George Mitchell

Most of us, me included, have probably bought some of our books from the University Co-op during the rush of the first week of classes. Some may have even purchased UT merchandise, as I have done several times when friends in Argentina or Brazil have asked for souvenirs. This mixture of school spirit and textbook sales has made the Co-op an icon for current, former and future UT students. It benefits from the UT brand even if it receives no direct funding from the University.  Enter the Co-op store and gaze at three floors of sheer school spirit: khakis with UT logos that are more expensive than plain khakis, Longhorn regalia and a kids’ section for future Longhorns. School spirit has its place, but the Co-op creates an image problem by not offering any books beyond those textbooks required for classes down in the basement.

The Co-op had a separate shelf for faculty publications and University of Texas Press several years ago, but that section has disappeared.  Why is that? Why did the Co-op, which is supposed to be at the service of the University, pull the books? When I talked to George Mitchell, the president and CEO of the Co-op, he gave a simple answer: The books were not profitable.

In Mitchell’s defense, America has a bookstore problem. This is largely due to the rise of online distribution centers such as Amazon.com, which benefits from the so-called “long tail effect.” This means online distributors do not depend on local markets or storefronts, instead selling a few copies of even the most obscure books to worldwide audiences at a low cost.  Barnes & Nobles leased the space the Co-op used to use for trade books, but according to Mitchell, it did not do any better than the Co-op and the location was subsequently closed. In the last year Borders, another national bookstore chain, went out of business. Michael Kiely, director of course materials for the Co-op, made note of this trend, telling me that he used to work at  a Colloquium Bookstore in San Marcos that has since closed.

The Co-op has not escaped the nationwide trend. According to Mitchell, textbook sales have dropped from $26.7 million to $13.7 million in the last five years. This effect has cut into the Co-op’s normal textbook sales, which used to account for the majority of sales. Now they account for only 40 percent of all sales as opposed to 52 percent for licensed merchandise. But in the case of the Co-op, other oft-cited culprits such as book rentals and e-books in general have not yet cut into Co-op price sales. When I asked Kiely which books sold well outside of regular textbooks, he showed me “DKR: The Royal Scrapbook,” which eulogized the legendary football coach, and told me, “I don’t have the exact numbers, but it sold well during the Christmas season.” Study aids also fare well.

Do I blame the Co-op for prioritizing textbooks over trade books? No. But the Co-op should keep in mind that its function is not merely to sell what is profitable, but also to serve the UT community and promote a positive attitude toward education. Merchandising should supplement, not replace, this effort.

There are some things that the Co-op is doing to promote educational initiatives. The Mitchell and Granof Awards for students who conduct exemplary research encourage and reward quality academic production from UT students, and the Hamilton Book Award rewards prolific scholars from our University as well. However, the Co-op should go further. If the Co-op has a surplus of faculty publications in its inventory, why not make a separate display or shelf that could highlight certain scholarly work and help sell off some of those extra copies?  Why not dedicate a specific section to showcase the quality academic research that receives the aforementioned awards and not just UT’s athletic conquests?

As an emblematic institution in the UT community, the Co-op should seek innovative ways to encourage the reading culture on campus while remaining conscious of financial limitations. Without balanced marketing, the Coop risks sending the message that UT stands not for the pursuit of knowledge but only for the football field.

Knoll is a Latin American Studies senior from Dallas.

A bill in the Texas Senate would allow students to purchase textbooks without paying sales tax during two 10-day periods every year.

The bill, introduced by state Sen. Judith Zaffirini, D-Laredo, would exempt textbook purchases from sales tax from the third Friday in August to the second following Sunday and from the second Friday in January to the second following Sunday.

Students would have to verify their status as full-time or part-time students by presenting identification issued by the institution they attend to the retailer.

George Mitchell, University Co-op CEO and president, has testified in favor of similar legislation during previous legislative sessions. Mitchell said the bill would help students save money when purchasing textbooks.

Mitchell said he lobbied for the bill because it would make the Co-op competitive with online retailers who did not have to include sales tax in purchases prior to the Texas Legislature’s 2011 decision requiring online retailers to charge sales tax.

“Online companies that are out-of-state did not have to charge sales tax, thus, had advantage over us,” Mitchell said.

