On Their Watch

Poor board governance could risk the future of American higher education, according to a new report by the Association of Governing Boards.


November 6, 2014

Inattentive college and university governing boards are putting American higher education at risk, according to a new set of guidelines for trustees issued today by the Association of Governing Boards of Universities and Colleges.

A special 26-member commission, led by former Tennessee Governor Phil Bredesen, concluded that changing conditions -- including financial constraints and public perceptions – endanger the durability of the nation’s higher education system. That system, the commission concluded, is based on “the reputations of a relative handful of highly ranked U.S. universities, not the overall performance of the sector.”

The commission said generous government funding and lifelong careers for faculty and staff are rapidly becoming things of the past, yet boards function as they have for decades and even then disagree with or misunderstand what they ought to be doing.

In a series of recommendations, the commission called for board members to restore public faith in higher education by improving value for students; to do less short-term thinking and more long-term planning; to rethink the power-sharing agreements boards have with faculty; and to hold themselves accountable for bad board behavior, including self-dealing and conflicts of interest.

The report also calls on boards to do more to oversee affiliated institutions, including university foundations, public-private partnerships, research companies and teaching hospitals.

“If there’s an underlying theme to the report it was that in some ways the business model of higher education is breaking -- I think it’s particularly true at public institutions,” Bredesen said in an interview.

The commission’s report -- on behalf of an organization that represents board members -- found, not surprisingly, that boards must do more. They can no longer just be an audience for presidents and receiver of “routine reports.” Instead, the report said, boards must pay “constant attention to ensure that institutions are providing a quality product or service at a price that investors are willing to pay.” The “investors,” in this case, are “students, the public, philanthropists and employers.”

Bredesen, who was known as an education-minded governor, said board members he saw would come to meetings and receive reports, but never had time to think about long-term issues, as corporate boards do.

AGB, whose members govern a total of 1,900 institutions, plans to push for the report to be more than another shelved and little-read paper on higher education management. “I told commission members that issuing this report was just the first 5 percent -- the other 95 is yet to be done,” Bredesen said.

Jane Wellman, the founder of the Delta Project on Postsecondary Costs, Productivity and Accountability, worked with AGB and the commission to produce the report, which she called a “serious piece of work” that is needed so that boards responsibly prepare for the future.

“What’s happened is that the pressures for more complicated decision-making are greater... choices have to be made that are more explicit -- the revenue that allows you to avoid choosing between A and B isn’t there. The need to focus on student success and what that means for programs -- that’s a different environment,” she said.

The commission, funded partially by the Bill and Melinda Gates Foundation and the Lumina Foundation, pays close attention to public concerns that colleges and universities value “their own status quo” more than keeping down prices.  These concerns, the report notes, may be overblown, but they are real.

“They believe that institutions increase tuition in order to spend more money on institutional amenities that do not translate into increased educational quality, and they are critical of spending on non-academic amenities,” the report said. “Public trust in the values and priorities of institutional decision makers, so essential for university self-governance, has eroded.”

Of course, many administrators and faculty members worry about board members getting involved in issues on which they may not have expertise, or trying to force out popular leaders like the presidents of the University of Virginia and of the University of Texas at Austin, or insisting that colleges spend big on athletics.

Rick Legon, AGB’s executive director, said board members shouldn’t be directing who is teaching what and when they are teaching, but boards need to spend more talking about academics and not just short-term budgeting.

“The boards at these institutions need to make sure the missions of their institutions are being achieved and insofar as it relates to academic achievement, the question is, 'How are we doing?' ” he said.

The sentiment points to a growing worry that if colleges fail to meet public expectations, the government will come in and tell colleges what to do.

The relationship among board members, the presidents they hire and the faculty should be rethought, the commission said -- without making quite clear to what end.

The “premises behind shared governance have become disconnected from its practices at many institutions,” the commission found. That goes in several directions: boards can be too assertive or they can be too lax; faculty can interfere in financial decisions and they can be left out of academic ones.

“Some boards have moved more into institutional management and academic policy, even as others are disengaged,” the report said. “Faculty members increasingly want to exercise veto rights over fiscal decisions. Legislators and governors, in turn, want to get involved in articulation agreements, transfer practices, and policies for awarding  academic credit -- all areas traditionally the purview of faculty.”

The commission notes that while most formal faculty input comes from full-time faculty, they now make up less than 25 percent of the nation’s instructors. Shared governance, the commission said, “remains inaccessible” to most of the adjuncts who teach so many courses.

What this may mean for the debate over faculty’s role remains unclear.

Gary Rhoades, a commission member and former general secretary of the American Association of University Professors, said in an email that the strength of the commission’s report is that it recognizes sharing governance is “fundamental to realizing consequential governance.” That means, he said, “effecting the enduring change that comes most surely based on deliberations and shared responsibility with all faculty, including the vast majority now who work in contingent positions."

The commission also said board members must hold themselves accountable. They have to set clear standards for how they operate and conduct themselves. And board members have to realize that they are responsible for the long-term health of the entire university, not just some narrow constituency that they might happen to represent.

Bredesen said some board members he’s seen came from a geographic area or a particular profession and thought they were there just on the board to represent these constituencies.  

“They get there and think their whole mission is to make sure nothing bad happens in that sector -- what we’re saying is that’s O.K. in good times, but that’s not the role of a board member,” he said.

According to the commission, signs of a troubled board include “cliques within the board, failure to include all board members in meaningful conversations, lack of participation by board members, board members who patently represent constituencies in decision making, overuse of the executive committee, and dismissive behavior among board members and with key staff and faculty.”

The commission also said boards need to exercise more control over affiliated organizations that use their college’s name. These organizations -- including foundations, hospitals and research companies -- are part of universities’ assets and board members need to realize events at affiliated organizations that use a university’s name can hurt the university itself.

John Casteen, a former University of Virginia president, worked on that section of the commission’s report. He said the uses of a college’s name, commercial exploitation of its brands, its teaching hospitals and its athletic programs are all things trustees must find some way to oversee.

“I like a model in which money that is spent on behalf of the university flows through the auditable university accounting system, so there can be a single audit of all activities having to do with employment and so on,” he said. Of course, many public colleges and universities have intentionally set up these foundations and other units independently, which many times frees those units from the reporting and open-records requirements of state agencies if a university is public.

The rollout of the report begins with a press conference today in Washington and then emails and hard copy mailings of the report to board members and college leaders across the country. AGB also plans to incorporate the commission’s recommendations in training sessions and other material.


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