San Francisco State University

-- Academic Senate Meeting

MINUTES OF NOVEMBER 4, 1997

The Academic Senate was called to order by Chair Mark Phillips at 2:10 p.m.

Senate Members Present:

Barnes, Paul; Bartscher, Patricia; Bernstein, Marian; Chen, Yu-Charn; Cherny,

Robert; Choo, Freddie; Collier, James; Consoli, Andres; Corrigan, Robert; Craig,

JoAnn; Duke, Jerry; Eisman, Gerald; Fehrman, Ken; Gillotte, Helen; Goldsmith,

Helen; Graham, Michael; Hammett, Jennifer; Harnly, Caroline; Haw, Mary Ann;

Hom, Marlon; Homan, Bonnie; Houlberg, Rick; Hu, Sung; Kelley, James; La Belle,

Thomas; Lee, Wanda; Leitao, David; Lyles, Lois; Nicholson, Joel; Oñate,

Abdiel; Pestrong, Raymond; Phillips, Mark; Rivas, Mario; Scoble, Don; Shouse,

Amy; Tarakji, Ghassan; Thomson, Lana; Turitz, Mitch; Verhey, Marilyn; Warren,

Mary Ann; Warren, Penelope; Wilkinson, Nancy; Fox-Wolfgramm, Susan; Wong, Yim

Yu; Woo, George; Yee, Darlene; Zoloth-Dorfman, Laurie

Senate Members Absent: Swanson, Deborah(exc.); Wade, Patricia(exc.);

Terrell, Dawn(exc.); Blank, Mark; Cancino, Herlinda; Raggio, Marcia(exc.); Wong,

Alfred; Smith, Nina Jo(exc.); Smith, Erna; Flowers, Will(exc.); Hammerstrom,

Gary(exc.); Aaron, Eunice(exc.); Chang, Paul(exc.); Mallare, Marie.

Senate Interns Present:

Guests: G. Whitaker, G. West, R. Giardina, I. Goodfield, J. Kassiola,

M. Kasdan, H. Matson, D. Cunningham, K. Bomar, J. Randolph, J. Keroes, E. Williams,

D. Masters, T. Rutter, R. Maples, L. Polidora, R. Martinez, R. Strong, T. Mitchell,

V. Sakovich, A. Barnes, E. Hooker, C. Dumont, M. Miller, J. Ferneau, A. Goad,

C. Prince, G. Bardsley, S. Johnson, T. Chretien, H. Layer, C. Servetnick, R.

Wright, M. Joe.

Agenda Item #1 - Approval of Agenda for Meeting of November 4, 1997
As there were no objections, the agenda was approved as printed.

Agenda Item #2 - Approval of Minutes for Meeting of October 21, 1997
As there were no additions or corrections, the minutes were approved

as printed.

Agenda Item #3 - Report from Vice President La Belle
La Belle reported that he had attended a conference in the CSU Chancellor's

Office where a mandate has been given to the campuses to reintegrate teacher

education preparation with the subject matter. Elementary Education will be

reintegrated with Liberal Studies and Secondary Education will be reintegrated

with the subject matter majors. Each campus sent a team to the conference. The

SFSU team consisted of Nancy McDermid, Jake Perea, Helen Goldsmith, Vera Lane,

Gerianne Johnson, and Jane Bernard-Powers.

He felt that the mandate was probably sparked by the Governor's initiative

to lower the class size to 20 in grades K-4. This initiative created a shortage

of teachers as some secondary teachers shifted to lower grades for the reduced

class size and other teachers retired. This demand for new teachers resulted

in emergency certificates.

La Belle mentioned two activities which have occurred. The State Legislature

has become much more active in teacher education. A recently passed bill determines

the content for teacher preparation in the teaching of reading. This means that

the State Legislature is dictating the content of a course to the University.

The second activity is a report from the CSU Presidents. President Robert Maxson

from Long Beach headed a team of Presidents that called for greater integration

of teacher preparation with the subject matter.

The CSU system is the major State-supported provider of teachers since the

UC system does very little, relative to numbers, in terms of teacher preparation.

Competition in teacher education would come from private universities who feel

that they are delivering certificates more rapidly and more "efficiently" than

the CSU is. He felt that the locus of control for teacher certification has

moved away from higher education. County Boards of Education, school districts,

unions, and other groups are now having more control over certification. Some

school districts are issuing requests for proposals from universities to train

their perspective teachers. Then the School District issues a contract and controls

the certification process. Governor Wilson recently signed a bill to allocate

close to $5 million for the Teacher Education Initiative. SFSU has received

$200,000 to invest in increased teacher education and teacher production.

La Belle felt that all of these pressures explain why the conference was held.

He discussed some history to help explain why the issue of integrating teacher

education into the discipline is on the table. In the late 1960's, the Fisher

Bill said that all secondary teachers in California need a baccalaureate degree

in the discipline. The thinking seemed to be that teachers need to be prepared

in the subject matter, since that is what they teach, rather than being prepared

in pedagogy, human growth and development, cognition, and psychology. Elementary

teachers, at that point, could still get a bachelor's in teacher education.

In California in the 1980's, the Ryan Act said that teachers need a liberal

education, not an education degree. Liberal Studies (for Elementary Education)

or subject matter disciplines (for Secondary Education) would be the bachelor's

preparation and pedagogy should not be part of the subject matter in the preparation

of teachers. The fifth year of study included the teacher preparation courses.

Over the last 30 years, education as a field and education courses have become

marginalized in the certification of teachers. Teacher education has been purposely

put apart from the subject matter. Now it has been determined that what we need

to do is integrate teacher preparation in with the subject matter.

