities Indicators project.
This is the second in a two-column series. The first, published in May 2006, was an anonymous letter from a chief marketing officer to a college president.
In preparation for this month's column on best practices for employee and pre-employment drug testing, human resource departments at more than 25 colleges and universities nationwide were contacted. Many responded, stating that their school did not drug test employees beyond the U.S. Department of Transportation mandate. The Omnibus Transportation Employee Testing Act of 1991 requires all employers to drug test transportation workers who perform safety-sensitive functions, such as employees whose jobs require them to have a commercial driver's license or operate motor vehicles that weigh more than 26,001 pounds, transport hazardous materials, or carry 15 passengers or more.
Yet, the same scenario doesn't hold true in the private sector. A March survey conducted by the Society for Human Resource Management found that 84 percent of the 454 employers contacted said they conduct pre-employment drug testing; 39 percent do random drug testing.
So why the discrepancy? Are college campuses considered safer environments than corporate campuses? Or, is drug testing just considered an invasion of privacy?
Some of these schools were asked the same questions, but none really offered any answers. As vice president of Drug Testing Services at Aurico Reports, Wayne Hovland runs into the same problem every time his drug screening company contacts institutions of higher education.
"They bury their heads in the sand and don't even entertain the thought of a faculty drug testing program," says Hovland. "When I bring it up, they will say something like, 'We are not going to talk about that,' or 'We are not interested in doing that.' I have heard it said that faculty would not put up with it."
There are plenty of reasons to drug test. During the last decade, federal and nonprofit organizations have published hundreds of sobering facts about the impact of drugs and alcohol on the job.
According to Drug Free Pennsylvania, the annual cost of substance abuse in the workplace for U.S. employers is $140 billion due to lost productivity, absenteeism, accidents, medical claims, and theft. Pennsylvania workers who are problem drinkers are absent from work four to eight times more often than those without a problem, while drug users miss an average of five days per month. Likewise, 38 percent to 50 percent of all workers' compensation claims relate to substance abuse. Drug users are also three times more likely to use medical benefits compared to other employees, and 80 percent steal from their employer to support their habit.
The Substance Abuse and Mental Health Services Administration revealed more startling statistics with its 2004 National Survey on Drug Use and Health (http://oas.samhsa.gov/trends.htm): Eight million full-time workers, age 26 or older, reported being heavy alcohol users. Another 9.5 million full-time employees, age 18 or older, reported using illicit drugs in the past month. Alcohol is also a contributing factor in 39 percent of all work-related traffic crashes, states the Occupational Safety and Health Administration.
To be fair, let's examine the other side.
If drug testing is conducted in a vacuum, it can be perceived as oppressive and a way to weed out undesirables, leading to a poor work environment, says Elena Carr, director of Working Partners for an Alcohol- and Drug-Free Workplace, a U.S. Department of Labor program. In such situations, she says, drug testing is considered more of a policing function rather than a program that focuses on employee safety or health.
Carr also points to many organizations that function well with a zero-tolerance drug policy that's supported by a strong employee assistance program (EAP).
"A policy can stand alone, but I'm not sure it replaces drug testing as a tool of detection and deterrence," says Carr, adding that the five components of a drug-free workplace are a policy, supervisory training, employee education, drug testing, and an EAP. "But it does set the expectation."
No one disputes the danger of alcohol or drugs in the workplace. How would officials at a school that decides to expand drug testing to other employee populations in the future proceed?
There are currently four different types of drug tests, explains Jeffrey Ellins, president at Datco Services Corp., a third-party administrator for drug and alcohol testing and compliance. He says the most stable is urine, because there are established or accepted industry standards and it's very difficult for people to cheat the sensitive testing technology.
An alternative is blood testing, which Ellins says is not reliable because the federal government has not yet set any standards. For example, someone's blood test may turn up positive for amphetamines. That could mean several different things. The employee could be abusing illegal drugs or under a doctor's care, taking a prescription drug. In the latter case, there may only be a trace amount in the person's system. But since there is no standard, no one really knows what is an acceptable amount.
