Featured Articles - Foreign Money in U.S. Universities — Part I & Part II by Daniel Currell

A few weeks ago, I wrote to you about two new bills Florida Governor Ron DeSantis signed into law in order to curb foreign influence in higher education. And Florida is not alone—other states, most notably Alabama, have also introduced legislation to do the same, in Alabama’s case to close the state’s existing Confucius Institutes. While Alabama’s efforts have had mixed results, we encourage it and other states introducing strong foreign influence bills to continue doing so.
 

But we know that not all states will follow suit—for a variety of reasons, many are content to let huge amounts of dark money pour into their colleges and universities. There are indeed federal foreign disclosure requirements on the books, but they are both largely unenforced and in dire need of reform, though the Trump administration did try to revive them. These requirements are found in Section 117 of the Higher Education Act, which compels colleges and universities to report gifts or contracts from foreign sources that exceed $250,000. But there are a few problems with this:
 

• The disclosure threshold is far too high—the National Association of Scholars recommends a $50,000 threshold, which is featured in Florida’s recent bill.
   
• Section 117 does not require institutions to disclose the name of the donor or the purpose of the gift.
   
• With the exception of two years of strong enforcement by the Trump administration, Section 117 has been left more or less unenforced since its passage decades ago, allowing schools to keep billions in foreign gifts a secret.
   

Some of these flaws may be remedied by the Innovation and Competition Act of 2021 (ICA), according to Daniel Currell in this week’s featured articles. Currell is a visiting fellow at the National Security Institute and previously served as deputy under secretary and senior advisor in the U.S. Department of Education during the Trump administration. He has long advocated for the reform of Section 117 and in this two-part series explains how it might be coming through the ICA, a bill which has passed the Senate and now awaits House approval.
 

In Part I, Currell sets the context of Section 117, highlighting the great power that higher ed institutions hold in Washington, D.C.:
 

Universities are a powerful force in D.C., and not just because the elite ones have towering endowments and big lobbying budgets. U.S. universities altogether employ 4.5 million faculty and staff and enroll 20 million students. … And of course, while not every senator has a military base, they all have universities that educate the children of their donors and host some of the state’s most popular sports teams.
 

Which is to say that universities often get what they want. And ACE, their main association, doesn’t want any more sunlight cast on foreign gifts and contracts. That was made clear in its welcome letter to the Biden Administration last November: sending Sec. 117 back into hiding was #2 on the ACE Christmas list.
 

Part II outlines the reforms to Section 117 contained in the ICA, which include:
 

• Lowering the disclosure threshold to $50,000
   
• Requiring institutions to disclose the names of foreign donors
   
• Empowering the Department of Education to enforce Section 117
   
• Requiring institutions to create better infrastructure to track and record foreign gifts
   

These are all wonderful and much-needed updates. Currell spots a major flaw, though, in the ICA’s requirement of “negotiated rulemaking.” He explains,
 

In short, negotiated rulemaking requires the language of a rule to be negotiated between the agency and a series of appointed representatives of interested parties. The parties hash out the language, word by word and sentence by sentence, in conference rooms at ED. The content of the final rule is still in the Department’s control but negotiated rulemaking dramatically amplifies the already powerful voice of universities … It is not an appropriate rule-making process when one of the parties at the table has an incentive to oppose the rule altogether, as is the case here.
 

Currell urges the House of Representatives to remove negotiated rulemaking from the ICA’s reforms of Section 117, and the NAS is in full agreement. Colleges and universities don’t want to shine light on their foreign ties—that’s the whole point. The higher ed lobby should not have a preferred place at the negotiation table—if it does, we can expect a steady backslide toward a weak Section 117 and even weaker enforcement.
 

Until next week.
 

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