It is now felt that students, as freshmen, need some exposure to the elementary

or secondary schools so that they will know if they want to be teachers. Students

should be in the classroom observing. Students should be connecting with kids

along the way. The subject matter courses, in either Liberal Studies or in a

discipline, should be reflective of some of the pedagogy teaching/learning issues

associated with education.

In practice, La Belle said, there is no clear definition of what reintegration

means. Part of it is to put pedagogy back into the disciplines and into Liberal

Studies. Part of it is to link or couple subject matter courses simultaneously

with experience in teacher preparation. Another approach could be to pair subject

matter courses with teaching methods courses. Another possibility is a minor

in education.

La Belle identified some of the possible implications for SFSU. Since the All-University

Teacher Education Committee (AUTEC) was not composed as a policy committee,

that might need to change. The Teacher Credential Committee (TCC) might need

to be combined with AUTEC and Liberal Studies might need to be represented on

that committee. It may be necessary to revisit the K-18 Council that used to

exist on this campus. Faculty development may be affected since pedagogy will

need to be reintroduced into discipline courses and Liberal Studies courses.

Discipline faculty may need to be paired up with education faculty. Syllabi

may need to be rewritten and curricula may need to be revised.

A five-year integrated plan must be developed in order to meet State standards.

Liberal Studies and discipline faculty may need to spend time in schools to

have a greater appreciation of what goes on in elementary and secondary schools.

There may be a need to get education students into elementary and secondary

schools earlier than they are now. It may be necessary to split off Liberal

Studies majors so that those planning to go into Elementary Education are in

specific courses. Advising will be affected since there will need to have more

coaching, counseling, and assistance for education students. A general orientation

may need to be created for those students who want to pursue teacher education.

Identifying students, as freshmen or before, may assist in making their way

through the system and into teacher preparation. There may need to be joint

appointments between disciplines and the College of Education. Teachers may

be brought in from the schools on visiting internship programs.

These changes may have to be reflected in promotion and tenure policies. There

may need to be incentive efforts to help discipline faculty to revise their

courses. There may be a need to reinforce the commitment to Liberal Studies

so that there is more coordination in Liberal Studies. A capstone or gateway

course for Liberal Studies may need to be funded.

Since the CSU, from the Chancellor's Office down, is committed to this effort,

La Belle felt that it doesn't look like we have a choice. Additionally, he felt

that the new Chancellor looks to be supportive of this kind of effort and the

State is going to mandate a five-year integrated program. So SFSU must meet

the challenge and move forward to reintegrate in multiple ways.

Duke said that it seems that La Belle is basically overseeing these

efforts and wondered what the next steps are. La Belle responded that

the faculty need to be engaged in planning exercises involving AUTEC, TCC, and

Liberal Studies. The deans and colleges that are heavily affected need to be

looking at courses. Incentive systems need to be devised quickly to help faculty

redesign courses and to help discipline faculty or Liberal Studies faculty link

up with Education faculty in some constructive ways. There may be a need to

hire some faculty. The demographics in California suggest that the need for

teacher preparation will not go away. However, some universities have over-invested

at times in certain fields because of demographics. He felt that Dean Perea

and his staff have done a very good job of exploring alternative ways to approach

this. It is possible that some of the Education students will be prepared through

Extended Learning, some through partnerships and internships directly with school

districts, and some through general fund programs on campus. How to articulate

these issues and how to ensure quality and standards are upheld are important

issues. La Belle felt that the College of Education could loose everything if

they don't reach out and work more closely with the elementary and secondary

schools.

As the Time Certain for Agenda Item #4 was reached, the agenda was moved forward.

Agenda Item #4 - Report on CETI/SIP

Phillips introduced Vice President for Business & Finance Don

Scoble and invited him to give a status report/update on the California

Education Technology Initiative. Scoble is the primary SFSU representative to

CETI/SIP and Senator Gary Hammerstrom/BACS is also on a CETI/SIP committee.

Since many faculty and student visitors were present, Phillips reminded potential

speakers to try to keep comments to the point and as brief as possible. He explained

that this was not an action item, it was an open forum for as many people as

possible to speak.

Scoble explained that in his role as a campus representative and as

a member of the CETI/SIP team he was present to explain, not to defend the proposal

and to take feedback from the University to make sure that the SIP team hears

that information. He said that a lot of influence had been exerted by this campus

and the other campuses as well.

The use of computers and the application of technology has grown exponentially

in education and elsewhere. Given this growth, the University will need more

technology access. He asked the Senate to picture a society in which more and

more people are buying autos thus creating the need for more roads and freeways

and overpasses. He compared that to the growing need within the CSU system for

technology which creates a need for the information technology equivalent of

roads, freeways, and overpasses.

The Technology Infrastructure Initiative Vision Statement, according to Chancellor

Barry Munitz, is: "By 2005, all students, faculty, and staff will have anywhere,

anytime electronic access to information resources in support of the teaching

learning mission of the University."

Scoble said that the CSU, as a 23 campus entity, including remote sites,

has varying states of readiness. SFSU has reallocated money from its own budget

to create an intra-campus superhighway. There is still the need to connect all

campuses and, for example, to finish the SFSU superhighway. SFSU does not have

the money to complete this campus superhighway and the money is just not available

within the system to create a system-wide superhighway. For example, Stanislaus

and Los Angeles are two campuses which have made different priority decisions

and are not anywhere near to SFSU's state of readiness in terms of technology.

