Des Moines Register
09-24-07
University data deals shroud money
By CLARK KAUFFMAN
REGISTER STAFF WRITER
Last year, representatives of Bank of America sat down to negotiate a deal that
would guarantee the company access to the home addresses, phone numbers
and e-mail addresses of University of Iowa students and parents.
But they didn't deal directly with school officials. Instead, they talked to
representatives of the school's privately run alumni organization.
The two eventually signed a confidential credit card marketing agreement in
which the bank agreed to pay the alumni association an undisclosed amount of
money.
The alumni association then signed a related contract with the university
guaranteeing the association - and, by extension, Bank of America - access to
publicly owned databases of information on students, parents and fans who
attend football and basketball games.
It was a roundabout way of doing things, but it's an approach Bank of America
and other credit card companies have used at many U.S. schools. It enables
some of the world's largest financial institutions to keep secret the amount of
money they pay to use the assets - and even the student athletes - of public
universities.
The alumni associations say that because they are private, nonprofit
corporations, they're not subjected to public-disclosure laws that would otherwise
force them to reveal their contracts with Bank of America. With the associations
acting as a conduit between public schools and Bank of America, the money that
changes hands as the banks gain exclusive access to a campus remains largely
hidden from view.
Robert Manning, a professor of consumer finance at the Rochester Institute of
Technology in New York, calls that process a form of legalized money laundering
that is intended to obscure the flow of cash between public institutions and
private corporations.
"There's too much money sloshing around, and there's no accountability," he
said.
The schools and their alumni aren't always so concerned about confidentiality.
Although they typically refuse to disclose all of the details of their arrangements
with credit card companies, they're often willing to give those companies
information on students, parents and supporters of their athletics programs.
'Non-public' data may be released
At the U of I and Iowa State University, students and others can request that
access to their basic contact information be restricted. Otherwise, the schools
say, that information is treated as public and given to everyone who asks including The Des Moines Register, which recently asked for and received a
copy of the most recent U of I database given to Bank of America.
But records obtained by the Register indicate Bank of America could be gaining
access to university information that isn't available to others.
For example, a memo of understanding between the U of I and its alumni
association states that in connection with the credit card program the school
"may, from time to time, disclose to the association" both public information and
unspecified "non-public information." It goes on to say that the university must
provide, if asked, updated addresses and phone numbers of students and
parents for use in Bank of America's credit card marketing program.
The U of I's current contract with Bank of America calls for the athletics
department to give the bank access to its electronic e-mail list.
At ISU, school officials say the only contact information they give to Bank of
America is data that's available under the state's public-records law to everyone,
including other banks.
But in 1999 the school agreed in writing to give Bank of America "updated and
current lists containing names, postal addresses and, when available, telephone
numbers" of everyone who purchased either a single-game ticket or season
ticket to a football or basketball game. The school agreed that it would "not
provide to others any information about any current or potential athletic mailing
lists" for the purpose of credit card marketing.
Deal gives bank unique U of I access
Late last year, Bank of America sent out a news release after finalizing a deal to
market its credit cards on the U of I campus.
In the news release, the company said it had forged new relationships with
dozens of schools across the nation, including "Hawkeyes." The bank claimed it
had established a "dominant presence throughout the United States," with more
than 800 "collegiate endorsements."
The U of I deal granted Bank of America special access to public assets such as
campus facilities and university-owned trademarks. To further promote card
usage, the alumni association and the university also agreed to give Bank of
America's biggest-spending cardholders special access to coaches and student
athletes by allowing them to "have lunch with the football team" and attend a
sports banquet seated next to the player of their choice.
Even so, the terms of the deal between Bank of America and the alumni remain
secret. Both parties have refused requests for a copy of the contract, and both
refuse to say how much the alumni association is being paid by the bank.
A corresponding contract between the university and the alumni association was
made public by the school last week in response to a request from the Register.
But that public document includes numerous references to obligations of the
school that are detailed only in the confidential agreement between the
association and the bank.
For example, the public document says the school can conduct its own
solicitations for credit card applicants and must also allow on-campus marketing
by Bank of America in accordance with the terms of the confidential agreement.
The public document also says the school is entitled to certain compensation that
can only be calculated if one has access to the confidential agreement.
If the U of I had a copy of that confidential agreement, it would be subjected to
disclosure under Iowa's open-records law. But in response to a request for a
copy of the agreement, university officials said they don't have one.
U of I: 'No reason' to possess contract
Marcus Mills, the U of I's general counsel, says there is no reason for the school
to have that document.
"Obviously, we work with the alumni association pretty closely," he said. "We
certainly could ask, and might want to ask at some point, about the financials.
But there would be no reason that I can think of that we would need to have that
contract."
Asked how the school can verify whether it's being fairly compensated under the
terms of the private agreement, Mills said, "I think you're missing the fact that we
work with the alumni association, and that if we were to make an inquiry as to
whether or not we were entitled to further compensation, they would provide us
with the financials."
Later, when asked whether the school would be willing to obtain a copy of the
agreement and release it to the public, the U of I said in a written statement that
"we don't need to see, or have the right to see, the confidential contract."
University of Northern Iowa officials have taken a similar stance. They say they
don't have a copy of their alumni organization's contract with Bank of America.
Alumni association President Mark Jastorff, who also works for the university,
declined to make public the alumni association's copy. He said there is no
corresponding agreement between the alumni and the school, in part because
Bank of America isn't soliciting students.
The situation at ISU is different: Although the bank's original contract was only
with the alumni association, a long series of subsequent amendments and
extensions involved the university. The school has made public almost all of the
documents that make up the credit card marketing agreement, including the
original contract.
Those documents indicate that the privately run Iowa State University Alumni
Association stands to collect at least $500,000 annually from Bank of America,
with the school itself receiving an annual guarantee of $40,000 to $42,000.
Manning, the professor, has proposed federal regulations that would require
exclusive credit card marketing agreements with public colleges and universities
to be competitively bid by the schools and open to public inspection.
Even if such regulations were approved, disclosure could take years. Bank of
America's contracts with ISU and the U of I do not expire until 2012 and 2013,
respectively.
Reporter Clark Kauffman can be reached at (515) 284-8233 or
ckauffman@dmreg.com