Mitchell said the proposed tax holiday would increase sales at the Co-op, which made an estimated $20 million in revenue from textbook sales during January 2011, August 2011 and January 2012. Approximately $1.6 million of that revenue went to the state in the form of sales tax.

The bill would require the state comptroller to establish methods for patrons to identify themselves as students when purchasing textbooks from online retailers, but does not specify those methods.

In 2010-2011, students nationwide spent an average of $449 on textbooks in campus bookstores or online, according to data provided by the National Association of College Stores.

Members of the legislature have introduced similar bills during previous sessions, but those bills were left pending in committees.

Zaffirini introduced a bill in 2011 that would have instituted the tax holiday during the same time period. The bill was left pending in the Senate Finance Committee after a study from the Legislative Budget Board found the bill would cost the state an estimated $150,100,000 in lost revenue from fiscal years 2011 to 2016. The same study concluded Texas cities would lose an estimated $28.3 million over the same period if the bill was implemented.

Zaffirini introduced a similar bill in 2009 that was referred to the Finance Committee where it received the same treatment as its 2011 counterpart.

Efforts to reach Zaffirini to discuss the bill were unsuccessful.

State Rep. Roberto Alonzo, D-Dallas, introduced a bill in 2009 that would have instituted two month-long periods during which textbooks would be exempted from
sales tax, but it did not make it out of the House Ways and Means Committee.

In 2011, Alonzo introduced a bill that would have completely exempted textbook purchases from sales tax year-round, but the bill did not pass the House Higher Education Committee.

Printed on Friday, November 30, 2012 as: Proposed bill could lead to no sales tax on textbooks

Photo Credit: Zachary Strain | Daily Texan Staff

Ailing merchandise and textbook sales caused total income for the University Co-operative Society, also known as the University Co-op, to fall approximately $7.6 million from 2009 to 2011.

Michael Granof, chairman of the organization’s board of directors, said the loss in revenue has required the Co-op to expand its services beyond the sale of books and merchandise at the main branch and has affected the organization’s ability to contribute to the University in recent years.
Sales of merchandise are linked to the performance of the UT football team, Granof said. George Mitchell, Co-op president and CEO, said the organization’s licensed merchandise sales fell from more than $23 million in fiscal year 2010 to just less than $18 million in fiscal year 2012.

“I expect the football team to come back,” Mitchell said. “We enjoyed 13 years of a good football team. Knowing Mack Brown, he’ll be back next year big time, and he’ll be back this year, too.”

In addition, textbook sales have continued to fall as professors increasingly post texts online for free, Granof said. Competitors such as Amazon have also gained popularity in recent years, he said. Students purchasing used books have led publishers to charge more for the original copy, because they must recoup their costs in a single sale, he said.

The Co-op makes a profit by selling textbooks for 25 percent more than they pay for them, and students can turn their receipts in at the end of the year for a 10 percent rebate opportunity. Granof said he hopes students understand the market and don’t think the Co-op is driving high prices.

When sales drop, the UT community loses out, Granof said.

“Any money we make goes back to the University,” Granof said. “We want to support activities that enhance the quality of life at the University that otherwise would likely go unfunded.”

The Co-op gave the University $812,000 in grants in the fiscal year that ended July 2011, according to the organization’s tax returns — a huge drop from more than $2.3 million in grants made during the previous year.

The Texas Revue, UT’s annual student talent show, did not receive funding from the Co-op this year, said event chair Courtney Brindle. The Co-op had fully sponsored the Texas Revue the past two years, the business honors senior said.

“It allowed us to advertise, put on the show and give prizes,” Brindle said. “Basically everything for the show was funded by the Co-op.”

The show will still go on this year, but the organization will have to find alternative funding sources, Brindle said.

While revenues have fallen, Mitchell’s pay remains high, said Texas Tech law professor Marilyn Phelan.

“When people contribute to a nonprofit, they don’t expect their money to go to a handful of executives,” Phelan said.

The Co-op paid Mitchell $735,984 for the fiscal year that ended July 2011.

Granof said the board decided Mitchell’s pay after outside consultation with experts. He said some of the consultants recommended Mitchell’s pay be set higher and noted the Co-op has to compete against for-profit companies and must offer competitive pay to its employees.

