A major demographic shift is dramatically changing the college admissions game. Kathleen Kingsbury reports on the population dip that means it’s easier to get into college this year.
It may be easier to get into college this year than it has been in a decade.
Yes, you read that right. True, more Americans are expected to attend college this fall than ever before. Yet, even as those freshmen begin to move into the dorms this week, admission officers on those very same campuses are bracing for another, very different reality: the start of a long decline in the number of new high-school graduates across the U.S., according to the Western Interstate Commission on Higher Education. Indeed, it could take up to another full decade to reach 2008’s peak of 3.3 million again.
If history is any indication, this slump will yield good news for families. Applicants could soon find lower admission standards, a slowing of tuition increases, and fewer college dropouts. Schools, though, face a more difficult task ahead. Already battered by the economic crisis, some won't be able to weather a drop in cash flow if enrollments tumble. What’s more, going forward, the high-school seniors that colleges need to attract will look very different from today. Graduating classes will have dramatically larger numbers of Hispanics and Asians, many of whom will be the first member of their families to go to college.
“The well-prepared, affluent college student that has helped fuel the expansion of higher education over the past 20 years will not disappear but will not spur additional growth either,” writes Greg Perfetto, vice president for research and development at Admissions Lab, an education consulting firm, in a recent white paper titled “The End of Higher Education Enrollment as We Know It.”
Schools saw a similar downturn in the mid-1980s and early '90s. “When the Baby Bust generation was graduating high school, it was a very good time to go to college,” says John Nelson, an analyst for higher education at the credit agency Moody’s. “Admission standards were much more liberal.”
Not only was it easier to get into college—if you were a particularly desirable candidate, it was easier to get in cheap. Colleges competed harder for the best and the brightest by resorting to tuition discounting, usually through generous financial aid packages. Many then made up for that lost income by upping recruitment of international students—few of whom qualify for financial aid and thus pay full price. With private institutions’ endowments tattered and public ones facing lower tax bases, Nelson expects to see both these practices again in coming years. “Definitely the inflation of tuition will slow as price competition between colleges rises,” he says. “And we’ve already seen an increase in marketing overseas.”
Hardest hit will be small, private colleges in the upper Midwest and on the East and West coasts. New York’s Utica College, for instance, is planning on a 7 percent decrease in enrollment over the next five years. Larger universities are not immune either. As Marc Harding, director of admissions at Iowa State, puts it: “Any university interested in growing—or even stabilizing—its enrollment in the next few years will have to reach out to a more ethnically diverse population.”
Not only is it easier to get into college—if you’re a particularly desirable candidate, it’s easier to get in cheap.
Sure, there are only a handful of states less diverse than Iowa. But Harding isn’t being hyperbolic. When high-school graduation rates do begin to climb again in 2015, there will be 54 percent more Hispanic graduates than 10 years prior, according to WICHE estimates. For Asians, that figure rises nearly one-third. Considering pure demographic data, schools will have to push more students to leave home for college than ever before. (Currently about 72 percent of students enroll in colleges in their home state, according to the College Board.)
Struggling Cities Shut Firehouses in Budget Crisis
SAN DIEGO — Fire departments around the nation are cutting jobs, closing firehouses and increasingly resorting to “rolling brownouts” in which they shut different fire companies on different days as the economic downturn forces many cities and towns to make deep cuts that are slowing their responses to fires and other emergencies.
Chief Javier Mainar of the San Diego Fire-Rescue Department said a brownout delayed the response to assist a choking toddler.
Firefighters were in another part of town when the call came in about the toddler down the street.
Philadelphia began rolling brownouts this month, joining cities from Baltimore to Sacramento that now shut some units every day. San Jose, Calif., laid off 49 firefighters last month. And Lawrence, Mass., north of Boston, has laid off firefighters and shut down half of its six firehouses, forcing the city to rely on help from neighboring departments each time a fire goes to a second alarm.
Fire chiefs and union officials alike say it is the first time they have seen such deep cuts in so many parts of the country. “I’ve never seen it so widespread,” said Harold A. Schaitberger, the general president of the International Association of Fire Fighters.