Hair follicle testing is yet another method. It reveals a person's 90-day history with drugs/alcohol, so some employers prefer to use it as a prehiring tool. But it can't test for current usage.
The last test-on oral fluids or saliva samples-was introduced three years ago. Ellins says this test is becoming more stable and doesn't require a sealed bathroom like with urine testing. A person's mouth is simply swabbed and the results are instant. However, there is a downside: The test is subjective. It is conducted with a reagent that chemically reacts with the cotton swab. If it's positive, there's no reaction. If negative, a line will appear. What if the line is faint? It then becomes a judgment call by the test administrator.
For those using instant kits, Ellins recommends urine kits, partially because of their expense-less than $10. Oral fluid kits are available for under $20. Blood and hair tests are the most expensive, since they must be conducted by a lab, and can run from $35 on up per employee.
Any drug-testing program, he adds, must include two essentials-a policy that explains the consequences of a positive test and a training component that communicates information to employees about the signs and symptoms of drug or alcohol misuse. His company publishes a handbook that explains the U.S. Drug-Free Workplace Act of 1988, the physical effects of drug and alcohol abuse, and a list of resources where people can seek help.
When the DOT began testing, Ellins says the positive rate was 10 percent. That number has dropped and stabilized at four percent. "Four percent sounds small, but it could be over hundreds of thousands of employees," he says.
Ball State University (Ind.) drug tests approximately 83 of its 3,500 employees due to the DOT mandate. In the last 10 years, only a handful have tested positive, says Marta Stephens, coordinator of the school's work/life programs.
"Initially, we jumped right on the [DOT testing]," she says. "The workers know we're going to be right on top of this and not let anything slip. The supervisors are really great about making sure licenses and physicals are updated. It takes a lot of people to make this work."
While the DOT decreased the number of employees who had to be tested for alcohol from 25 percent to 10 percent, Stephens says the school stuck with 25 percent as a safety precaution. Still, BSU has no plans to expand its drug-testing program. "There's no need to extend this to new hires in general," she says. "There just doesn't seem to be any reason to."
Besides understanding the DOT's drug-testing rules and procedures, one of the most difficult challenges for Pepperdine University (Calif.) was finding a reliable vendor for its testing process, says Chip Moore, chief HR officer. Nearly 10 years ago, the school began sending a sample of its workforce-about 10 employees out of its 1,400-member workforce-to an external lab for drug testing annually.
Moore's staff scoured the local market for a vendor before finding one that not only understood the federal guidelines and was precise with testing, but also who would manage the entire process, from training employees to random testing.
What's more, he says, the vendor had to show respect for employees. That can sometimes be overlooked by schools.
So far, drug testing has been a continuous learning process, Moore notes. But he does believe there is a good argument to be made for testing more employees.
"The basic premise is you want to protect your people from either themselves or the impact of drugs," says Moore. "We will probably in the long run increase the number of people involved in that. We've just chosen not to do so at this point. We haven't gotten to the discussion part."
So what about your school? Are you ready for that discussion?
Carol Patton, a Las Vegas-based freelance writer,specializes in covering human resources issues.
There was a time and place in American higher education when our urban universities sat at the pinnacle of power, prestige, and influence.
It's not uncommon for a capital campaign or annual fund drive to focus on scholarships or need-based grants. Here's how financial aid officers can help advancement staff make their fundraising case-and avoid pitfalls in establishing endowed scholarship programs.
In North Carolina, two-year colleges have taken in a vast number of laid-off workers in the last decade. The number of unemployed students in North Carolina's 58 community colleges rose from 40,000 in 1999 to 109,917 in 2004-nearly 175 percent.
Anyone who is following technology trends is hearing more about the marvels of RFID. Prognosticators envision a not-too-distant future in which there will be no lines in supermarkets and no need to pay cash at the gas pump. RFID will act like a "smart" system, tracking items as they are pulled off the shelf and deducting payments automatically from bank accounts.
These pundits are obviously putting a lot of faith in RFID, a technology that is simple in theory, but-like all new technology-expensive to implement. Still, retailers and security services are finding more mainstream uses for RFID. Can it be too long before RFID comes to campus?
Truth is, some universities are already using RFID technology, although use is limited.