The CSU system evaluated different funding sources in order to be able to build

out the technological infrastructure by the year 2005. 1) Further reallocation

of funds--since resources are already strained, anything that will pull resources

out of existing budgets would further damage the educational process, so reallocation

of funds is not a feasible option; 2) grants, contracts, and leveraging existing

assets--there is not enough money available in grants and contracts to fund

the $200-$350 million for the complete system build-out; 3) additional State

revenue--after mandated expenditures of the State, only 15% of the State budget

is available. The CSU is competing directly with the State prison system for

funding from that 15%. Also the CSU has negotiated a compact with the Governor

and the State Legislature for a certain percentage increase in the budget every

year and is locked into that. So the needed additional funding will not be coming

out of State revenue. 4) Capital outlay and revenue bonds--the capital outlay

funding capacity for the CSU is $150 million per year. This outlay is covered

under general obligation bonds, assuming that the Legislature approves a bond

issue and that the voters approve the bond issue. However that $150 million

has to take care of all the building needs of the CSU including meeting the

Americans with Disabilities Act requirements, seismic retrofit and building

to meet new enrollment. For example, to rebuild a state-of-the-art library would

cost at least $80 million, so $150 million is not enough to build out the system-wide

technology infrastructure. Revenue bonds are related to the fiscal capacity

of the CSU and the CSU would be required to take something off the top of the

budget to do the amortization on the bond. It would create a strain on the system

budgeting process. 5) Technology fees--there is no support for fee increases

either on the campuses or in the State Legislature or by the Governor, so this

is not a likely source of revenue. 6) Partnering with the Private Sector--this

option is the only viable option. By entering into an exchange relationship

with the private sector, each partner will get something and give something

in exchange. The purpose of the private sector is to make money and the purpose

of the CSU is to provide education. There needs to be some way to strike a balance

to let private sector entities make money without sacrificing the educational

mission of the University.

The System-wide Internal Project (SIP) objectives are as follows:

  1. Define the baseline technology infrastructure requirements.
  2. Bring a unified system-wide approach to the planning, development, and implementation

    of the technology initiatives.

  3. Meet the growing technological needs and expectations and achieve the objective

    of ubiquitous (anytime, anywhere) access and the mission of the CSU.

The Scope of the Project includes the intra-campus infrastructure, the inter-campus

infrastructure, hardware (e.g., desktop computers), software (e.g., common environment),

user training and support, and the administration, operations and management

of these. Exclusions, which are defined as outside the scope of TII-SIP, include

planning, designing, building, operation, maintenance, enhancement, and financing

of data centers; administrative, student and library applications; and discipline-specific

instructional applications.

Included in the intra-campus infrastructure are the following:

  1. Telecommunications support for all communication services (voice, video,

    data).

  2. Telecommunications administration, operations and maintenance.
  3. Inter and intra-building build-out and on-going deployment (i.e., design,

    installation, and construction) of wiring, cabling, spaces, pathways, terminal

    and station equipment, LANs, WAN, video facilities, servers, routers, PBX's,

    voice mail and response systems, 911, automatic call direction, and station

    management.

The inter-campus infrastructure includes the following:

  1. Telecommunications functions to support all communication services (voice,

    video, data) in the CSU system.

  2. Telecommunications administration, operations and maintenance of the system.
  3. Telecommunications build-out and on-going deployment of regional, Statewide,

    national, and international systems (i.e., planning, provisioning, optimizing)

    for access and service for local and long distance, cellular, micro-cellular,

    wireless, PCS, microwave and satellite transmission/reception, switched, dedicated

    and virtual inter-campus facilities and services for the entire CSU.

User training and support includes applications training, "Help" and service

desk, hardware and software maintenance, upgrade and renewals or "refresh,"

and installation and configuration.

The estimated cost for the intra-campus infrastructure for 1998-2001, according

to the latest number, is $243 million. A process is underway to try and validate

data that has been provided by the campuses concerning costs.

The expected outcomes for faculty and staff include:

  1. Current desktop computer (with adequate refresh).
  2. 24 x 7 (24 hours per day, 7 days per week) access to the intra- and inter-campus

    network.

  3. 24 x 7 access to the Internet.
  4. Enhanced access to intellectual resources for scholarship, instruction,

    and creative endeavors.

  5. Support services (help desk, service desk).
  6. Basic and refresher training in hardware, applications software, and the

    Internet.

  7. Opportunities to contribute educational content to new education/training

    ventures and to receive compensation for those contributions.

The expected outcomes for the private sector partners include:

  1. Fair rate of return on investment.
  2. Access to world class faculty, education, and training.
  3. Access to CSU affinity groups.
  4. Access to an employment pool of qualified, educated students and graduates.
  5. Exclusive rights to provide technology and services within the scope of

    the baseline infrastructure.

  6. Opportunity to bid competitively to provide technology and services outside

    the scope of the baseline infrastructure.

  7. Access to the CSU research environment and information resources.

Some of the critical dates in this process were discussed. In October 1996

the Chancellor convened a system-wide meeting of campus representatives to discuss

the concept of putting together this partnership. Having obtained agreement

to proceed with the planning process, in November 1996 the SIP team was formed.

This team consisted of members from each campus. In April 1997 the SIP Development

team was formed. This subgroup of the main SIP team dialogued with potential

private sector partners. In June 1997 the selection was narrowed down from six

to three corporate teams. The SIP team reviewed and analyzed the 3 business

plans in August 1997. On September 3, 1997 the Trustees accepted the CETI proposal.

After September 3 the campus Presidents were asked to submit criteria for the

best deal and to describe the issues.

SFSU defined the characteristics of the "Ideal Deal" as the following:

  1. The technical infrastructure of the campus and off-campus sites completely

    built out.

  2. Access provided for appropriate and robust telecommunications infrastructure,

    and "refreshed" over the next decade to meet current and projected needs of

    the campus into the 21st century (in other words, a great big superhighway

    for SFSU).

  3. A sufficient choice of desktop environments will be provided to accommodate

    different and unique needs of the various disciplines (acknowledging that

    some standardization will be necessary).

  4. Provide sufficient flexibility to procure desktop equipment at least cost.
  5. Provide sufficiently "robust" technology to insure ubiquitous access for

    faculty, students and staff.

