By Cullen Couch
When Thomas Jefferson founded the University of Virginia almost 200 years ago, he created a model for secular public higher education that has become the envy of the world. American public universities produce 70 percent of the nation's scientists, engineers, and doctors, and most of its university-based research. But in spite of such outsized contributions and promise, the system is being questioned and financially squeezed. Meanwhile, other nations, in particular emerging economies, are investing heavily to emulate America’s leading public universities and match their success.
Ironically, states are now running away from the records of their flagship universities as they debate the future of public higher education. University governance was always informed by politics, but elected officials and trustees historically showed restraint in deference to institutional management, or at least sought to balance strategic differences. Today, public universities sometimes resemble a tug-of-war between the administration and the board, with less collaboration and more conflict, often over academic issues that were previously reserved to the discretion of the president and the deans.
In the last two years alone, the presidents of the University of Wisconsin - Madison, the University of Illinois, and the University of Oregon – plus another eight presidents of public research universities – were ousted or forced to resign. Whom did they fail to serve? It’s not clear, but boards are increasingly proxies for governors, and the governors of Texas, Florida, North Carolina, and Wisconsin, for example, have been pressuring the "educational elite" in their states to cut costs and trim programs.
Their rhetoric reflects the times. The economy is still struggling, states have right-sized to close deficits, and revenues are not expected to rise fast enough to avoid hard choices. Public universities are not immune to calls for greater fiscal prudence and accountability. But critics such as Governor Pat McCrory of North Carolina go much further. His staff is drafting legislation that would fund the UNC system "not based upon how many butts are in seats, but how many [of those] butts can get jobs." Governor Rick Scott of Florida asks, "Is it a vital interest of the state to have more anthropologists?” Governors Scott Walker of Wisconsin and Rick Perry of Texas want to link state funding of their systems to alumni employment.
More subtly, the State Council of Higher Education for Virginia began publishing the starting salaries of college graduates by school and program of study. Not surprisingly, the technical disciplines have higher earners than the humanities, but that has always been true. It’s a facile analysis for the moment because tight budgets are in search of spending rules, and everyone understands income. Hunter Rawlings, president of the Association of American Universities, throws up his hands in dismay. "This ranking is specious. As others have said, not everything that counts can be counted, and not everything that can be counted counts. Yet treating all college as vocational training encourages just that kind of simplistic thinking, reducing the value of an education to a single number."
Such sentiments challenge what many believe to be the intrinsic value of higher education. "We are certainly in a time where higher education is under attack, not simply based on cost, and we need to defend it," says George M. Cohen, the Law School's Brokaw Professor of Corporate Law and the Chair of UVA's Faculty Senate. "This should not be a partisan issue. We are talking about being competitive in the world and having an educated populace of responsible citizens able to think critically, whatever their political beliefs."
"Narrow technical training may solve certain types of problems," adds Robert W. Iuliano '86, General Counsel of Harvard University, "but in the end that person may not be as well situated as someone who has both the technical training and a broader knowledge base to find answers when hard questions arise. I like to work around people who can think creatively and have a broad base of knowledge upon which to draw, because that's going to help solve increasingly complicated problems that require multidisciplinary perspectives."
Indeed, UVA President Teresa Sullivan sees an even more dire threat. "I tell you without exaggeration that as we in the United States are tearing down our research universities, other countries, which may one day be our adversaries, are building them up," she told an audience on Grounds in February. Sullivan asserts that UVA has a responsibility to make public higher education sustainable "because our national security depends upon it. I think we can do it because of our distinctive history, because we have a history of innovation that makes us a change leader, because of our uncommon size and scale compared to other flagship universities, and most importantly, because we are not embarrassed to embrace a set of strong values."
Gerald L. Parsky '68, founder and Chairman of Aurora Capital Group in Los Angeles, was a member of the University of California Board of Regents for 12 years, serving as Chair from 2004 to 2007, and was a trustee of Princeton University from 1981 to 1991. Even before the financial crisis and ensuing recession, Parsky foresaw the challenges facing public universities, the "converging forces" they must manage to fulfill their mission of providing access to quality higher education at an affordable price.
Just as in Virginia, where the Commonwealth provides just eight percent of the University’s budget, state funding of public universities around the country has steadily declined. “It would be contrary to the University’s charge to make up that difference solely through tuition,” says Parsky. “Private support should be a primary source to replace state funding, but it must do so without raising the specter of privatization. I'm sure that University of Virginia alumni are just as dedicated and loyal to their alma mater as the alumni of private institutions, but they're relatively untapped. So you need to look at private giving not as something to be feared, but something you can carefully marshal as you seek to make up for less public funding."
Changing demographics are also forcing public universities to reconsider their relationship with the K-12 systems that feed them. "In California as well as Virginia, the challenge is to figure out a way the entire population can have access to the best university system in the world," says Parsky. "That gets to the direct link to K-12. The universities have to participate in helping to prepare students for college. In California the universities have Student Academic Preparation and Educational Partnerships that do this, but more needs to be done.”