It may be a while before RFID technology is in place at campus bookstores, dining halls, and rec centers, but if current buzz is any gauge, RFID is going to become a common technology on campus and everywhere.
The letters RFID stand for "radio frequency identification." An RFID tag, which can be embedded in a security card or placed on a packaging label, gives off a radio signal that is picked up by antennae in the reading devices.
If programmed into the system, a person's identification information and other data are easily verified-sometimes at great distances-without the need for the user to swipe a card or stand in close proximity to the technology.
Some RFID tags are made to be "read only" for one-way communication-these types of tags are the ones most commonly used by libraries, or in highway speed-pass systems.
Other tags are in "read and write" format, allowing for more control. Data can not only be read by the system, but can be changed on the fly. The data stored in an RFID tag can be updated-a retail price can be marked down, for example.
RFID technology has been around for a while, but uses have been mostly applied to agriculture and industrial sectors. For example, ranchers are already tracking large herds of cattle with RFID signals; transportation managers use it to monitor railroad cars.
If RFID technology is being used at all on campus, it's most likely in the library to track research materials and sign out books. The library system at the University of California, Merced started using RFID technology this year. "RFID technology allows us to run a better library," says R. Bruce Miller, the university librarian.
The UC, Merced library uses RFID technology in two ways: to check out books and to monitor the use of research publications and other materials that do not leave the building. The system reads data programmed to the RFID tags that have been placed on cards inside the library's books and publications. Each book is identified by a string of numbers that can be matched to publication name within the system.
A database records that ID when a book is checked out, or even if it is moved off a shelf for a period of time. Staff can monitor who has taken out a book, but the RFID tag inside the publication does not contain any personal information about who is reading what, nor does it include the book's title. The system was set up this way to quell fears of privacy violations, says Miller.
"Even if some other RFID system breaks the encryption, all someone would see is a string of numbers. There is no personal content on the card," explains Miller.
The RFID system, though, will be relied upon to do more than track materials. After all, libraries already have bar code systems and related readers that can help do that.
The real use for RFID will come when the library culls through the research material that does not leave the facility. Librarians at research facilities routinely have to decide which materials should be kept and which ones should be removed, says Miller.
Until RFID systems, this required poring through written requests for research material and also relying on memory. "We would have to take a highly paid librarian and walk through asking about what has been used. That cost is horrendous," he says. "You literally have to touch every book in the system."
RFID will automatically track usage. "Down the road, when I have to take 15 percent of the books out of the library, I will be able to see what hasn't been used." RFID will allow the staff to rely less on manual labor and more on analytics.
Considering the efficiency, why aren't RFID systems used on more campuses and in more general retail locations? High cost is the reason. An RFID reader can run $1,000. Comparatively, the cost for the standard reader used for mag-stripe technology might be several hundred dollars.
Miller compares the RFID costs to other library tracking systems. Inserting and tracking a book with a bar code system might cost 10 cents per publication, whereas inserting an RFID tag costs 85 cents. "When you are dealing with 100 books, that's no big deal. When you are talking about millions of books, that's an interesting number," he posits.
UC, Merced is in the enviable position of being a start-up facility. It is the newest campus in the UC system, having opened just last year. The library, which opened this year, has only 40,000 books. Investment in RFID is possible because there are fewer books to deal with and no older volumes to retrofit with the new technology. The institution's inventory is quite manageable when compared to other libraries in the UC system. UC, Berkeley, for example, has at least 10 million books in its library, Miller notes.
That's not to say that other higher ed library systems haven't implemented RFID. The library at the National University of Singapore is known for its RFID system, says Miller. Still, it will be awhile before the technology is more the norm than the exception at campus library systems.
And while RFID holds the promise of potential labor cost savings and more accurate data, Miller has obviously not realized them yet.
But there are reasons other than cost that explain why RFID is not more commonly in use on campus.
There is not yet a universal RFID technology standard, notes Jim Zaorski, CEO of Sequoia Retail Systems and a recent speaker on RFID at the 2006 CAMEX conference sponsored by the National Association of College Stores.