  6. Desktop hardware "refreshed" at regular intervals to ensure that faculty,

    staff and students have access to the most current technology for faculty

    and staff workstations and student computer laboratories.

  7. Adequate software installation, training and support available for faculty,

    students and staff including general purpose instructional student computing

    laboratories.

  8. Insure that no campus shall abruptly decommission nor neither discontinues

    existing systems of service nor re-commission them prior to the end of their

    useful life. Replacement systems shall provide significant enhancement.

  9. CETI partners will offer State-of-the-art products at attractive prices,

    but will not require exclusive procurement.

  10. Financing of the infrastructure build-out will not cause redirection or

    reallocation of existing campus financial resources.

  11. Services and service levels currently provided to faculty and staff at no

    cost shall continue to be available to campus employees at no cost.

  12. Provide professional development opportunities for faculty and staff, particularly

    the campus IT staff.

  13. Provide service level agreements for each campus for network access (voice,

    data and video) including provision for monitoring agreement compliance.

  14. Provide for long-term development of a responsive relationship to campus

    needs.

  15. Provide adequate protection for employment rights of existing employees,

    particularly existing IT staff who are engaged in providing some of the services

    that will relate to the scope of SIP.

  16. The partnership should provide for development of new sources of revenue.

    Existing revenue producing and entrepreneurial activities should be retained

    by campus entities which "own" them unless the campus entities are willing

    to give them up voluntarily and/or are compensated for giving them up. All

    parties must agree.

  17. The partnership should complement existing campus partnership arrangements

    which engage in activities outside the scope of the System-wide Internal Partnership.

  18. Prefer that "face to face" desktop support be provided by campus employees

    and student staff reporting to them since employees of other entities might

    not understand our culture and might not be as responsive as campus employees.

  19. Significant involvement of relevant campus staff in infrastructure construction

    and installation projects.

  20. Inspection and sign off on such work by relevant campus staff.
  21. CETI partners shall not assume use of any physical campus space for telecommunication

    equipment or use by partner subcontractors without appropriate campus review

    and approvals.

  22. The partnership shall not prohibit campuses from seeking donations and gifts

    from non-partner firms.

Issues that are of concern to the SFSU Campus Community include the following:

  1. To what extent will the campus be taxed to finance partnership activities?
  2. Are the revenue-producing activities which would interfere with the College

    of Extended Learning either by assuming some of its activities or causing

    it to lose revenue?

  3. Would implementation and various marketing activities produce conflict between

    the campus leadership and campus constituencies?

  4. Would adequate protection be provided for campus employees, and would the

    campus be subjected to potential cost or risk in addressing human resource

    issues?

  5. Would faculty intellectual property rights be protected and/or faculty appropriately

    compensated for development and/or production of software and other learning

    materials?

The guiding principles behind the CETI agreement include the following:

  1. CSU staff will be retained by the CSU campuses.
  2. Initial build-out, up to the face plate, will be at no net cost to the CSU.
  3. The CSU will provide exclusivity to the partnership for technologies within

    the scope of the agreement. Prices will match the best prices which can be

    obtained by individual campuses. Exclusivity will not be provided for technologies

    outside of the scope of the agreement.

  4. The CSU will have a majority role in the partnership governance structure.
  5. The corporation partners will promote and utilize the CSU's education and

    training capabilities and services.

  6. Partnership revenue-generating programs must be approved by the CSU.
  7. The partnership organization will be responsive in meeting campus and system-wide

    needs and priorities.

  8. The partnership will honor the intellectual property rights of the creators

    of the property.

  9. The partnership governance structure will provide a means for campuses to

    review and challenge partnership price/performance for services and products

    within the scope of the agreement.

  10. Partnership success will be judged by its ability to maintain and sustain

    the currency of the technological infrastructure, its responsiveness in meeting

    campus and system-wide needs and priorities, its contribution to new modes

    of learning and the delivery of education, the creation of new tools and opportunities

    for faculty, students, and staff, and the contribution to personal productivity.

In September, business plans were submitted and reviewed, the campus review

started and the partners were selected on September 3. Initial campus implementation

planning, consultation, and visits started in October and partnership agreement

negotiations also started. Detailed implementation planning is expected in November

along with a completed partnership agreement. In December, the schedule calls

for campus review of the implementation plan, which will provide more opportunity

for discussion and debate, and an internal review of the partnership agreement.

In theory, the partnership agreement will be signed on December 15. However,

Scoble stressed that no agreement has been signed yet.

Scoble is serving on two committees, the Organization Agreement Team and the

Negotiating Committee. He said that at this point, there has been a conceptual

agreement on an organizational framework. The proposed entity structure includes

the CSU, the CSU auxiliary (to be named later), and CETI. The CSU auxiliary

would be non-profit and controlled by the CSU. It would be used to provide communication

utilities and commodities and products to the CSU. The entire scope of this

auxiliary would be internal and not for profit. CETI would be an outside corporation

with external markets as its focus. It would be for profit and would compete

with any other communication provider.

More information may be obtained at http://its.calState.edu/sip and in the

document "Q&A's About the Technology Infrastructure initiatives (TII)" which

is available on campus.

Phillips stated that the problem as he sees it lies outside CSU in the

moral bankruptcy of a culture that puts us in the position of having to engage

in the possibility of "Faustian" explorations. He said that he worries about

who we are dealing with, where we come out, and what the degree of power and

strength is in the CSU and the degree of naivetÈ in dealing with some

of the corporate partners. He mentioned a memo he had received from the Senate

Chair at Cal State Hayward that indicated that CETI has first right of refusal

on all revenue generating projects. He questioned the protection of intellectual

property rights. He didn't see in Scoble's presentation any mention of what

the payoff is for students. He questioned whether computer access on this campus

at 4:00 am is attractive and whether there are any student advocates in the

process.