The risks of cutting fire service were driven home here last month when Bentley Do, a 2-year-old boy who was visiting relatives, somehow got his hands on a gum ball, put it in his mouth, started laughing and then began choking.
“It blocked the air hole,” said his uncle, Brian Do, who called 911 while other relatives frantically tried to dislodge the gum ball. “No air could flow in and out.”
It is only 600 steps from the front door of the neatly kept stucco home where the boy was staying to the nearest fire station, just down the block. But the station was empty that evening: its engine was in another part of town, on a call in an area usually covered by an engine that had been taken out of service as part of a brownout plan.
The police came to the home within five minutes and began performing cardiopulmonary resuscitation, officials said. But it took nine and a half minutes — almost twice the national goal of arriving within five minutes — for the fire engine, with a paramedic and more medical equipment, to get there. An ambulance came moments later and took Bentley to the hospital, where he was pronounced dead.
The San Diego Fire-Rescue chief, Javier Mainar, said it was impossible to say whether the delay contributed to Bentley’s death on July 20. But he said there was no doubt that the city’s brownouts, which take 13 percent of firefighters off the streets each day to save $11.5 million annually, led to the delay.
“You can just lock everything down and look at it sequentially, chronologically, as to what occurred,” Chief Mainar said in an interview. “There is no question that the brownout of Engine 44 resulted in Engine 38 having to take a response in that community, and because of that, Engine 38 was now out of position to respond to something that happened just down the street from their fire station.”
Fire service was once a sacred cow at budget time. But the downturn has lingered so long that many cities, which have already made deep cuts in other agencies, are now turning to their fire departments.
Some are trying to wrest concessions from unions, which over the years have won generous pension plans that allow many firefighters to retire in their 40s and 50s — plans that many cities say are unaffordable. Others want to reduce minimum-staffing requirements, which often force them to resort to costly overtime to fill shifts. Others are simply cutting service.
Analysts worry that some of the cuts could be putting people and property in danger. As the downturn has worn on, ISO, an organization that evaluates cities’ fire protection capabilities for the insurance industry, has downgraded more cities, said Michael R. Waters, ISO’s vice president of risk-detection services.
“This is generally due to a reduction in firefighting personnel available for responding to calls, a reduction in the number of responding fire apparatus, and gaps in the optimal deployment of apparatus or deficiencies in firefighter training programs,” Mr. Waters said in a statement.
Several fire chiefs said in interviews that the cuts were making them nervous.
“It’s roulette,” said Chief James S. Clack of the Baltimore City Fire Department, which recently reduced the number of fire units closed each day to three from six. Officials saw that the closings in the 55-unit department were in some cases leading to longer response times. “I’m always worried that something’s going to happen where one of these companies is closed.”
Don't Facebook 'Em, Dano: Using Social Media to Sell Surplus Lines May Be Illegal
The use of social media sites such as Facebook and LinkedIn by surplus lines insurers and agents to promote their business is considered advertising, despite their casual nature and the fact that surplus lines insurance is considered by many to be an unregulated part of the industry. Regardless, many states have specific advertising restrictions for surplus lines insurance and unfair trade practices laws that apply; not knowing the laws can derail the efforts of savvy marketers wanting to leverage the power of social media.
State insurance regulators have yet to issue any formal compliance guidance on the subject. In their defense, they are once again left with the unenviable task of applying old laws to new issues and technology.
The unfair trade practice laws of every state prohibit the making of any unfair, false or misleading statement about insurance and persons in the business. Any statement, including advertising in any medium, is subject to this standard.
Some, but not all, states further restrict the content of advertising by surplus lines brokers. Not too surprisingly, the laws vary significantly among states and the laws of the states in which one does business should be reviewed.
In states that specifically restrict surplus lines insurance advertising, a surplus lines broker is permitted to announce the broker’s ability to place surplus lines insurance and to provide a general description of the types of products that are available. In some states, brokers are expressly prohibited from mentioning the name of any surplus lines insurer and may not identify specific products or coverages.
The state of New York prohibits any producer or broker, including surplus lines brokers, from calling attention to an unauthorized insurer.
Prohibitions against providing rate or premium information are fairly common.