Researchers at the Massachusetts Institute of Technology developed an RFID technology, but the rest of the industry has been hesitant to recognize that format as the RFID protocol.
"People said, 'This is great, but we shouldn't have one lab in Cambridge making the standards.' By this point everyone thought we would have a set of RFID standards, but we don't," says Zaorski. Until there's a universal standard, there will be hesitancy to select a commercial system that may not work on a wider or global scale.
The other concern is security. Hackers can exploit imperfections in RFID technology just as they have with software and networks. The media has already covered the instance of a graduate student at UC, Berkeley who checked out books from the Oakland Public Library and overwrote the data on the RFID tags with a commercial system to prove that libraries should employ tighter RFID security.
Another report, released this spring from researchers at the Vrije University in Amsterdam, warned that RFID codes can be infected with computer viruses that can be spread from point to point. The report, titled "Does Your Cat (or Passport) Have a Computer Virus?", is meant to dispel the widely believed assumption that RFID tags cannot become infected with such viruses because of their limited memory.
"The tags apparently are more vulnerable than first thought," the researchers write, while recounting their own successful efforts to place viruses into RFID tags. They also warn that small, infected tags can do a huge amount of damage. An entire database can become corrupted if a virus is not detected in time. They offer tight security measures and routine system checking as the main antidotes.
Despite some of these new findings, momentum is growing for RFID use.
This spring card vendor HID announced a partnership with MIT to create a website that will not only be a primer about RFID technology, but also address concerns about privacy and vulnerabilities.
It may be a while before every student is carrying a card with an RFID tag, but given the interest and the potential, it may not be too long before the technology is part of higher education.
For the last two decades, much of the public and media attention has been focused on the problems in K-12 education. Higher ed coverage was concerned largely with stories on school rankings or sports scandals.
It's a new day at Harvey Mudd. Known for its focus on engineering, science, and mathematics education, the 700-student liberal arts school-part of California's Claremont Colleges consortium-has done well in realizing its vision of attracting the brightest students.
Real estate is a modern American obsession. What the neighbors got for their house is a leading suburban backyard barbecue topic.
According to the National Association of Realtors, in 2005, 69 percent of American families owned their own house. In other words, a lot of people know a little about real estate. Although the average Dick and Jane know little about the commercial market, where institutions of higher ed would traditionally invest their funds, this area of real estate has also performed well. You might say the real estate conversation has filtered down to the fraternity-party level.
Administrators are talking about the wealth to be had in real estate, too. According to the National Association of College and University Business Officers' 2005 Endowment Study, the average university endowment posted 9 percent average returns for that fiscal year. The top-performing asset class for endowments over $1 billion in the period? Public real estate. This investment category returned an average of 36 percent for IHEs, on average.
The report lists public real estate as the second-best asset class, behind natural resources, for smaller endowments, which reported a 27 percent return on public real estate investments. By contrast, the largest endowments earned 9 percent in U.S. equity in the last fiscal year. Despite these stellar numbers, the overall allocation to real estate remains small, at 3 percent for all endowments-but that's up from just less than 2 percent in 1996. With a total of $299 billion tracked in the NACUBO database, that 3 percent represents a hefty $9.3 billion invested in real estate.
Alternative investing in general is becoming a bigger part of investment policy for more colleges and universities today. Real estate is just one of many asset classes that fall into that "alternative" category, which includes pretty much everything that is not stocks, bonds, or cash. (See "Alternative Investing 101," p. 66.)
As for real estate investment categories to consider, the commercial market is divided geographically, by industry segment (retail, office, warehouse, etc.) and by type of property:
Core real estate is high-quality property, usually centrally located office buildings with major corporate tenants, with most space occupied, generating stable income and a good rate of return.
Opportunistic real estate includes troubled buildings to be torn down or overhauled, or raw land that will be developed.
Value-added real estate involves buying buildings that are inexpensive but need some work, then working with a developer to upgrade them and lease them to new tenants.
In addition to endowment investing, many IHEs acquire real estate as an investment that supports the campus without pushing out its borders. Such properties may add off-campus housing options, promote community economic development, or act as an option for future campus expansion. These holdings generate revenue to offset other operating expenses, grow the endowment, and further the mission of the institution in interesting ways.
