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Redefining the Relationship

July 25, 2012

A group of influential Vermont leaders thinks $40 million shouldn’t buy a majority stake on the University of Vermont’s governing board.

That’s roughly how much the state appropriates to the university every year. But the group says that’s not enough. These days, state appropriations make up less than 10 percent of the university’s overall revenue, while tuition makes up about half.

In a report released last month, an advisory group convened by Vermont Governor Peter Shumlin to study the relationship between the University of Vermont and the state recommended that the state alter the university’s governing board composition to include more members who are not appointed by politicians, a shift they say would help the university when it comes to raising money and creating partnerships with outside entities.

The current board structure, put in place in the 1950s, has 25 trustees: Nine appointed by the legislature, three appointed by the governor, nine private trustees who elect their replacements, two students, and two ex-officio members (the governor of Vermont and the university president). That means political appointments outnumber “private trustees,” which the report says is a problem for the university. “This structure is out of balance in relation to that state appropriation and does not reflect the interest of the university or the true relationship to the state,” the report states. “Further, the limiting size and make up of the board hinders UVM’s ability to raise its profile within the state and nationally, raise needed dollars and recruit future trustees and supporters.”

“A lot has changed in the 60 years since the state last took up this question of the relationship between the state and the university,” said Nicholas Donofrio, former executive vice president for innovation and technology for IBM and chairman of the committee that made the recommendations.

In the past few years, as states have decreased appropriations for higher education, institutions have tended to argue that they should also be freed from some state legislative control and regulatory burdens. The Vermont board proposal reflects a different path, with individuals starting to question whether the state should also step out of governance. State lawmakers’ influence on the University of Virginia’s governing board – despite the state's shrinking investment – was a major issue during the university’s controversy last month, when the board forced the resignation of the university's president, a move that went against the wishes of many other university stakeholders.

The Vermont proposal also reflects a novel idea that control of an institution’s governing board might not be the best way for a state to influence the direction of the institution. In most states, lawmakers simply appropriate money and leave it to the institution to determine how most of those dollars are spent. The Vermont proposal argues that the state might make a better "return on its investment" if it invests directly in the programs it wants to see grow while letting private dollars -- tuition, philanthropy, and corporate investment -- support the rest of the institution.

The proposal has not generated much talk in the state so far, with only a few media outlets even reporting on it. But is likely to be controversial when the state legislature convenes in January, said Philip Baruth, a University of Vermont faculty member who is also a state senator. Baruth and other faculty members said they oppose the idea of decreasing the public's voice in university governance and letting the governor and other lawmakers, rather than faculty members, determine exactly how the university should spend the limited state dollars it receives.

Shumlin has said that he will do everything in his power to make the report’s recommendations come to fruition. Other recommendations in the report include removing a restriction that in-state tuition be 40 percent of out-of state tuition, targeting state appropriations to STEM fields, and creating a long-term loan forgiveness program to keep graduates in the state.

Who Gets a Seat?

Current Board Structure:

-Nine trustees appointed by legislature

-Nine trustees who elect their replacements

-Three gubernatorial appointees

-Two students

-Governor of Vermont

-University of Vermont President

The University of Vermont is rare among public institutions in that some of its board members are already appointed outside the political process. Most public university boards are composed entirely of political appointments, with perhaps one or two seats reserved for the president and faculty and student representatives. According to a 2010 survey conducted by the Association of Governing Boards of Universities and Colleges, 80 percent of public university board members were appointed by elected officials, most often by a governor with legislative approval. Another 5 percent were elected directly by voters.

The University of Vermont’s board structure is an outgrowth of its winding historical path through public and private status. The university began as a private institution, but started receiving public funds in 1865 after the state established a land-grant institution at the university. The private and land-grant components remained separate until 1955, when the entire university became an instrument of the state, creating the current governance structure.

The fact that the university has altered its board composition and the state-university relationship might make it easier for Vermont to adopt the recommendations than would be the case in states where universities have been under state control for their entire history.

A handful of other institutions also mix public and private board elements, mostly by virtue of history. Only 8 of the University of Delaware’s 28 board members are politically appointed. Pennsylvania State University’s board comprises five ex-officio members (mostly statewide office holders), six members appointed by the governor, nine trustees elected by alumni, six members elected by state agricultural societies, and six members selected by the rest of the board.