Scoble responded that we were given the process that we are in and one

of his responsibilities is to try to achieve the best outcome that we can. While

acknowledging that the rules of engagement are somewhat different than the usual

CSU negotiations, he felt that the bargaining team is not as naive as they might

appear to be. The SIP team has hired an owners representative, Harry Walaesa

who is a consultant to the committee. Walaesa is used to making "hardball" deals

with the private sector and is pledged to guard the interests of the CSU. Scoble

said that if the CSU does not arrive at a deal that meets the needs of the CSU

and honors the CSU culture, there will not be a deal. But he believes there

will be a deal. He felt that the things that campuses are saying are being heard

and that there is a recognition for the need for a lot more consultation and

a lot more debate in the CSU. He explained that the CETI document is a business

plan from the private partners, but it is not an agreement.

Barnes asked if in the hardball negotiations there been any thought

about the free market system. The companies that donate equipment in the beginning

get a tax right off. He asked if it has been said that we will try it, and if

we like it in 2 years we will keep it since in the free market we have the right

to go to other providers. Scoble responded that at the present time GTE

has said that they are willing to provide, not necessarily donate, $36 million

of working capital. They are also willing to redirect $120 million that is being

spent on the infrastructure. The commercial partners would borrow the rest of

the money, through bonds, to build out the technology infrastructure. There

would need to be a revenue stream to pay back the borrowed money. A good part

of the revenue to retire the bonds would, in theory, be created by CETI competing

in the marketplace. The other revenue producer would be a lease back to the

campuses for technology which is provided. The theory is that money that is

currently being spent on technology would go to pay back the lease holders.

Todd Chretien, student in history and member of the International Socialist

Organization, felt that the University will feel a lot of collateral damage.

He expressed concerns about the process of notification, the process of everything

getting done, and input from students. Since the decision was made in the summer

when students were not in school, there was no input from the students. Associated

Students only got the CETI document a week ago, so he felt that the decision

must be put off. He felt that the December 15 "lock off" date is "cramming it

down our throats" with no opportunity to oppose the proposal or to get specifics.

He questioned what is going to happen when Microsoft is not so profitable. He

questioned what would happen after a couple of years when Microsoft and Fujitsu

start to look at the University as a "cash cow" and stop giving the CSU a good

deal. He felt that the process must stop. He called for Scoble and President

Corrigan to hold a well publicized, public town hall meeting around CETI/SIP.

He felt that students should have a vote on whether or not to accept the program.

Julian Randolph said that Scoble had said that our business is education

and that the business of business is to make money. Randolph felt that what

is dead wrong is to be in the business of making money for the private sector

partners. What he felt is not clear is how the CSU will be making money for

them. It seemed very odd to him that it took a year and a half for the Trustees

to get to agreement on the CETI proposal and now there is only a month or two

for campus input. In seeing the campus presidents response to the proposal,

acknowledging that the proposal is for infrastructure buildup, only 6th on the

list is some mention of curricular integrity. He felt that technology cannot

drive the curriculum, it has to be the other way around. The curriculum has

to be built from the bottom up by students and faculty. He also felt that it

is unclear what role the CSU is playing for the corporate partners by opening

doors of access to affinity groups. He felt that the corporate partners should

spend their money to do that. He felt that we need to be clear about what products

those potential partners make. Hughes makes aircraft and big weapons and he

felt that we should think clearly about making a commitment to that type of

organization. Concerning distance education, he felt that the curriculum should

be developed from the bottom up. He felt that the State has moved away from

its commitment in the Master Plan to serve the students of California. He felt

that distance education offers different kinds of privileges for the elite,

those who have immediate access at home to computer technology. He also said

that what goes on in education is not limited to the discipline but includes

socialization. He felt that in these times socialization has to take place in

major ways.

Scoble agreed that building out the superhighway would make possible

the slicing out of the elite, but whether or not that will happen is unknown.

He felt that the infrastructure is still needed to meet current needs. He said

that a massive virtual university serving large parts of the SFSU population

is unlikely and that he sees SFSU continuing to do what it is doing into the

next century. SFSU will reach its Master Plan enrollment cap next year. He also

felt that it is unlikely for this campus to get the enrollment cap lifted since

an environmental impact statement would need to be completed and there is capacity

elsewhere within the system. So perhaps some mix of instruction will be needed

to meet the needs of the future student population. With respect to making money,

he said that we are already doing business with business because everything

in the room was bought from a corporation that made a profit on it. This proposal

is to make partnerships with business, but there is no guarantee that it will

make money. He said that he sees the enterprise losing money for a half a decade.

Phillips reminded people to limit there remarks to two minutes so that

as many people as possible could be heard.

Cherny said that he was pleased that the team had addressed the issue

of charges for access to the Internet. He was also concerned about access to

supposed excess capacity of the CSU and that issue was also being addressed.

He was concerned about a control issue. He said that the initial proposal included

that each of the five partners will have one director in CETI who spoke to the

CSU director. He felt that the CSU needs to keep the majority control so that

the CSU cannot be out-voted. Another concern that he expressed was that if CETI

loses money, will there be a fire wall which keeps that from draining CSU resources

There is, from his perspective, also a conflict of interest. Since CSU will

be profiting from second sales to CSU, there could be a conflict of interest

over whether there should be exclusivity for CETI. He further questioned whether

the hardware and software involved will be that which will provide access for

disabled faculty, students, and staff. Scoble replied that the fire wall

will be negotiated in the exit strategy, it has not been addressed yet. With

respect to composition of the board and control, that has not yet been negotiated.

In terms of the conflict of interest, he said that CETI is selling off campus.

In relation to the CSU procurement process, if CETI offers good prices, the

CSU will have incentive to buy from them.