Institutional investors, like IHE endowment managers, distinguish between public and private real estate investments. Public investments are those made into funds registered with the U.S. Securities and Exchange Commission, usually in the form of real estate investment trusts (REITs). These pool investors' funds, invest in commercial real estate, and pass on the income.
Because they combine money from several investors, REITs can offer greater diversification than other types of real estate investments, a key advantage for smaller endowments that may not have the assets to diversify otherwise. The shares trade on the stock exchanges, so buying and selling them is much easier than buying properties outright.
National Association of Real Estate Investment Trusts (NAREIT) research has found that the majority of university endowments invest through real estate investment funds managed by outside managers or through real estate investment trusts. Of 108 IHEs reporting investments in real estate, seven have bought properties outright, 27 invested through REITs, and the remaining 74 used private real estate equity funds.
Abby McCarthy, senior director of industry information and statistics at NAREIT, makes the case for REITs in this way: "If you want an asset class that has good diversification benefits, that will generate good returns and reduce risk, then real estate and REITs are the way to go."
An institution's size may well determine what decision is made. "Larger endowments tend to approach the market differently than small endowments," says Michael K. McMenomy, global head of Investor Services at CB Richard Ellis Investors in Los Angeles, which invests in real estate for its own account and for pensions, endowments, trusts, and other large investors. Larger endowments tend to concentrate on specific niches, such as high-rise office buildings in a handful of central business districts, he explains. They typically want the investment management firm to invest in these projects alongside of them.
Smaller endowments, on the other hand, will usually invest in pools organized by a real estate investment company. These pools are limited partnerships that operate for a set time period, say five to seven years. "The fund manager has complete discretion relative to the investment management agreement and the strategy therein," McMenomy says.
Most endowment funds are investing through REITs or private equity funds because managers view real estate as simply an asset class with favorable risk, return, and income characteristics. But many IHEs own land outright. In some cases, it is property acquired through donation that generates enough income and other benefits that it remains in the portfolio. For other campuses, real estate is an investment that also helps in the execution of the institution's mission and values.
For real estate gifts, having donation policies can help ensure that it works out in the institution's favor. The Kansas University Endowment of the University of Kansas, for one, accepts gifts of real estate under two conditions. First, it must be given free and clear of debt. Second, it must undergo an environmental assessment; if problems are found, it must be cost-effective to remedy them.
Finally, says Jen Humphrey, who works in communications for KU Endowment, "We check with the university to see if they have a use for it. If they do, we'll lease it to them. If they don't, we'll sell it."
The endowment foundation also accepts donations of mineral rights without the property attached, and it holds such rights in five states. In total, its real estate had a market value of $158 million as of June 30, 2005, making up 16.5 percent of the endowment's $955 million in assets.
The Kansas endowment owns farmland in 54 Kansas counties as well as in Oklahoma and Nebraska. Most of this acreage was donated and is leased to operating farmers to generate steady income. Two full-time staffers handle property management with the assistance of two regional banks. Humphrey says that farmland's low management cost and low operating risk makes it a better investment for them than, say, student housing, where maintenance, rent collection, and liability factors cut into returns.
That doesn't mean the endowment won't buy properties in town. Humphrey says that on occasion, property near the Lawrence campus comes on the market. The university may want it for future expansion, but the administration is not ready to commit now. The endowment buys the land and operates the properties until the university makes its decision. This offers a way for the foundation to support the campus.
While the KU Endowment staff is happy to own land, University of Nebraska-Lincoln endowment managers aren't so eager.
NU's endowment receives about six or eight property donations a year, says Dorothy Endacott, director of Communications for the University of Nebraska Foundation, but almost all of those are liquidated. Less than 1 percent of the university's $1.3 billion endowment is invested in real estate, mostly through investment funds managed by outside money managers.
The land the foundation holds outright was given to it for academic use. One such property is a 145-acre arboretum northeast of Lincoln used as an outdoor classroom by students at the NU's School of Natural Resources. The other is a ranch in North Platte used for groundwater and surface water research.