Granof said Mitchell’s service to the Co-op since 1987 warrants higher pay.

However, Mitchell’s salary is much higher than that of Jim Williams. Williams retired this year from his post as general manager of the Oregon Duck Store, a nonprofit book and merchandise store for the University of Oregon. He first took the job, which is comparable to Mitchell’s, in 1976. When he retired, he was the store’s highest-compensated employee, according to tax forms. He was paid $179,877 in the fiscal year ending July 2011. The Duck Store’s gross receipts for that year totaled more than $42.8 million.

Mitchell is the creative mind behind many of the organization’s innovative successes such as Longhorn apparel for women, children and pets, Granof said.

The best of reputations won’t change the numbers, however. Granof said the best way students can help the Co-op right now is to buy textbooks and merchandise at the store.

When undergraduate studies freshman Daulton Venglar rented his textbooks at the Co-op this year, he said he had no idea the money he spent could have helped fund Camp Texas, a program that helped him transition to UT.

“Without Camp Texas, I don’t know if it would have been scary, but it was good to know that I had friends that were already here,” Venglar said.

Camp Texas consists of several weeklong sessions before the start of every school year that allow incoming freshmen to meet and bond. The Texas Exes partner with the Co-op to sponsor $150,000 that supports the camps, minority scholarships and operating expenses, said Tim Taliaferro, Texas Exes vice president of communications and digital strategy.

“It would be really difficult to replace the Co-op’s contribution that makes Camp Texas run,” Taliaferro said. “It’s an expensive program. It’s a high-impact program that touches many incoming freshmen.”

Granof said the Co-op has funded three annual award banquets for faculty and student research, student activities such as Forty Acres Fest, Explore UT, Texas Revue, lectures and more over the years.

“If we were a person, we’d probably have our name on the side of a building by now,” Mitchell said of how much funding the Co-op has granted. 

To increase revenues in the future the Co-op isn’t placing all of its bets on the recovery of the football team or book sales. This fall, the Fort Worth branch of the Co-op, now called University Stores, began selling Texas Christian University merchandise.

Mitchell said stocking half the store with TCU merchandise was necessary.

“The Fort Worth store was losing money,” Mitchell said. “That’s the first store we had that wasn’t making money.”

The Co-op also has branches in Dallas, Houston and San Antonio.

Mitchell said he received 10 complaints about the store’s decision to sell TCU merchandise, but after speaking with the complainants, they realized the economic benefits of the change.

“I expected much bigger backlash, but there wasn’t at all,” Mitchell said.

Diana Troy, a member of the Fort Worth branch of the Texas Exes, said she has lived in Fort Worth her entire life and except for when the Longhorns face off against the Horned Frogs this Thanksgiving, she supports both teams.

“Looking at it from a business perspective, I think it’s a good strategy,” Troy said.

In addition to selling TCU merchandise at the Fort Worth branch, the Co-op is also considering creating merchandise for high school markets, Granof said. The Co-op market on Guadalupe is another initiative by the organization to help generate revenue.

As the Co-op tries to increase revenues, Granof said having an independent bookstore helps build community. Benefits to students and faculty are the primary argument for not privatizing the store, he said. The store exists for the good of the UT community, not for the good of the Co-op or its executives, Granof said.

The overall outlook this year is not good, Granof said.

“Right now it looks like we’re going to break even, I think,” Granof said. “We may have a small loss. A trip to the national championship wouldn’t hurt us.”

Printed on Friday, November 16, 2012 as: Bookstore revenue drops, affects monetary distribution 

Over the course of several years, the University Co-op made CEO and president George Mitchell a series of loans that amounted to $795,296.

Co-op officials say the loans were appropriate, although a nonprofit tax expert disagrees. Mitchell said the loans were made against his deferred bonus compensation more than a decade ago.

Michael Granof, chairman of the Co-op’s board of directors, said the board wanted to give Mitchell an incentive to improve sales at a time when the Co-op wasn’t generating adequate revenue. The board decided to provide that incentive through bonus compensation.

“In order to preserve the cash, which the Co-op didn’t have very much of at the time, it set it up so that the bonus would be deferred,” Granof said. “Nonetheless, he was permitted to borrow against it.”

