A Mass. Referendum, Revenue Sharing, And Taxing College Sports

When the Supreme Court reversed the 1984 Chevron ruling in June, the overwhelming majority of the folks in higher education I’ve talked to breathed a (quiet) sigh of relief, regardless of political orientation.

The original Chevron ruling, which gave regulatory agencies significant latitude in establishing regulations that Congress hadn’t directly addressed in legislation, has created a series of whiplash events for those leading colleges and universities over the past decade.

Why? Every time a new administration came into office, it seemed that many higher education regulations would change dramatically.

As anyone will tell you, managing in tremendous uncertainty where the context changes in significant and unpredictable ways every few years is a surefire way to freeze innovation and investment.

So while I expect the rulings in Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo that overturned Chevron will, over time, result in legal action that begins to stabilize some of this regulatory whiplash, I also wonder if it will have some surprising impacts.

Today’s Higher Education Act bars incentive compensation—paying money—to employees or third parties in exchange for enrolling students. In 2011, however, the Education Department issued a Dear Colleague letter saying that the ban didn’t apply to third parties that provided a bundled set of services, which could include recruitment. That ruling has largely held the online program managers (OPM) industry together, as companies like 2U and more have been able to share in the revenues with online programs at colleges and universities.

That’s a letter that many have expected this current Department of Education to reverse. And that expected reversal is also an example of the whiplash many have hoped to move beyond.

But in a post-Chevron world, I wonder how the original 2011 Dear Colleague letter is even permissible in the first place. From the perspective of plain English, it seems to clearly override Congress’s policy as expressed in the Higher Education Act.

I wish it were otherwise. To me, the Dear Colleague letter makes sense, as I’d prefer the Department of Education regulate outcomes rather than the arrangements by which colleges and universities deliver education. But I’m not sure how I see the Dear Colleague letter standing in a post-Chevron world.

If I’m wrong, I’d love to learn why.

Taxing College Sports?

In the vein of continued speculation… As the changes around college athletics reach a fever pitch, with “athlete students,” as my Future U. co-host Jeff Selingo recently termed them, receiving large deals from NIL (name, image, likeness) Collectives to attend and compete for certain schools; an agreed-upon resolution between the NCAA and House allowing for athlete students to be paid directly by the schools; and employee status on the horizon, I wonder if the IRS might step in and force the issue of whether college sports teams remain, well, part of colleges.

How might the IRS get involved?

Although tax-exempt entities (non-profits) don’t pay tax, they can pay tax on “unrelated business income.” The definition of unrelated business income is that which is “from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption.”

My sense is that it’s harder and harder to claim that big-time, varsity sports are connected to a college’s educational purpose. Might the IRS declare the revenues from varsity athletics to be unrelated business income—and therefore taxable?

If that were to happen, I wonder whether colleges might spin some of their athletic teams out as related for-profit entities.

Massachusetts Referendum On The MCAS Graduation Requirement

Several stories suggest that Massachusetts voters are likely to end the requirement that students pass the MCAS (Massachusetts Comprehensive Assessment System) exams to graduate when they vote on Referendum 2 in November.

Ending the requirement would be a mistake.

Although there’s plenty of room for improvement in the MCAS English, science and math exams, having a third-party validate that someone has learned and mastered certain foundational skills and knowledge is a good thing. Teachers shouldn’t be the judge of their students’ performance. Not only does it create an incentive for grade inflation, but it also puts teachers in the uncomfortable position of being not just students’ coaches and advocates, but also their judges and juries. That’s unfair to teachers, students and parents.

In the absence of a robust set of publicly-funded educational choices for families, it’s a bad idea—and one that’s in search of a problem that doesn’t really exist.

According to The74, “Ultimately, the vast majority of students — about 99% — meet the requirements.”

In other words, the exams largely serve as a floor, not a ceiling. And it’s as close to a mastery-, or competency-based, one as we have in this country. Students are allowed to take the exams multiple times—and there is even a provision for alternative ways of showing mastery.

What’s more, because Massachusetts doesn’t have statewide high school course requirements, it gives students (and schools) the latitude to at least theoretically explore a variety of interests in multiple pathways—career and academic.

Mass. Gov. Maura Healey, Mass. Secretary of Education Patrick Tutwiler, the National Parents Union, the Democrats for Education Reform, the Boston Globe, and more are right to argue in its favor.

As The74 quoted the National Parents Union president and Mass. resident Keri Rodrigues, the parent of five children, one of whom receives special education services, “getting rid of the requirement in the name of kids with disabilities is ‘really offensive.’”

It would be another sad step in the name of equity that would be anything but equitable.

Massachusetts may have led the way in education for a long time, but its star has been increasingly fading.