New York also prohibits a surplus lines broker from including a list of unauthorized insurers from which the broker may procure coverage. Hawaii has a law prohibiting the publication of any advertising in Hawaii for or on behalf of any unauthorized insurer. In California, the name of a nonadmitted insurer may be included in a surplus lines broker's advertisement so long as no products are mentioned and the unlicensed status of the insurer is disclosed.Of particular importance and what should be a best practice for brokers as well as carriers is to disclose the states in which one is licensed. This can be helpful in avoiding allegations of soliciting insurance in states in which one is not licensed or eligible to write.
Also, some states have laws that purport to regulate any advertising that might be seen or heard in that state even if the person is not doing business in that state. To avoid problems and to comply with specific disclosure requirements that exist in some states, both surplus lines insurers and brokers should consider including disclosures about licensing on their social media sites.
Other commonly required disclosures include the full name of the insurer, the states in which the insurer is licensed and the location of its principal place of business. A few states have very specific requirements for websites that regulators may try to apply to social media sites.
For example, California wants insurers to include their California license number. While these requirements may not apply to surplus lines brokers and perhaps not to surplus lines insurers, complying with these requirements may avoid confusion and provide some measure of protection in the event of a regulatory inquiry.
Facebook may have enough “real estate” on a page to include disclosures, but a 140-character limit on Twitter presents a challenge. Insurance regulators have generally permitted required disclosures on websites to be made via a link. One can only hope that they will go one step further and allow a page on LinkedIn or Facebook to contain a link to the entity's website. Of course, the appropriate disclaimers must actually be on the entity's website.
It goes without saying that every insurance agency and carrier should have policies and procedures for the development and review of advertising, and those may need to be revised if social media is used. Particular attention should be paid to the currency of information on the sites and to third-party postings. Outdated information and inappropriate third-party postings should be removed.
The ability of another person to post comments on what is essentially an advertisement of a broker or insurer creates some risk. If a “fan” of an insurance agency posts a false or derogatory comment about an insurer, is it attributable to the agency?
Maybe, if insurance regulators take their lead from the Financial Industry Regulatory Authority. Earlier this year, FINRA issued formal guidance regarding the use of social media by brokers and dealers in the securities industry (Regulatory Notice 10-06) and indicated that forwarding or commenting on a third-party post could be an implicit endorsement of the content, thereby making it the broker dealer's own statement.
There are Facebook pages and websites for insurance agencies that contain the names of surplus lines insurers and specific products. While such content is not prohibited in all states, surplus lines insurers may want to limit the use of their names and products on social media sites that belong to brokers in order to protect their brand and to avoid regulatory issues.
Regulators will have to decide how to apply old laws to new technology when it comes to the use of testimonials and record retention requirements for social media. The use of testimonials is regulated in many states, and it is not clear whether becoming a fan of an agency will be considered a testimonial.
It is also not clear whether regulators will expect the industry to maintain a copy of every change made to a LinkedIn page or every comment on Facebook.
Surplus lines brokers, like all insurance agents, should recognize that using social media has the potential to create errors and omissions exposures, particularly if clients and potential clients are able to request coverage or changes via a post to a Facebook page. Agencies should consider a disclaimer prohibiting this practice, similar to voice mail messages that remind callers that coverage cannot be bound by leaving a message. Social media sites should be checked regularly for client communications.
The Dodd-Frank Wall Street Reform and Consumer Protection Act will streamline certain aspects of doing business in the surplus lines market, but it does not exempt the surplus lines industry from advertising law and unfair trade practice laws. State laws will continue to apply to advertising and the use of social media by surplus lines brokers and insurers.
The simplest way to avoid potential problems when using social media for an insurance business is to remember that it is formal advertising and to treat it accordingly.
Wage and Hour Litigation Tops List of Employment Class Action Claims
According to a 2010 survey of more than 1,800 senior legal and HR professionals conducted by ELT, leading specialists in ethics and workplace compliance training, one-third of respondents indicated that their organization had been hit with a wage and hour claim in the past year. Accordingly, 54 percent of respondents indicated that despite the troubled economy, their organization has increased its 2010 spend on wage and hour compliance. Today, wage and hour class actions outnumber all other discrimination class actions combined. With the explosion in wage and hour claims over the past several years, most employers are finally starting to grasp the enormity of this litigation landmine.