The loans to Mitchell were not problematic for the Co-op during its annual audits, Granof said. Interest on the loans Mitchell took out against his deferred bonus pay eventually equaled slightly more than $1 million, an amount equal to the deferred compensation he was owed. In Mitchell’s words, the Co-op “needed to figure out some way to get it off the books since it’s equal.”

Marilyn Phelan, a nonprofit tax expert and Texas Tech law professor, saw the loans as cause for concern.

Loans — made under the premise of having to pay the money back — are usually considered nontaxable income, according to Phelan.

Theoretically, Mitchell could receive the cash from the loans without paying taxes on it, Phelan said.

“He will not pay any income taxes until the organization discharges its obligation to pay him the deferred compensation,” Phelan said. 

“However, he has received it all in the form of borrowing the money from the organization.”

Mitchell said his pay was approved by a team of lawyers and he did not want to release his personal income tax information.

“I would have had to pay taxes if I took it out,” Mitchell said of the deferred compensation.

He refused to say whether the loan status of the deferred compensation would affect its tax status.

Granof said Mitchell’s personal income taxes are not the Co-op’s fiscal responsibility.

Printed on Friday, November 16, 2012 as: Series of loans to Co-Op CEO causes concerns 

Members of the UT chapter of United Students Against Sweatshops are continuing their efforts to make UT apparel sweatshop-free — this time by getting the University Co-op to purchase $53,000 worth of apparel from a factory with fair working conditions.

Members of the organization contacted George Mitchell, president and CEO of the University Co-op, earlier this fall and asked him to order $250,000 worth of the store’s apparel from Alta Gracia, an apparel factory in the Dominican Republic that has come to represent the pinnacle of fair working conditions in an underdeveloped country, United Students Against Sweatshops members said. 

After multiple correspondences with organization members, Mitchell announced the decision Friday to make an initial order of $53,000. He said it would not be practical for the University Co-op to make a $250,000 initial purchase.

“Anyone in the retail business will tell you that [$53,000] is a ‘significant purchase.’” Mitchell said. “Anything more as an opening order would be irresponsible on my part.”

Mitchell said he wants to test out the apparel before making a larger order, and his decision came after looking into the success of other university bookstores. He said the bookstores at New York University, Oregon State University and Washington University have all made initial orders of a similar size from Alta Gracia.

Mitchell said he would be open to ordering more of the apparel in the future if it sells well.

In a letter to its members sent Friday, Mitchell said the success of the apparel’s sales will depend largely on the actions of the organization.

“If you do accept this offer and would like to work with us, we will do our part in marketing the merchandise in a civilized and positive fashion,” Mitchell said in the letter. “All the bookstore managers I contacted emphasized the fact that the Alta Gracia product sales were successful only if the student organizations stayed actively involved.”

Bianca Hinz-Foley, Plan II sophomore and United Students Against Sweatshops member, said the organization will remain involved in the University Co-op’s efforts to sell the apparel, and she hopes this purchase can be the start of a strong relationship between the organization and the store.  

In response to the purchase, Hinz-Foley said the organization has planned an event titled “RACE TO THE TOP: UT students celebrate the beginning of an ongoing relationship with the UT Co-op over the issue of ethical apparel” for Wednesday at 1 p.m.

The event will be held outside of the University Co-op on Guadalupe Street. Attendees will run from there to the UT Co-op Administration office, located at 507 W. 23rd St., roughly two blocks away.

The run will symbolize “that collegiate garment manufacturing does not have to be a race to the bottom ... but can instead be a chance to uphold human rights and embody ‘what starts here, changes the world,” according to a statement released by the organization Monday.

Printed on Tuesday, November 13, 2012 as: University Co-op tests ethical apparel

Bianca Hinz-Foley, Louchin Chi, and Jessica Alvarenga represented UT Sweatshop-Free Coalition in a meeting with the University Co-Op Monday afternoon.

Photo Credit: Chelsea Purgahn | Daily Texan Staff

The University Co-op president said he will invest in merchandise from a factory that the Make UT Sweatshop-Free Coalition has advocated for because it provides fair working conditions, but the investment is much less than the coalition asked for.

