The now-fizzled $95.7 million deal the University of Colorado struck with an orthodontics company wasn’t ideal, but shrinking state funding has forced schools to ramp up efforts to tap into private money, CU leaders said.
“We have to look for innovative ways to achieve our goals and missions,” said Roy Wilson, chancellor of the CU Health Sciences Center. “If we had gotten state funding, would we have gone into that? Probably not.”
National higher-education analysts say there is a growing trend among universities and community colleges to partner with private business, and many say that isn’t a bad thing – as long as the corporation does not influence curriculum.
Gasper Lazzara paid $3 million three years ago to help build a new dental school that is named after him and pledged 30 years of support to a new orthodontics program. He also promised to pay tuition and stipends for 12 of the 16 students in each class. In exchange, the students would work for him for seven years after graduation.
But Lazzara ran out of cash before his second payment, forcing CU to jack up tuition and fees from $10,693 to about $50,000 for future students and look for alternative ways to make its building payment.
Lazzara and CU officials said they are in discussions to salvage their relationship.
Lazzara backed out of similar deals with the University of Nevada at Las Vegas and Jacksonville (Fla.) University.
Dealings go beyond cash
CU’s partnership is unusual because it required Lazzara to make annual payments for 30 years, but schools across the country have been using private partnerships increasingly in the past two decades to fill in funding gaps, experts said.
Automobile companies have funded research at Michigan State University, several agricultural and technology companies have deals with Colorado State University, and Lockheed Martin and Ball Aerospace & Technologies help CU pay for equipment and building upgrades.
The reason for the partnerships goes beyond cash.
“The university can’t be an island,” said Peter McPherson, president of the National Association of State Universities and Land- Grant Colleges. “A university that decides it’s not going to deal with outside parties is a university that will understand the world less.”
One deal gone bad does not mean CU will stop looking for ways to partner with corporations, school leaders said.
Regent Steve Bosley said “the pressure is on” universities to find new funding sources, and they will have to take risks to get payoffs.
Bosley, a former banker, said he hopes CU will pursue more private partnerships and that university officials knew the risks when they signed on to Lazzara’s proposal.
Chancellor Wilson agreed. “It was a calculated business decision,” he said.
Wilson, who came to CU from Texas Tech University this summer, said he would “rather be totally free of these kinds of partnerships.” But state funding is scarce, in Colorado especially, he said.
Baylor University, a private Texas school, gets more state funding per medical student than CU, Wilson said.
“Job training” complaint
Other CU leaders seemed leery about future partnerships.
Regent Gail Schwartz said she feels “that we should be very careful not to put the university up (to) fail and we do not compromise our vision, our curriculum, our programs just for the sake of additional funding.”
The American Association of University Professors is concerned when private partnerships reduce higher education to “job training for a particular employer” or make it subject to politics, said John Curtis, director of research.
“It’s important that higher education be seen as objective and independent,” he said. “It really should be about academic principles.”
CU officials said that Lazzara did not influence curriculum at the orthodontics residency program, despite that the majority of students had contracted to work in one of his clinics.
The program was criticized by some local orthodontists who thought it was unethical that 12 of the 16 residency slots in each class went to students willing to work for Lazzara.
A qualified student who did not want to work for him would have a smaller chance of getting in, they said.
Some likened it to indentured servitude.
But Regent Pete Steinhauer said it was similar to congressional appointments to military academies.
“Nobody forces anybody to do this program,” he said. “You get a free education, a great education, a stipend to live on and books and everything, and in turn you have to give back, and I think that’s only fair.”
Lazzara, who said his plan to build a national chain of orthodontics clinics was too ambitious and cash-intensive, called his partnerships with the three universities “a new paradigm for health care and the way business is done.”
Staff writer Jennifer Brown can be reached at 303-954-1593 or jenbrown@denverpost.com.
