National  Labor  College Takes a Partner,
Offers Online Degrees to Union Members

By Harry Kelber

The first in a series

On January 14, 2010, the Board of Trustees of the National l Labor College announced plans to offer high quality college degree programs based on online instruction to the  “AFL-CIO’s 11.6 million members and their families.”

Tentatively renamed the “College of Working Families,” the school will build upon its current distance learning curricula to provide  skills  courses  and degree programs  specifically suited to the special needs and interests of union members and their families. The college  is totally subsidized by the AFL-CIO.

In explaining the Labor College’s dramatic innovations, Tom Kriger, Provost and Vice President for Academic Affairs, said: “The NLC’s goals in entering into the partnership with Princeton Review/Penn Foster are to provide greater access to high quality, higher education to rank-and-file union members and their families; to preserve and strengthen the NLC’s signature labor studies program, and to stabilize the College’s long-term financial status.

“The NLC will remain in full control of all faculty, curriculum, courses and core academic functions. Princeton Review/Penn Foster will provide marketing, tech support and student services expertise and capacity necessary for the NLC to expand its curriculum and increase its enrollment. The new programs that the NLC will develop will be in areas other than Labor Studies. All faculty at the NLC are, and will be, union members.”

The Labor College Faces Serious Problems

What most AFL-CIO members did not know was that the National Labor College was facing a double-edged crisis.  On the one hand, it had been operating at a deficit, despite an annual budget of $28 million.  Although the AFL-CIO refused to disclose the amount of the deficit, reliable sources revealed that it   came to more than  $40 million and would  continue to grow unless some solution was found.

By 2008, international unions were grumbling about having their per-capita taxes used to keep the college afloat, especially since they were encountering difficulties in dealing with their own financial problems caused by the economic crisis.

At the same time, the college had too few students. For an academic institution that had been accredited  by the Middle States Association of Colleges and Schools, NLC, which was located on a 47-acre site in Silver Spring, Md., had  a total  of 983 students with only about 240 enrolled, on average, in two-year and four year professional degree programs. Although any union member could enroll in the college and earn a degree through its distance learning programs, NLC failed to attract the large  and steady influx of students that its founders had hoped for.

To cater to this small group of students, there was an administrative staff of at least 20 people, ranging from an Acting President, a Provost, three Deputy Provosts and a Director of Admissions to an academic adviser,  registrar, transcript evaluator, with their staffs and someone in charge of the front desk and room reservations. There are 16 full-time instructors and an almost  equal number of part-time teachers

 Also on the payroll are  the employees of the college’s hotel,  cafeteria and maintenance crews  who service students, no matter how few show up for a week  at the campus as part of their course work.

The question was: where could the NLC find an investor with plenty of cash and the ability to build up a student body for the college from the 11.6 million  AFL-CIO members?

 Finding the Ideal Partner for the  College

Princeton Review (no connection with the university) became the ideal candidate for the partnership.  A “for profit” company, P.R.  was awash with cash, having received a $60 million  investment  from Bain Capital and Prides Capital  in July 2007,  the same day that Michael J. Perik became President and CEO of the Review.

John Katzman, founder of Princeton Review, who remains as its executive chairman, approves of the partnership.  “Bain and Prides bring great track records, and their investment materially strengthens and simplifies our balance sheet; this will allow us to capitalize on a number of important opportunities in the industry, as we place a renewed emphasis on expanding  the geographic and product footprint of our core franchise.”

Princeton’s revenue was $35.9 million in 2006, with approximately 70 percent coming from test preparation and academic services. As its CEO, Perik, 51,  who will be in charge of  ”marketing” for the new partnership, earned a salary  of $787,501 in 2008, as  the company’s  president and chief executive . He has also held top positions at Forbes and Houghton Mifflin. According to Business Week, Perik is “connected to 15 board members in three different organizations across five different industries.”.

The obvious question is: what does each party gain from the partnership?  For the National Labor College, the infusion of a substantial amount of needed capital will be a life-saver, also  some improvement in academic management and services and the hope that Princeton Review, with its operational network in 41 states and 22 countries, can find the magic formula to attract a flood of unionists to enroll in the college.

AFL-CIO President Richard Trumka, who is also Chair of the college’s Board of Trustees, says: “This new online education venture demonstrates our strong commitment to playing a significant role in ensuring that quality education for American workers and their families remains affordable and accessible. We believe this is one of the best ways to retain and grow good jobs in this country.”

But what does Princeton Review get from the partnership?  It has never shown an interest in strengthening the labor movement. It can’t get much  financial return from increasing the  student body of the college.  So what are Princeton Review’s motives? Is it possible that shrewd P.R. investors visualize money-making opportunities in being linked to a partnership with the AFL-CIO and its millions of members?.

Put a group of smart venture capitalist together and they will come up  with all kinds of spinoffs. Is there a danger that the National Labor College will become another prize in Princeton Review’s acquisitions?

-Harry Kelber was Professor of Labor Studies at Empire State College and bas taught labor subjects to many hundreds of union leaders and members over a 25-year teaching career.