The Make UT Sweatshop-Free Coalition asked George Mitchell, president and CEO of the University Co-operative Society, to purchase $250,000 in licensed UT merchandise from Knights Apparel’s Alta Gracia, an apparel factory in the Dominican Republic. Mitchell said the Co-op will commit to a $15,500 order from Alta Gracia, which would have a retail value of $35,000.

Jessica Alvarenga, coalition member and geography junior, said the coalition endorses this supplier because it pays its workers a living wage and it has an open-door policy for inspectors from the Worker Rights Consortium, an organization that monitors the working conditions in factories.

“Students will always support ethical apparel because our motto is ‘transforming lives for the betterment of society,’ and that is exactly what would happen here,” Alvaraenga said.

Eighteen United Students Against Sweatshops members were arrested last spring for participating in a sit-in at University President William Powers Jr.’s office as part of an effort to get the University to join the WRC.

In an interview with The Daily Texan last week, Jessica Alvarenga said the organization will take similar action if necessary to ensure that its demands are met on this issue.

Mitchell said committing $250,000 without testing the product is a business gamble that will put employee jobs at risk if the product does not sell. He said the sales are tied to the success of the football team and have declined in the last three years.

Louchin Chi, coalition member and government sophomore, said from the business side, he understands testing a product is responsible and appreciates the offer, but the coalition will continue to ask for the Co-op to purchase more from Alta Gracia.

“Since we trust the humanity behind the product we would try to provide your demand,” Chi said. ”And we will campaign for money regardless.”
  
Bianca Hinz-Foley, coalition member and Plan II sophomore, said the proposed order offer is not sufficient to provide a long-term partnership between the Co-op and Alta Gracia. She said the merchandise supplied by the Co-op’s commitment would not be enough to satisfy the demand.

“$35,000 for a pilot is set-up for failure,” Hinz-Foley said.

She said the people who signed a petition for the Co-op to spend $250,000 with Alta Gracia are proof of the demand.

“These are consumers that are interested in buying one particular type of clothing and that is one they can wear with pride — and that is ethical clothes,” Hinz-Foley said.

Mitchell will meet with the coalition again Friday to discuss further action.

Printed on Tuesday, October 30, 2012 as: Co-op invests in humane apparel supplier

Julian Villalobos walks past the renovated Co-Op Outlet Wednesday morning. The Co-Op market is scheduled to reopen next week as a health-conscious grocery store.

Photo Credit: Thomas Allison | Daily Texan Staff

Students will soon have another option for purchasing health conscious, local groceries at the University Co-op grocery store scheduled to open next week.

Co-op management decided to build the grocery store after receiving positive feedback for it on their annual student survey, said Co-op CEO and president George Mitchell.

Mitchell said the grocery store, which is located on the 2200 block of Guadalupe Street at the Co-op Outlet’s former location, will be larger than a convenience store and unique to the UT community.

“We did a lot of research and checked out a lot of universities,” Mitchell said.

“Stores like this are a big deal especially on the west coast. The layout itself of our store is really unusual and seems to cover all of the areas of what students need.”

Mitchell said once the bank next door closes Sept. 17, the Co-op will make the building an addition to the Co-op grocery store.

“That part of the store will house Texas products specifically,” Mitchell said. “We hope to open [that section of the store] on Oct. 1.”

Zach Voelker, manager of the Co-op grocery store, said the store was not only student-inspired but will also house products specific to the needs of students who live on campus. He said the store will carry a variety of snack foods and health foods provided by local vendors.

“We feel this is especially important because the food is not freshly prepared so we are trying to provide the best nutrition to students we can offer,” Voelker said.

The store will also carry a number of products that are distributed in smaller packages, Voelker said. He said the store will sell small packages to benefit students because they do not go to waste and fit in the smaller storage areas available to students living on campus.

Rhetoric and writing senior Rebekah Luna said she is excited about the prospect of more health food being available near campus. She said she hopes the items available are made affordable to students.

“It’s exciting and will be really convenient to have around,” Luna said. “I think it’s also kind of silly because it doesn’t look to be much bigger than a convenience store and students can just take public transportation to H-E-B.”

Printed on August 25, 2011 as: Grocery store aims for October opening