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Money on Their Minds

July 15, 2009

Financial concerns have dominated the agendas of college governing boards in the last year, and trustees at private institutions have been more occupied with finance and enrollment issues than academic programs, according to a report released today by the Association of Governing Boards of Universities and Colleges.

The AGB Survey of Higher Education Governance asked 700 institutions about their boards' work, providing a window into how trustees have navigated the rocky terrain of the economic downturn. Respondents to the survey were given a list of dozens of concerns to choose from, and those at public and private institutions all ranked academic programs in their top five. Academics came in at No. 2 on the list of trustee agenda items at publics, compared with private institutions where such programs came in at No. 5 – last on the list.

Susan Whealler Johnston, executive vice president of AGB, said she was heartened to see boards showing sincere interest in academic quality.

“I was glad to see athletics wasn’t on [either] list,” she said.

The respondents to the survey included chancellors, presidents and board professionals -- not the trustees themselves.

What are the Board's Top Agenda Items?

Private Institutions Public Institutions
1. Finances 1. Finances
2. Strategic Planning 2. Academic Programs
3. Fundraising 3. Strategic Planning
4. Enrollment 4. Facilities
5. Academic Programs 5. Enrollment

In what may be another indication of trustees’ increased focus on finances, the survey found that three-quarters of all boards provide training for members in financial management of higher education. Institutions with larger budgets were the most likely to have such training. Johnston called the prevalence of finance training a “very good sign.”

“Higher education finance is different from the kind of financial experience or information many board members come to their trustee service with,” she said.

The need for additional training, however, reflects the increased complexity of a college trustee’s job. As these positions become more demanding, a significant number of colleges are reporting problems recruiting the best and brightest for their boards. Indeed, 24 percent of respondents at private institutions and 19 percent of public respondents said it is “harder or much harder” to recruit good board members than it was five years ago.

A Good Trustee Is Hard to Find

While respondents attributed some recruitment problems to the demands of the position, others noted that prospective board members are skittish about being hit up for donations. Some would-be board members also describe what the report terms “Enron fear,” saying they are reluctant to oversee financially fragile institutions in an era of greater demands for accountability and transparency, according to respondents.

“That’s troubling to me,” Johnston said of the response.

The AGB report comes as questionable trustee behavior has been much in the news. The admissions scandal at the University of Illinois, for instance, has put a harsh spotlight on trustees, some of whom have “pursued personal interests” while on the board, according to former university leaders. A series of stories in the Chicago Tribune have indicated trustee involvement in the university's "clout list," which allowed some politically connected applicants to gain admittance over the objections of admissions officials.

While ethical lapses aren’t without precedent for governing boards, Johnston says the surveys suggest most are trying to do the right thing. Of those who responded, 89 percent said they have a conflict of interest policy. That’s compared with 46.5 percent who had such policies in 1986, according to the AGB.

Having a policy doesn’t necessarily ensure ethical behavior, but it's a start, Johnston said.

“If you don’t have the policy, chances are good that you haven’t thought about it at all and your practices may be way off-kilter,” she said.

One of the functions of governing boards that garners the most public attention is the setting of presidential compensation levels. The inflation of presidential compensation has drawn critics, particularly at public institutions, in recent years. Not surprisingly, trustees are looking at other institutions to determine what to pay their own college chiefs. Indeed, about 80 percent of respondents said their institutions used some form of comparable data to determine presidential compensation.

By and large, governing boards are also inclined to evaluate presidents with regularity. Of those who responded to the AGB survey, 86 percent of private colleges said they conducted annual performance reviews. Among public institutions, 92 percent said they conducted annual reviews.

AGB member presidents and board chairs will receive a free copy of the report. To purchase a copy, visit the AGB Bookstore.

This story has been corrected from an earlier version to reflect that the respondents only included chancellors, presidents and board professionals.

 

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