International Forum on Investment in Private Higher Education

International Forum on Investment in Private Higher Education Hybrid Models: Overcoming Resistance to the “P” Word © 2004 Dow, Lohnes & Albertson, pllc

Michael B. Goldstein mgoldstein@dowlohnes. com © 2004 Dow, Lohnes & Albertson, pllc

The Inherent Power of a State to Regulate Institutions © 2004 Dow, Lohnes & Albertson, pllc

How We View Institutions © 2004 Dow, Lohnes & Albertson, pllc

Secure & Manage Finances Secure or Build Facilities Set Academic Standards Develop Curriculum Adopt Curriculum Appoint Faculty Employ Faculty Set Admissions Standards Market Institution &Recruit Students Set Student Performance Standards Deliver Instruction Evaluate Performance Award Credential © 2004 Dow, Lohnes & Albertson, pllc

. . . and How They Really Exist © 2004 Dow, Lohnes & Albertson, pllc

“Core Academic Functions” Set Academic Standards Adopt Curriculum Appoint Faculty Set Admissions Standards Set Student Performance Standards Evaluate Performance Award Credential © 2004 Dow, Lohnes & Albertson, pllc

“Non-Core” Functions Secure & Manage Finances Secure or Build Facilities Develop Curriculum Employ Faculty Market Institution &Recruit Students Deliver Instruction © 2004 Dow, Lohnes & Albertson, pllc

Standard Model “Institution” Education Services Company Core Academic Functions Non-Core Functions © 2004 Dow, Lohnes & Albertson, pllc

Fundamental Premises • Control over “core academic functions” remains with the institution. • Facilities and financial management, marketing and recruitment, employment of personnel and course development and delivery reside in the Education Services Company. • Investors and Lenders receive economic benefit. © 2004 Dow, Lohnes & Albertson, pllc

Potential Ownership Interests Institution © 2004 Dow, Lohnes & Albertson, pllc Education Services Company Investors

Exercise of Control Governing Body Appoint Directors Institution Services Agreement © 2004 Dow, Lohnes & Albertson, pllc Education Services Company Ownership Interest Services Strategic Partner License of Brand & Marks Ownership Interest Investor Ownership Interest Appoint

Flow of Funds Venture Capital Profits Institution Royalties, License Fees © 2004 Dow, Lohnes & Albertson, pllc Education Services Company Appreciated Value Payments for Services Strategic Partner Appreciated Value Profits Investor Payments for Services

“Core Academic” Functions “Non-Core” Functions Adopt Curriculum Secure & Manage Finances Appoint Faculty Set Admissions Standards Set Academic Standards Set Student Performance Requirements Award Credential Secure or Build Facilities Develop Curriculum Employ Faculty & Staff Market Institution & Recruit Students Deliver Instruction Evaluate Student Performance Institution © 2004 Dow, Lohnes & Albertson, pllc Education Services Company

Michael B. Goldstein Dow, Lohnes & Albertson, pllc 1200 New Hampshire Avenue N. W. Washington, DC 20036 p. 202. 776. 2569 f. 202. 776. 4569 mgoldstein@dowlohnes. com www. dowlohnes. com © 2004 Dow, Lohnes & Albertson, pllc

MICHAEL B. GOLDSTEIN is a member of the Washington, D. C. law firm of Dow, Lohnes and Albertson, where he is in charge of the firm's Educational Institutions practice. Prior to joining DL&A in 1978, Mr. Goldstein was Associate Vice Chancellor for Urban and Governmental Affairs and Associate Professor of Urban Sciences at the University of Illinois at Chicago, and before that served as Assis tant City Administrator and Director of University Relations in the Office of the Mayor of the City of New York. Mr. Goldstein has assisted in the planning, organization and implementation of many hybrid postsecondary structures combining for and non profit entities, as well as extensive experience in higher education regulation, finance, mergers and acquisitions. Mr. Goldstein holds a law degree from New York University, a B. A. in Government from Cornell University, and was a Loeb Fellow in Advanced Urban and Environmental Studies at Harvard University. © 2004 Dow, Lohnes & Albertson, pllc