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About the Author
Stephen Joel Trachtenberg served for 30 years as a university president. He is now president emeritus and university professor at the George Washington University, where he teaches courses on the university presidency in America. He is also an adviser to Korn/Ferry International, where he is helping to find the next generation of university leadership. In June 2008 Simon and Schuster will release his new book Big Man on Campus: A University President Speaks Out On Higher Education. B.A. Columbia, M.P.A. Harvard, J.D. Yale. Fifteen honorary degrees. A swell guy. But not much of a dancer.He will blog about issues torn from the headlines dealing with higher education. Contemporary topics of pressing, current concern. And some serious matters too.
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Higher Education Governance: Stewardship or Sham?
ACTA, the American Council of Trustees and Alumni, recently hosted a gathering at the American Enterprise Institute in Washington, D.C. for people interested in education issues within the local public policy community. In the audience were folks from special-interest groups, think tanks, government agencies, non-government organizations, the media and others. The announced agenda was “Higher Education Governance: Stewardship or Sham?”
The preface to the agenda reminded us of an assortment of controversies which arose in the last couple of years on America’s university campuses that gained national attention. Cited were the usual: the famous resignation in 2005 over the use of university funds by American University president Benjamin Ladner; the struggle over the governance of Dartmouth College, in which the board of trustees disputed the size and role of their membership; and, most immediately, the issues over student loans and study-abroad programs suggesting that academic administrators were behaving in questionable if not felonious ways. It promised to be a full morning.
The American Council of Trustees and Alumni is generally thought of as a conservative group, critical of many contemporary campus practices, so I went anticipating an agenda with a pre-determined point of view and attitude, and I was pleased to discover that the questions raised and the speakers’ dialogues were mostly objective — something not always the case in Washington, where partisanship and advocacy sometimes trumps fair-mindedness.
The first panel, moderated by Frederick Hess from AEI, addressed the question, “Why all the Scandals?” Michael Dannenberg of the New America Foundation, Benjamin Lawsky of New York State’s Attorney General’s office, and Paul Fain from The Chronicle spoke to that question. I came away thinking that in some ways universities are suffering from the introduction of higher standards than had ever previously prevailed. Behavior that was either condoned or ignored in the past is now viewed in our post-Enron environment with a keener eye. While technically Sarbanes-Oxley standards do not apply to not-for-profit organizations, trustees — particularly lawyers and corporate executives who serve on university boards — are bringing their professional perspective to their work as trustees, and the performance expectations have become more refined and articulated. Those responsible for the oversight of institutions of higher education are more and more sensitive to their fiduciary responsibilities and expect their university administrators to behave sympathetically. Moreover, government officials at the federal and state levels, both out of a sense of responsibility and political opportunity, have institutions of higher education in their sights.
This isn’t to say that all colleges have been operating in some sort of shoddy manner. On the contrary, most administrations are extremely fastidious. However, the parameters of what was considered normative have constricted and new boundaries are in place, ones that at first blush seem to limit administrations and faculties. Of course, once the new becomes the norm, it will be old hat. We need to be careful, however, not to over-react, not to quash donor generosity, or mindlessly desist from doing business with all trustees or listening to self-interested third parties. We do need to be careful when doing any of these things, to keep a careful eye on full-disclosure, transparency, on seeking advice and getting a second opinion, of not having single sources for purchases, services, hires, and the like.
The second panel, moderated by Anne Neal of ACTA, asked, “Where are the trustees?” Richard Legon, from the Association of Governing Boards, University of Nevada law professor Nancy Rapoport, and Dartmouth trustee Stephen Smith indicated that trustees were refining and enhancing their oversight roles. This was a natural outgrowth of the first panel, and is particularly imperative because universities are being squeezed by the need for more non-tuition funding on the one hand, and reduced opportunity for finding alternative income on the other (with “the usual” allowances made for the defined generously endowed institutions which are liberated from conventional economic restraints). So the search for revenue and undercapitalization inspires universities to seek resources where they can, even as trustees and their audit committees are keeping a keener eye and acting more vigorously as super-egos of their institutions. Trustees increasingly worry about the bottom line, but they also worry about the good name of the universities they serve, seeking to avoid the sorts of representational embarrassments that have blackened the reputations of various institutions over the past several years. Universities can accommodate sin but they despise scandal.