Its been a perfect storm for wage and hour class and collective actions against employers, says Shanti Atkins, Esq., President and CEO of ELT. Employers are being hit from two sides. On one, there is a better funded, more fully staffed Department of Labor (DOL) that has made fighting wage theft one of its key priorities. On the other side are aggressive plaintiff law firms that literally salivate at these easy-to-identify and easy-to-win, lucrative class actions.
According to the DOL, more than 80 percent of employers are out of compliance with federal and state wage and hour laws. Vowing to fight this standard of non-compliance, President Obama increased the DOLs budget for 2010, which means even stricter enforcement of wage and hour laws and hundreds of additional field investigators. These investigators are tasked with closely examining the pay practices surrounding overtime, off-the-clock work, meal and rest breaks, and auto-deduction at hundreds of employers around the country.
Adding to the risk, wage and hour lawsuits have become a strong focus for the plaintiffs bar. Finding technical violations of antiquated wage and hour laws is relatively simple, and the burden of proof is on the employer who is presumed guilty until proven innocent. This type of litigation also lends itself to a "template" lawsuit where multiple employers can be simultaneously targeted.
The money on the table for wage and hour class action settlements is huge, averaging $23.5M at the federal level and $24.4M at the state level. With the majority of employers already out of compliance with wage and hour laws, these are the kind of open and shut cases plaintiffs law firms love to take on. Although these lawsuits are often positioned as valiant efforts toward worker protection, most of the money ends up in the hands of the attorneys while many class participants see as little as a few hundred dollars.
Employers can protect themselves from wage and hour claims by proactively training their workforce on wage and hour compliance. Not surprisingly, 60 percent of ELTs survey respondents have or are planning to implement a wage and hour training course over the next year. These savvy employers are using training not only to help prevent wage and hour issues in the first place, but to arm their organization with powerful legal defenses in case of litigation. Wage and hour training can help to reduce damage awards by as much as 66 percent.
Most plaintiff law firms wont want to take on a wage and hour case if the employer has a robust compliance program that includes wage and hour training for employees and managers, says Atkins. Evidence of a consistent and thorough program makes a class harder to certify, a case harder to win and plummets settlement values. Its like having a security system sign in your front yard during a neighborhood crime wave. It may not provide 100 percent protection against a robbery, but the burglar is likely to go to the less risky house down the street.
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Informational Notice Regarding the Nonadmitted and Reinsurance Reform Act
On July 21, 2010, President Obama signed H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Act). H.R. 4173 includes the Nonadmitted and Reinsurance Reform Act (NRRA) which contains a number of provisions that are designed to streamline the surplus lines and nonadmitted market.
The NRRA prohibits any state, other than the home state of an insured, from requiring a premium tax payment for nonadmitted insurance. The Act authorizes states to establish procedures to allocate among themselves the premium taxes paid to an insured's home state. It declares that Congress intends that each state adopt nationwide uniform requirements, forms, and procedures that provide for the reporting, payment, collection, and allocation of premium taxes for nonadmitted insurance consistent with this Act.
The Act subjects nonadmitted insurance solely to the regulatory requirements of the insured's home state, and declares that only an insured's home state may require a surplus lines broker to be licensed to conduct nonadmitted insurance business with respect to such insured. Please note that the provisions of NRRA do not take effect until July 21, 2011 (one year from the enactment date). At this time, all eligible Florida surplus lines insurers and Florida licensed and appointed surplus lines agents must continue to comply with the reporting and eligibility requirements that are currently in effect until further notice.
FSLSO has created a Federal Legislation page on its website to assist members in finding information relative to H.R. 4173 including a breakdown of the full bill by title and detailed summary of the NRRA. This page is located at: http://www.fslso.com/statutes/leg/2010/federal.aspx
Given Money, Schools Wait on Rehiring Teachers
http://www.nytimes.com/2010/08/18/business/economy/18teachers.html?_r=1&hp
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