For-Profit Colleges Curry Favor With Candidates for State Offices

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Jerry Brown, the Democratic candidate for governor in California, was the leading individual recipient of campaign donations from the Apollo Group among state office seekers.
November 01, 2010

For-profit colleges may be rooting for Republicans to take over Congress in the midterm elections, but at the state level, they are largely supporting the status quo by contributing to the campaigns of powerful incumbents or likely winners who will be around after the dust settles on Tuesday's voting.

Among for-profit colleges, the Apollo Group, which owns the University of Phoenix, has been the most generous to state candidates, according to data from the National Institute on Money in State Politics, a nonprofit organization that tracks state-level campaign contributions. The Phoenix-based company, along with a few of its key employees, has poured nearly $350,000 into state campaigns during the current election cycle, with roughly two-thirds of that amount going to campaigns in Arizona and California.

Those contributions are meant to build the companies' influence among lawmakers who could have the greatest impact on future proposed regulations, in particular, new state laws and regulations that authorize for-profit and online institutions to operate in a state. Under new federal rules, which take effect next year, some colleges will have to be approved to operate in a state in order for its students to receive federal financial aid. As many as 30 states may have to design a new regulatory structure to carry this out, including providing a process to review and act on complaints about an institution.

Lillian K. Taiz, president of the 23,000-member California Faculty Association, said the contributions may be meant to counter the negative publicity the for-profit institutions have received over low graduation rates and recent allegations of improperly recruiting students.

"I would speculate that they are being pre-emptive," said Ms. Taiz.

Building Favor

In the Golden State, Jerry Brown, the Democratic candidate for governor, has received the largest contributions from the Apollo Group to any individual state candidate. The company gave $13,000 to his campaign. Mr. Brown, a former governor who is now the state's attorney general, has been leading in the polls in recent weeks over his Republican opponent, Meg Whitman. Ms. Whitman did not receive any contributions from Apollo, according to the most recent data from the institute.

Apollo gave a total of $96,000 to lawmakers and parties in California, including $6,000 to the State Assembly speaker, John A. Pérez, a Democrat who is running unopposed for re-election. The company also gave $5,000 to State Sen. Robert D. Dutton, leader of that chamber's Republican minority, whose seat is not even up for election.

In fact, nearly 90 percent of Apollo's state-level contributions went to incumbents, according to the institute's data, and only 1 percent to candidates who were challenging incumbents.

While that may seem like a waste of cash to some observers, candidates in safe political districts can often rake in more campaign contributions than do those in contested areas. Those politicians can then redistribute that money to their legislative colleagues to build or maintain support for leadership posts.

In other states, Apollo gave to the campaigns of Gov. Rick Perry of Texas, a Republican who has been favored to win re-election to a third term; the speaker of the Texas House of Representatives, Rep. Joe Straus, a Republican; and the speaker of the Illinois House of Representatives, Rep. Michael J. Madigan, a Democrat.

Apollo wasn't the only company to focus the bulk of its campaign contributions in California. Education Management Corporation, which owns four different chains of colleges and operates across the country, gave nearly $75,000 to state candidates in the current election cycle, with nearly 95 percent of that amount going to candidates in California.

Campaigns in Arizona also got significant help from Apollo, including more than $100,000 given to the state Democratic Party from the company's founder and executive chairman of the board, John G. Sperling.

Shared Goals With Nonprofit Colleges

While nonprofit and proprietary colleges are often at odds on the issues and regulations they support or oppose, the campaign contributions reveal that they also share common ground on some issues.

In Arizona, for example, Apollo gave $25,000 to support a ballot initiative that voters approved last May to temporarily increase the state's sales tax. The measure is expected to generate an estimated $900-million in revenue annually and stave off cuts in higher education, public safety, and health care.

In New York, the Association of Proprietary Colleges, which represents 26 institutions across the Empire State, has given a total of nearly $79,000 to candidates. They include the State Senate's minority leader, Thomas W. Libous, a Republican who may become the chamber's floor leader if his party regains a majority after Tuesday's elections, as well as the leading gubernatorial candidate, Andrew M. Cuomo, a Democrat.

While the association's members want lawmakers to be aware of the consequences of increased regulations, the group's primary goal in the coming legislative session is increasing the amount appropriated to the state's Tuition Assistance Program, which provides annual grants from $500 to $5,000 to qualifying undergraduates at both public and private colleges.

That support puts the proprietary colleges and nonprofit campuses on the same side of the issue, said Jim Smith, a spokesman for the association. "The only difference is, We pay taxes," he said.