Phillips said that a two-minute rule would now be in effect and speakers

must adhere to it.

Duke thanked Scoble for an excellent presentation and for taking on

the role of championing the cause. He expressed concerned about what the partnerships

will get out of this, since it was not clear to him. He said that he read in

the original document that CETI would make money by selling stuff to faculty

and students, but that is in direct conflict with The Bookstore. The document

also says that one of the benefits is that the CSU will offer classes for the

partners. He questioned how that would directly benefit the CSU. He felt that

the partners' goals need to be clarified. Scoble replied that the CSU

and the private sector partners agree that they will not make as much money

as the business plan stated. The external corporation must rely on marketing

techniques in order to make money. In theory, CETI will make money by selling

communication services to the external world. Most of the risk will be on the

part of the partnership, not the CSU. As with Extended Education, some faculty

wish to participate, some do not. Classes for the partners will be much the

same and will be provided through some CSU entity.

Joe, representing the Students Peace Action Network, felt that privatization

is a daunting issue and that informing students in one month is impossible.

He asked the Academic Senate to postpone the signing of the agreement for one

year. He also wanted to read a financial analysis written by Accounting Professor

Robert Daniels. This statement was submitted and is attached as Attachment A.

He questioned how CETI would make money and expressed opposition to the proposal.

Phillips explained that the Senate had passed a resolution on October

21 that called for more time for decision making.

P. Warren said that she was in agreement with all of the concerns raised

here. She was glad to see the principles listed, particularly in terms of the

SFSU response, but she was concerned about some definitions. She questioned,

for example, the meaning of "some standardization" and the definition of faculty

rights to intellectual property. She asked how far will the work have progressed

on arriving at those definitions before signing. She felt that while on one

hand it is comforting to see the role proposed for the CSU, but wondered whether

the CSU central administration is on the same page in terms of the faculty role

and the students role. Scoble replied that the team is still debating

how much detail is needed in the agreement before signing, so he cannot give

a definitive answer.

Fox-Wolfgramm asked if, during negotiations, it has been discussed as

to what happens if a partner company goes bankrupt, goes out of business, merges,

or is taken over and what are the provisions for new partners. She asked how

binding does Scoble see the contract. Scoble replied that no discussion

has taken place concerning provisions for new partners since the current proposed

partners are seen as stable. An exit strategy has yet to be negotiated. In terms

of how binding the contract will be, that has yet to be determined.

Scott Johnson, student and SFSU employee, wondered why the University

would want to do business with Microsoft since the Department of Justice has

threatened to fine Microsoft $1 million per day for anti-trust violations. He

questioned whether this is the kind of corporation the University wants to deal

with. He said that Microsoft is not known for being nice and that one of the

reasons that Bill Gates is the richest man in the world and Microsoft is the

largest organization in the computer industry is that "Microsoft is a greedy,

back-stabbing corporation." He felt that the University should not do business

with such a corporation. He questioned why all the CETI/SlP dates presented

are in the past instead of the future to allow for discussion. He was concerned

that CETI/SIP meetings were not advertised. He said that President Corrigan

wrote in First Monday how SFSU should be run like a business. Johnson

felt that as a public university, SFSU is not a business and that it should

stay that way.

Eisman said that a lot of the discussion is not about the center of

what is being built. He felt that CETI will be a telephone company. The deregulation

of phone companies and the convergence of analog and digital technology are

both going on in technology. He felt that the discussion is really about partnering

with a telephone company. What the partners are getting out of this is the ability

to sell communication services. He felt that basically the proposal is to build

a State-wide telephone system with switching centers in the major metropolitan

areas with pipelines between them. They are not building an infrastructure to

serve the CSU needs, they are building a telephone company to serve and route

all traffic that goes through the company. Scoble mentioned that faculty concerns

were being put aside for the first phase of the discussion. Eisman felt that

the faculty issues, i.e. intellectual property rights and distance education,

are marginal issues to this discussion. The virtual university does not exist.

Since what is being built is a telephone company, he felt that it will make

money. He said that he wants to make sure we get our share. Scoble replied

that yes, the theory is that this entity will make money and that money will

be used to fund infrastructure.

Houlberg said that there are a lot of changes in technology. He asked

what will happen when we use low orbit satellites and there will be entirely

different capacity issues than we have now. There are technology issues that

will have an impact. He asked will we be locked into a structure that we can't

get out of but won't meet our future needs.

Woo said that he felt that they are trying to create a company to compete

with the cable company, not a telephone company. He felt that we need to be

very careful about cutting edge of technology. He wanted to reserve judgment

on whether or not to go into business. But he felt that these are not the right

people to go into business with and that this is not cutting edge technology.

He said that he is convinced the future of digital learning is in the merger

of digital and analog not through existing cable or something like it. He felt

that we need to involve the students, since the future technology will be determined,

created, and run by our students, so we need their vision.

Cynthia Prince wondered if the CSU auxiliary will be the overseers of

CETI and if not, is there a group being put together with representatives from

all the CSU campuses, including students on up, to oversee the interactions

and sales from CETI to the CSU. Scoble replied that there is a proposal

to have representation from every campus on an advisory commission to perform

that oversight, but he didn't know the details. Phillips asked if Scoble

could ensure that he will present the viewpoint that students should be included

on that commission. Scoble replied in the affirmative.

Adria Goad said that students have not been educated about these issues

and therefore cannot make informed decisions. She felt that there are a lot

of issues to address. She felt that this is letting off the government entirely,

that it is their responsibility to fund the CSU system. The idea of distance

education at remote sites ignores the issues of community. She said that as

a commuter campus, there are enough community problems here. Distance education

would eliminate community, learning from each other, and class discussions.

She felt that this agreement obviously sees students as a commodity and she

didn't want to see "SFSU, Incorporated." Her other questions were submitted

in writing and are included as Attachment B.