Clemson University’s 13-member board consists of six political appointments and seven self-perpetuating members, meaning the private members are in the majority. That structure was a condition in Thomas Green Clemson’s will that the state had to accept in order to receive his estate and create the university. That structure has recently created controversy.

Problems of State Influence

Donofrio said the relationship between the state of Vermont and the university has been unsatisfying for both parties for several years. University administrators and faculty members complain that the institution is not getting enough financial support from the state and lawmakers saying that the university won’t invest in areas that would grow the state’s economy.

In a speech last November, Shumlin said the state was “falling short of our goal of maximizing our return on state investment.” Since taking office, Shumlin has been critical of some university spending priorities. He has said the university should spend more on science, engineering, technology and mathematics. Even with a majority of board members, lawmakers have not been able to steer the direction of university funds to the programs they support.

The committee that drafted the proposal argues that there are better uses for those seats. Donofrio said politically appointed board members have different priorities than do “independent” board members. As universities come to rely on private sources of revenue, politically appointed board members take up seats that could go to individuals who could bring more money to the university. The Burlington Free Press found that self-perpetuating board members tend to give more to the university than those appointed by lawmakers.

More than fund-raising, however, Donofrio said politically appointed board members are reluctant to deal with many of the issues that boards these days have to deal with, such as finding new sources of revenue, cutting costs, and creating new partnerships. “They’re not going to help you fund-raise,” he said. “They’re not going to help you deal with these thorny, nasty, controversial issues. That’s not what they’re there to do.”

Donofrio serves on the governing boards of his two alma maters, Rensselaer Polytechnic Institute and Syracuse University, as well as the Board of Regents for Higher Education in Connecticut. He also served on the Spellings Commission. He said the significant decrease in state support for higher education means that more public universities should push for independence on their boards.

“The bulk of people in the United States who receive a higher education are not educated in top schools,” he said. “They are educated in state-sponsored schools, and those are places that are under siege and under attacks these days.”

Faculty members at the University of Vermont argue that the connection between the university and the state is already too weak, as evidenced by the reduced appropriations. They say removing public accountability from a larger share of the board will only weaken the connection. "What Virginia and Penn State show is that we need more accountability for boards, not less," said Nancy Welch, an English professor at the university.

Peter McPherson, president of the Association of Public and Land-grant Universities, said that while the proposal's recommendation to change the composition of the Vermont board might make sense for Vermont, such proposals could move universities away from their public purpose, which he argues would be bad for all parties. "It would be a major loss to society if, in effect, that public purpose was lost because the public no longer had a role in governing the institution," he said.

A report released last month by the National Research Council said the decrease in state support for public research universities, which produce the majority of Ph.D. students and conduct the majority of federally funded research, was a major threat to the country's research excellence. "We've been in the business of trying to get the states to give us more money, not give them an excuse to give us less," McPherson said.

Changing the Relationship

The Vermont report also expressed a belief that the state is more likely to achieve its goals by investing in particular areas, rather than trying to steer the institution from a board level. Instead of investing in the university's general fund where the use of that money would be determined by on-campus administrators, the report says the state could tie appropriations to specific programs. “The state should pay for what it wants and expect excellent outcomes for those investments,” the report states. For the near term, the report says the state should “[t]arget state appropriations to high priority state interests, including STEM, agriculture, health, and natural resources.”

“This strategy would lead to positive outcomes and lead to transparency and clarification of what the state expects from UVM,” the report states.

McPherson said he doesn't think this is a good path. Most states already earmark a significant amount of funding for particular purposes, he said. Tying state funding to particular programs could lead to decreased funding for other parts of the university that are still vital to the institution's public mission.

Vermont is not alone in questioning the structure of the university's governing board.

Earlier this year, several current and former University of California administrators proposed giving each of the system’s 10 institutions their own individual boards. Currently, the system operates under one 26-member statewide board, with each member appointed by lawmakers. The administrators proposing the change said the local boards would help each campus generate new revenues, such as private philanthropy, out-of-state tuition, and corporate partnerships.

That proposal received a cool reception by the system’s current leadership and state politicians.

During the debate at the University of Virginia, faculty requested a seat on the university’s board, questioning the necessity of having all political appointments without having other stakeholders’ views represented.

Donofrio said the Vermont committee will reconvene in about six months to evaluate the state’s progress toward implementing the recommendations.

 

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