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I see your point, but are you sure that those standards apply with satellite campuses as well? LECOM may be reinvesting a certain amount of its income, but they aren't investing it at Seton Hill. Honestly, I wonder if the investment in every new branch or school falls within the letter of the law as well (using Erie and Bradenton money to finance Seton Hill, using all that money to finance the two new dental schools, etc.). As for inept people being hired, there has been little evidence of any standard of that or any other sort being enforced at my campus. No anatomy lab, no histology lab (not a microscope in the place, actually), few clinical faculty (or competent faculty, for that matter), no research. It seems like cutting corners for economic reasons to me. I do understand that there are theoretically greater constraints put on not-for-profit schools, but I see my own school being run (for whatever reason - growth for its own sake? glory? the mind boggles) under a for-profit paradigm.
Yea, satellite campuses have to follow identical rules and have (Technically) 100% separate accounts, even if the same people own all the accounts the books are kept separate. Its the joy of following the letter of the law a bit too well at Seton Hill. If you do appropriately reinvest the correct amount of money into a brand new school but charge (comparatively) nothing, you have very little to reinvest. Its the same thing that happens at every other school except that it is exaggerated by the much cheaper tuition. A longer established school (LECOM-E) would have built up all the funds it ever needs over years, but a new school would require extra investment to get over the hurdle of not bringing in enough money from tuition alone. Lecom-SH has instead decided to do it in a more unsavory way of making everything distanced learning and letting investment come at the minimum required rate.
Im sorry if i made it sound like being not-for-profit is somehow a proof of valid economic model. It simply prevents many many many other worse things from happening. There are still ways to abuse the system and this is one of them. Having a campus that doesnt generate enough cash flow to be truly independent but can rely on other resources to fill in the gaps while, year-to-year, the infusion of cash slowly allows it to stand on its own.
Thats the way ive had it explained to me at least