Cherny said that he had heard a rumor that the December deadline was

being driven by the Chancellor's desire to sign-off the agreement before he

leaves. He wondered if that were rumor or truth. Scoble responded that

he had heard the same rumor but that the December date has been set from the

beginning.

Phillips said that the Senate would do the best to get information out

to faculty. For students, he said that the Golden Gater might want to

think about creating a special column for a CETI/SIP update. He encouraged the

Golden Gater to keep in contact with Scoble and he asked the Golden

Gater to also take responsibility to follow up on that. He explained that

the concerns that were raised here are similar to concerns from other campus.

Many senates have passed resolutions concerning the CETI process. The resolutions

range from support at Fresno to other resolutions condemning the whole process.

The Senate was adjourned at 4:00 p.m.

Respectfully submitted,

Bonnie Homan

Secretary to the Faculty

Attachment A

Organizations are like people. When in an impossible situation, they may respond

in irrational and unreal ways. Such is now the case with the California State

University system (CSU), which is on the verge of creating a joint venture with

four major corporations to re-wire the University system for 21st century tele-communications.

The venture, called CETI, is to be led by GTE, a major telephone and wireless

enterprise. Fujitsu, Hughes Satellite and Microsoft fill out the ranks.

The education bureaucrats who run the CSU from the Chancellors office in Long

Beach have recognized the importance of the Internet for several years. They

are also acutely aware how averse California politicians and voters are to paying

taxes to support public higher education. The estimates vary widely, but the

current plan project a three year need for $300 million in computer and telecommunications

network upgrades. Meanwhile, the faculty restlessly seek to recoup their losses

from the pay freezes of the early 1990's, the buildings are slowly crumbling,

and the legislature keeps paring away at the budget requests. Under such circumstances,

it is only natural that the CSU managers would turn to off-the-books financing,

and try to convince themselves that partnering with Corporate America offers

a magical solution to the problem of no money.

Nor is it surprising a company like GTE, seeking to make its way in a newly

competitive telecommunications business, would express interest in such a partnership.

An executive who does not appreciate the diverse nature of the CSU's 24 campuses

might dream of 320,000 students converted into new customers with a stroke of

the pen. The prospect of inter-campus communications links centered in the Long

Beach headquarters, of a centralized system-wide Help Desk, of a self-funding

entity allied with the CSU yet immune from the legislative budget committees

-- these prospects must be powerful visions in Long Beach. This despite recent

moves to decentralize, which recognized t (sic) reality that the size of the

system makes centralized management unwieldy.

In September, the CSU chose the GTE team, as partners in the CETI consortium.

The details are to be worked out in marathon bargaining sessions from now to

December 15, 1997. The best guide to the project as it now stands is the GTE

sponsored business plan, available at http://www.cob.sjsu.edu/sip_ceti/. A careful

review of that plan reveals fundamental flaws in its core assumptions. It is

time someone stood up and said But he has nothing on.

Financial Analysis

It will take a lot of money -- about $300 million over three years -- to build

out the telecom/Internet connections across and between all 24 CSU campuses.

Part of the expense may be because the proponents chant the mantra of everywhere,

any time service. This is a good sound bite, but may be bad facilities economics.

It might be that the cost of 99% coverage is far higher than 95% coverage, as

the remote outposts are the most expensive to bring into any system. There is

no explicit analysis whether the marginal cost (sic) is worth it.

Financial analysis is a surprisingly simple exercise. Almost anyone can play.

the only question is: Where does the money come from and how will it be paid

back? Chapter 16 of the business plan contemplates three sources. First, the

corporate partners will put $36 million for working capital, to cover the time

lag between expenses and revenues.

Next, a company such as GTE (how modest!) will build part of the improvements

and then lease this equipment, cabling and wires to CETI -- or maybe t CSU itself

(16-2). The lease might be direct or through an intermediary investment bank.

The plan assumes a simple lease with a conservative 9% lease rate on a $120

million (sic) investment, which just means that someone (CETI with CSU backing,

or CSU itself) would be obliged to pay $10.8 million every to GTE or to its

banker. (It is not clear whether the $120 million is the cost of the system

or is what GTE wished to be paid not necessarily the same thing.) The plan is

silent about what happens when the ten years are up. The equipment and cables

will no longer be the State of the art: indeed, Table 16-4 on page 16-7 shows

this infrastructure will be fully depreciated by the year 2007. (A modest slice

of anticipated profits are to be set aside for system refresh.) This system

will be an essential part of day to day education and administration at the

CSU. However, GTE or the banker will still own the system, and will need to

be paid for it. The $10.8 million per year appears to be only a financing cost,

like interest. No rational investment banker would put up $120 million dollars

for 10 payments of $10.8 million that's a clear loser even if we don't count

the time value of money. At a rate as low as 7%, it would take over 22 years

of $10.8 million payments to recover a $120 million investment.

At some point, then, the principal as well as the interest will have to be

paid. The idea that the CSU could stop paying is ludicrous. Will all the electronic

classrooms turn dark? Will we give up telephones and computers and communicate

with signal flags? Will the repo men swarm over the campuses, pulling up copper

wire and fiber optics to sell for scrap? As a practical matter, the CSU will

be on the hook for the lease payments, whether interest or principal. If CETI

revenues fall short, the CSU must make up the difference, or shut down.

This is a special purpose capital lease. Financial accounting long ago recognized

that this type of lease is functionally identical with a purchase of equipment

which is paid off over time. FASB Statement 13 requires that the equipment be

carried on the books as an asset and that the payment obligation, as calculated

from the lease terms, be shown as a type of debt. One searches in vain through

Chapter 16 and the Appendices to the business plan for any recognition of the

$120 million long term liability associated with this financing.

