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DOA: Richard Lariviere's $800 Million Dollar Crap ShootErsun Warncke Salem-News.com
The Lariviere plan is simply a replay of the Oregon College Savings Plan disaster on a larger scale.
(EUGENE, Ore.) - Richard Lariviere is the current President of the University of Oregon. Mr. Lariviere has been on the job for about a year. If he is trying to live up to David Frohnmayer's legacy of corrupt political hack style maneuvering, he is certainly on his way.
The icing on the cake from Lariviere is his recent proposal for "funding" the University of Oregon by issuing $800 million in new State bonds. This crooked scheme will supposedly solve the University's problem of tuition costs rising by an average of 7% per year over the past 35 years.
Assuming that the State Legislator was actually dumb enough to approve this deal, the only result would be a billion dollars being transferred from Oregon Taxpayers to Wall Street investors, and a continuous decline in the financial condition of both the State government and Oregon's premier State University.
Whoever cooked this rotten egg certainly has a high level of contempt for the intelligence of our State's legislative body, but even illiterate backwoods yokels know what steer manure smells like, and no amount of slick talk can cover the stench on this one.
Lariviere's plan goes like this: 1) The State borrows $800 million on the Taxpayers' credit. 2) The Wall Street banks running the deal collect millions in fees. 3) Wealthy investors collect roughly $800 million in tax free interest income. 4) The University "invests" this money in stocks and bonds. 5) Wall Street banks collect millions more in fees. 6) "Investment" returns never materialize, and hundreds of millions of dollars are lost on these dodgy "investments." 7) Oregon's taxpayers end up at least a billion dollars poorer. The plan, in plain English, is that the State borrows $800 million on the Taxpayers' credit, and the University uses this money to gamble in the stock market.
Anybody idiotic enough to propose a deal like this most certainly lacks the competence to gamble with Wall Street and win, and so the baseline of a billion dollars in losses on interest and fees is probably a conservative estimate.
Lariviere is definitely not an expert in finance, but this proposal is only one example of his apparent incompetence and/or corruption.
There is the question of Lariviere's supposed "verbal contract" with University of Oregon Athletic Director Mike Bellotti, in which Bellotti was paid $2.3 million when he decided to quit his job to go work for ESPN.
Why someone who voluntarily leaves their job should be paid any severance at all is an open question. Why they should be paid $2.3 million dollars with no written contract is an even more interesting question. Why the person who signed off on this deal still has their job is subsequently an equally valid question.
Lariviere's dubious contractual games with Athletic Directors did not end with Mike Bellotti. New Athletic Director Rob Mullens has just been given a 5 year $450,000 per year contract, with the potential of up to $150,000 in additional bonus compensation per year.
This deal includes some very dubious clauses, which in effect have Lariviere holding the University hostage if they want to fire him. What is key here is that if Lariviere is no longer President, then the financial conditions of Rob Mullens' contract will significantly improve, to the tune of several million dollars.
The inclusion of these contractual terms certainly has the whiff of fraudulent collusion between Lariviere and Mullens in order to protect both of their jobs and impose a harsh economic penalty on the University if they get rid of them.
Lariviere's other major boondoggle is his promotion of a project to develop an office complex and parking lot on the bank of the Willamette River near the University in Eugene. The river front in Eugene is almost completely undeveloped and consists primarily of public land.
This is how the people of Eugene like it.
Even if the University can buy off the City, they are never going to convince the public that now, as opposed to any time in the last 100 years, is the crucial moment when we need to start defacing the central piece of natural beauty in our City for the benefit of a few large construction companies and their corrupt political hack friends.
What of the University's ever escalating tuition and stagnant academic climate? In a student poll on Unigo, the University is rated (out of 10) a 6 for intellectual life, a 7 for drug culture, an 8 for alcohol use, and a 9 for sports. Those results sound like they are roughly in line with the priorities of the University's top management over the past decade or so.
David Fronhmayer is, to his credit, a clever man and a talented hustler. During his five year tenure as President of the University he did about what you would expect from someone who spent the bulk of his career as a politician in Oregon.
Over a billion dollars was spent on construction of new buildings.
A couple of very nice stadiums and an absurdly grandiose athletic facility figure largely in that construction budget. At the same time little or no attention was paid to actually making the University a place where the children of the people who pay for all of this could learn the skills they need to succeed in life.
The University is not all that concerned about Oregon students, because two thirds of their student body are either out-of-State or international.
Seeing as how an out-of-State student earns them three times as much money, the University has clearly prioritized with their pocketbook, even though it means that our premier State university actually has very little connection to the people of our State.
Lariviere appears to be little more than a Frohnmayer retread, minus Frohnmayer's talent. Lariviere also lacks Frohnmayer's long history and political connections in Oregon.
Whereas Frohmayer was juiced in with corrupt politicians on both sides of the isle in Salem and Portland, Lariviere is lacking a similar support network of like minded individuals.
It is likely then that Lariviere's fate will be to get tossed under the bus whenever his usefulness as a shill has been exhausted.
This moment will hopefully come sooner rather than later, because the last thing this State can afford is to waste another billion dollars of our education budget gambling in the stock market.
Anybody remember losing hundreds of millions of dollars on the Oregon College Savings Plan?
The Lariviere plan is simply a replay of that disaster on a larger scale.
This time it is being done with State bonds because there are not enough individual investors left who will buy into the State's stock market gambling schemes.
If the Oregon Legislature wants to address the University's long term problem of excessive tuition inflation, my suggestion would be to hire a President who isn't going to run the University as welfare agency for Wall Street banks and construction companies.
Salem-News.com Business/Economy Reporter Ersun Warncke is a native Oregonian. He has a degree in Economics from Portland State University and studied Law at University of Oregon. At a young age, his career spans a wide variety of fields, from fast food, to union labor, to computer programming. He has published works concerning economics, business, government, and media on blogs for several years. He currently works as an independent software designer specializing in web based applications, open source software, and peer-to-peer (P2P) applications.
Ersun describes his writing as being "in the language of the boardroom from the perspective of the shop floor." He adds that "he has no education in journalism other than reading Hunter S. Thompson." But along with life comes the real experience that indeed creates quality writers. Right now, every detail that can help the general public get ahead in life financially, is of paramount importance.
You can write to Ersun at: email@example.com
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