The College of Business decided to cut its MBA program in Bangalore, India, after a change in tax status left a $1 million hole in the college's budget.
The program, which involves OU faculty volunteering for seven-week stints in India, started in 1999 and has since been funded through a nonprofit trust that collected student money and paid OU's expenses.
But three years ago, Indian courts began interpreting the tax code differently and revoked OU's nonprofit status, holding the trust liable for payroll and income taxes. The College of Business ended fiscal year 2008 with a $1 million deficit because tuition revenue was tied up in legal proceedings over the change of status.
The university has spent an additional $200,000 to $250,000 since last April to sustain the program, but expects to recoup all losses in the coming years.
Hugh Sherman, dean of the College of Business, explained the coalition government in India, which includes members of the Communist Party, cannot decide whether to allow foreign educational institutions into the country.
They can't make up their minds
Sherman said. That's been really unsettling for us.
Although the lack of clarity has been a problem since the program started, the change in tax-code interpretation coupled with OU's loss of an appeal to the Advanced Tax Court in India convinced Sherman that the program could no longer support itself.
Because the government hasn't made the decision about foreign education we made the decision to close the program he said, adding he's not looking to set up a similar program elsewhere. We just feel that it makes more sense to concentrate on Ohio.
The MBA program came under scrutiny in 2003 when a College of Business faculty member accused the program's leadership of intentionally boosting grades, sparking numerous internal investigations that concluded the grade-change errors weren't fraudulent.
Sherman did say an advantage to the program was that it provided faculty with international experience. He still hopes to maintain a focus on internationalism now through recruiting international students and the college's Global Competitiveness Program.
The emphasis is really on the experience that our students have here in Athens and we need to focus on that
Sherman said. It's not as draining on our resources ... (but) there is a shift in strategy.
OU is not the only school pulling programs out of India in response to the ambiguity in the country's treatment of foreign educational institutions, Sherman said. Some schools have closed their programs entirely, while others are switching their emphasis to bringing the Indian students to the schools' home countries.
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Emily Grannis