Batting third was a panel directed again by Fred Hess, who posited, “Where Do We Go From Here?” Ben Adler of Politico; Arthur Rothkopf, former president of Lafayette College and now a trustee of American University; and Jane Tatibouet from the University of Hawaii’s Board of Regents indicated the strong commitment and affection trustees had for their institutions; how their time-consuming work is considered a labor of love, done uncompensated, while they carry the burden of oversight, audit, policy making — a full range of checks and balances. Ultimately, the question raised was, “Exactly for whom are the university trustees stewards, and for what?” Are they responsible to external and/or internal audiences? What structure, what sort of board — what ideal size and make-up — best serves the university’s goals and needs? And, looking at universities and their problems, we were left with the unanswered question, “Why, too often, do smart people do stupid things?”
I came away impressed by the commitment of all of the parties to the preservation and enhancement of the academy, to the perpetuation of the free exchange of ideas, to scholarship and excellence and transparency and accountability and positive reform. Not only the panelists but the audience who participated with Q&A (most often politely but at times perhaps forcefully or even testily, also affirmed their wish for improving the overall health of universities. And while from time to time one can quibble with ACTA’s love of a good headline, I concluded that their commitment to the future of higher education was unreconstructed. The conversation added value for many stakeholders, and if even half the group took the ideas back to the drawing board, perhaps we’ll see some new approaches to governance floated about during the months to come. It is, after all, an election year.
Posted at 10:36:08 PM on April 18, 2008 | All postings by Stephen Joel TrachtenbergComments
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The increasing professionalization of management of universities, and of the state and federal boards/agencies that oversee them—MBAitis some have called it—will increasingly test the borders of corruption, CEO pay excesses, “optimizations” that avoid violating laws as narrowly as possible, and all the other turpitudes that American civilization has bestowed the world in the name of “professional management” of things. We can expect a vile, filthy atmosphere to emerge, with various individuals “to blame” and “exculpated” in a giant long term show, that really is just a certain nation pursuing rather neurotically its favored ideologies and its favored excuses for “management”. Were we, on the contrary, to buffer universities from this encroaching of professional MBA-ish management, we could expect universities to stand as exceptions, shining with a certain detached rigor, suggesting redirectings and recontextings of fundamental parts of the societies around them. Some of us dream this dream of “administration” but few of us resist the cultural villany and vileness that undercut the possibility of that dream entirely.
— Richard Tabor Greene · Apr 21, 05:27 AM · #
Administrators will deliver what boards demand. Trustees bring to the board the public’s interest in effectiveness and efficiency. There’s nothing wrong with those virtues but other values (such as collegiality) need to be considered as well. Presidents can teach (or remind) trustees of counterbalancing academic values. When the larger world’s values come into conflict with those of traditional academe, effective boards find an acceptable compromise and communicate it clearly to their presidents. Compromise and understanding is the key. We are amused when outsiders offer parodies of professorial life and professors love to joke about the ignorance of the masses. But in the board room little is to be gained when one culture demonizes the other. Academe and society both have much to gain when they learn to trust and honor one another. That is what a good board can teach us.
— Gary Davis · Apr 21, 08:36 AM · #
Boards in higher ed still have a lot to learn from Sarbanes-Oxley.
While there is not a 1:1 way of adopting SOX (and there should not be—SOX is aimed at for-profit organizations) there remain many parts of that law relating to such areas as accountability, independent audit committees and internal audit departments to whom experienced and credentialed INTERNAL auditors should report directly and regularly.
Outside financial audits are indispensible, but they do not purport to review the myriad compliance, operational, and fraud concerns that capable internal auditors can address—areas that frequently carry great risk but do not have dollar signs in front of them, like student records systems and many others that are part of the academic enterprise.
— Number Cruncher · Apr 21, 11:18 AM · #
Ever since the Dartmouth College case of 1819, trustees have been responsible for the public oversight of universities. Universities, and society, have earned tremendous success.
The question is rarely posed: who owns private universities? The absence of this question illustrates the trust we have in university governance.
— carl evensen · Apr 21, 02:32 PM · #