A.T. Still University, which operates four colleges on two campuses (one in Missouri, another in Arizona), has real estate ventures on each designed to be both long-term investments and sources of relationships to enhance student learning and faculty research.
In Kirksville, Mo., the university has schools of osteopathic medicine and health-care management, while in Mesa, Ariz., it offers programs in dentistry and health sciences. In Kirksville, the goal was to promote osteopathic medicine's strengths in managing the needs of a healthy, aging population by giving students practical experience. Located in north-central Missouri, the town was in need of economic development programs that would attract and retain residents. A continuing-care retirement facility adjacent to campus would help students learn and meet the town's needs now while creating a long-term asset.
In 1999, the university acquired 100 acres of land there, through a purchase that added to a property donation for the project. Since "A.T. Still is in the business of education, not in the business of running continuing-care retirement communities," says Elsie Gaber, associate vice president for University Relations, the school partnered with a St. Louis-based developer to build a 50-unit retirement residence. That developer was joined by state and local officials to develop a community center on the site. The land under these buildings is leased from the university. The buildings themselves will revert to ATSU at the end of the multidecade lease.
The income is small right now, Gaber says, but the amount of income generated and the underlying value of the land will increase as more of the property is developed and the Kirksville economy grows. And, she says, "This added dimension of the senior campus is attracting applicants and students who want to be a part of it," enhancing the medical school's reputation in geriatric care.
ATSU expanded into Mesa in 1995 to help meet the demand for health-care professionals there. It operates the state's only dental school, the Arizona School of Dentistry and Oral Health, while the medical programs at the Arizona School of Health Sciences educate baseball trainers and geriatric physical therapists alike.
Next to campus is the Arizona Health & Technology Park, which ATSU launched in 2001. The land is owned by the school and leased to the Alter Group, a real estate development firm. The firm handles construction and management of buildings used for campus offices, medical practices, and health care services businesses.
"We're not in the business of health care. We're in the business of training health-care professionals," explains Craig Phelps, provost of the Arizona campus. Among the park's tenants is the National Academy of Sports Medicine.
The next phases of the project, scheduled for 2007, will solidify the connections between ATSU students and the community even further. The Valley of the Sun YMCA and an acute-care hospital operated by Vanguard Health Services will be added, creating internship opportunities for students and as well as possible employment for alumni. As for the income from the land lease, Phelps says, "We see it being used to fund new programs, but also see a certain percentage going back into the endowment."
Although campuses are getting value from real estate now, will this continue? Market observers think it will, noting that the commercial real estate market is very different from the residential one.
The residential market is much more exposed to interest rate changes than the commercial market, says McMenomy, because individuals buying houses often borrow 80 percent or more of the value, while commercial properties are typically purchased with little or no debt. "Residential is all about affordability, and interest rates affect affordability," he says, adding that "residential has an emotional underpinning."
Commercial real estate is very much driven by income generated from rent. Tenants may be visiting faculty members using off-campus apartments, corporations leasing entire floors of downtown office towers, or agribusiness concerns renting farmland for their growing operations.
"Corporate leases are typically for 15 years," says NAREIT's McCarthy, "so the revenue is locked in." In other words, returns on a commercial property fluctuate less from year to year than returns on residential properties might. Demand for these properties tends to be driven by overall economic health rather than interest rates and family size.
Each market sector has its own outlook. The National Association of Realtors, which analyzes both residential and commercial market trends, sees a strong market for warehouse space (based on trade with China), rental housing (because so many units have been lost to condominium conversion), and hospitality facilities (as cities pick up convention business lost from New Orleans). The organization is less enthused about retail rentals, given that large blocks of space are coming on the market from the recent Sears-Kmart merger.
"There are submarkets within the U.S., and property types within those submarkets, that have challenges," McMenomy says. At the same time, though, "there's more and more knowledge, objective and otherwise, with which to make a decision." He says that information on historical performance, risk, investment styles, and operating strategies can help endowment managers make good decisions about whether to invest in real estate. And for those who choose this alternative investment, doing that legwork will help in finding good investment managers to work with and making the best real estate deals.
Ann C. Logue is a freelance investment services writer based in Chicago. She can be reached at firstname.lastname@example.org.