The final financing component of the plan is to float a private placement of

$180 million in ten year bonds with a 7% interest rate (16-2). Since CETI is

a novel blend of the State education system and profit-seeking (sic) enterprises,

there are grave doubts whether this borrowing could enjoy the Federal income

tax exemption which now allows the CSU and the State of California to borrow

at favorable rates. Another $12.6 million flows out each year for interest,

with a balloon payment of all the principal coming due in ten years.

How would all this be paid for? The rules of this peculiar game do not all

CSU to show on the books that it is obliged to pay $23.4 million in annual interest

or the lease equivalent of $300 million of financing that will some day come

due. Instead, the business plan proposes three general sources of revenue:

  1. CSU contractual support for which CETI will be tasked to perform (16-1),
  2. The Flagship Fifty commercial products (10-1), and
  3. Having employees of the GTE team study at the CSU.

The third source does not require much discussion. Although it has the impressive

name of Partners in Education, the financial benefit of having corporate employees

study at CSU is fairly trivial. According to Tables 16-2 and 16-3, when fully

implemented this would generate $4 million a year in revenue, but cost more

than $3 million, so the net profit for CETI would be just $860,000 per year.

This is about 1% of CETIs total projected revenue, and a minuscule portion of

the amount needed to carry the underlying debt.

The money must come from the other two sources. What on earth, one may ask,

does CSU contractual support for which CETI will be tasked to perform mean?

Table 16-2 shows that CETI would absorb all telephone, computer support and

communications functions throughout the CSU, except for the main frame data

centers. It appears that CSU headquarters surveyed the 24 campuses and was told

that all telephone, computer support and communications functions cost $122

million per year; $27 million went for central telecom, $9 million for off-campus

access, $16 million per year for user training, $15 million for instructional

media, $32 million for schools and colleges, and $21 million was other. It appears

that the numbers are a bit spongy and the survey methodology imprecise. Nonetheless,

it seems that the financial success of the plan hinges on running all campus

Audio-Visual operations and all School computer lab from CETIs headquarters

in Southern California no doubt, in the vicinity of Long Beach. The GTE plan,

perhaps not accustomed t academic imprecision, treats the $122 million as a

line item hard-dollar budget number. The plan then pulls some cost reduction

factors, seemingly out of mid-air. Bu the year 2000, the cost of user training

and school/college support is to be reduced 35%, with 30% cuts in telecom and

instructional media spending. Table 11-5, page 11-3.

Workers need not fear, however. You are repeatedly assured that these cost

reductions will happen without anyone being laid off. One wonders a bit, however,

because the People Plan (Chapter 14) keeps talking about human resource assets.

Perhaps our colleagues in Psychology can diagnose the syndrome behind this weirdly

depersonalized way of describing the faculty and the staff who work at the CSU

campuses. Alternatively, perhaps the notion of introducing flexibility into

the mobility of their human resource assets (Sec. 14-4) is simply techno-babble

for good old-fashioned union (sic) bashing. Students, too, are to be utilized

to fill personnel and functional shortfalls, and are to be given degree credit

for participation in working for CETI. (Sec. 14-6)

So how does CETI make any money from taking over telecom and computers within

CSU? The answer is: by keeping all cost savings for itself. A wave of the wand

is to cut $30 million per year from the cost of providing these services, fully

effective by 2001. CETI, however, will continue to charge CSU the old price:

the telecom service contract will bring in $122 million each year and only cost

$83 million. The contract profit pays for CETI overhead, debt and lease service,

and helps the buildup of $106 million or retained earnings by 2007 on the initial

$36 million investment. (Table 16-5)

With no layoffs, how is this enormous cost savings to be accomplished? Chapter

11 discusses such measures as increased physical plant utilization (translation:

running the University during the summer), administrative systems enhancements

and related enhanced capabilities, and the reduction of redundant telecom programs

(Table 11-1). It appears that CETI will appropriate for itself many efficiency

moves proposed at various times by CSU consultants, which have little to do

with telecom systems (page 11-6). For example, Student Services costs are supposed

to go down 20% as paperwork processing is reformed and duplicate signatures

or reviews are eliminated based on a Coopers & Lybrand efficiency study

of applications, financial aid and registration.

But if CSU were to re-engineer its paperwork by itself, it would keep what

it saved. Why turn the money over to CETI? Now comes the kicker the people doing

the (sic) work will be CSU employees under subcontract to CETI. The new entity

will not have (sic) any employees of its own, except perhaps some executives

who will be granted the obligatory stock options (Sec. 12.5). CETI will also

have rent free access to CSU facilities, including power, heat, lights, services

and security (15-1). Absent employees, the work to be done will be subcontracted

to CSU. For example, the computer labs will belong to CETI, while the lab staff

will be CSU employees working for the CETI Technology Services Utility (Fig.

12-2) under a subcontract, so CETI can deliver the promised services back to

faculty and students of CSU.

Suppose you want a fence painted. You hire your neighbor to paint it and agree

to pay your neighbor $100. Your neighbor then hires you as a subcontractor to

paint your own fence for $70.

Nice work if you can get it.

© 1997, Robert Daniels, Professor of Accounting, SF State

My views are my own, not those of SF State.

They are always subject to change if I learn things I did not know before.

Attachment B

Questions

  1. Associated Students and the Student Center Governing Board want to create

    a forum to educate the students of this university. We would like to get your

    input and help in putting the together.

  1. We want to know how this agreement can be signed on December 15th when there

    is so much "yet to be determined".

  1. We want to know how this agreement can be postponed so that we can include

    an educated student voice in this process.

  1. We want to know if there is an escape route? (Previously we have heard from

    Tom West that there is and this was contradicted today.)

Adria L. Goad

Associated Students

415-338-1230 x6

adria@sfsu.edu