Cohen agrees, and notes that expanding access to higher education puts a premium on teaching. "Certainly the faculty need to focus more on teaching critical thinking skills," he says, "but we also have to think about who we're teaching and what these students' experiences are. We have to recognize that we are dealing with challenges in admitting students who have gone through school systems where teachers are teaching to the test, where the students themselves do less real critical thinking and writing."
Then there is the lingering tension surrounding affirmative action. Educators value diversity for the myriad backgrounds and perspectives it brings to the campus conversation. "Diversity is a key principle and defining characteristic of the State of California and its universities,” says Parsky. “As a result, I'm a believer in legal affirmative action because we need diversity on our campuses, especially our public universities. The admissions office should be careful not to use processes that discriminate on the basis of race or ethnicity, but should take into account a number of factors in evaluating an applicant. For instance, it is important to understand the obstacles that a student may have had to overcome in getting to where he or she is and take that into account. If the admissions office does not consider such a factor, as well as other factors, it minimizes the chances of having a truly diverse campus where all students benefit."
A uniquely complex organization
"A university, compared to any other institution in the world, is a place that always has to be growing and learning because of the very nature of what we do." Teresa Sullivan, February 4, 2013
Like most modern research universities, UVA is a hive of related but disconnected activities. In addition to offering a full curriculum, the University manages a health care system, retail operations, entertainment and sports events, real and intellectual property interests, building and maintenance, and a host of other concerns. It employs 12,500 and has an annual operating budget of $2.6 billion. "A university, particularly a large research university, does just about everything," says Iuliano. "It is its own town in a way, but with international impact."
The University health system is especially vast and complicated. Having a medical school and running a hospital are in the public interest, but the scope of medical research and applied discovery drives a much larger enterprise. The sprawling business that has evolved is hardly what was originally contemplated, and it presses the expertise of president and board alike to set goals and allocate resources.
"It's not as if the president of UVA woke up one day and said, 'Hey, I've got a great idea, why don't we get into the health care business!"' jokes William B. Fryer ’74, a trustee of the Law School Foundation as well as the College Foundation. "No one would have done that. All institutions that are deep into the health care business struggle with it."
Another feature of the 21st-century university that tests conventional management practice is the composition of its stakeholders. Renowned brands, like UVA, reinforce their leadership by engaging as many constituencies as possible. Faculty, students, staff, parents, alumni, patients, private industry, policy makers, legislators, news media – these are just some of the groups that care about a place like UVA and have their own expectations of what it should be. Of course, they each see the role of the university differently, which puts the institution in the unusual position of wanting a large fan base with disparate interests. The great universities make it work, but they have had to adapt.
One conspicuous change is the increase in administration. It’s a fair complaint, but consider the growth in regulation by state and federal governments, whose involvement in university affairs requires more legal and compliance functions. "Forty years ago people like me didn't exist," says Iuliano. "Harvard had no need for a general counsel. Now, I have 13 lawyers working for me. Why? Because there are a whole set of regulations and legal obligations that we have to meet."
Further, a university is inherently decentralized. The work of faculty often spreads into other fields but is not easily coordinated across the university. Joint scholarship and discovery can be slow coming to market or reaching a wider audience because departments naturally protect their own turf and want to reward their own. Concerns about hiring, promotion, and tenure tighten the knot. "In an abstract sense the faculty wants interdisciplinary work, but they have to figure out who gets credit for these collaborations," says Cohen.
For example, should a faculty member from one school co-teach in another school? If so, who pays, and how much? If students take courses in other schools, should their tuition be apportioned? That leads to thinking in silos, says Cohen. "If people started internalizing the idea that to be a full citizen of the university you must branch out into other disciplines, and that was made part of the job description and the tenure standards, then faculty members would start caring more about it."
These hurdles are not unique to UVA and its peers. "It's a complicated set of issues," says Iuliano, "but I'm not prepared to despair that they aren't solvable. At the end of the day, individual faculty members will also recognize that their work will benefit if they can interact with people who have a different set of skills and perspectives. I think the responsibility of the university is in part to make that collaboration as easy as possible by gradually reducing the barriers."
According to Cohen, faculty see their role broadly as research (creating knowledge), teaching (disseminating it), and service (interacting with university administration and the public at large). "I think some of the controversies about higher education arise from differences on how to balance those three things," he says. "Certainly the faculty believes strongly that those three things interrelate and feed on each other. I don't think that's always the perception outside academia."
Finally, a university's "product" is not just unique in content, but also in kind. An economist might say higher education offers an "associative good," where the value to the buyer is determined by consumer demand. "The quality of the students we bring here is a big part of the product that we're selling," Cohen explains. "The University is selling its students to each other in some sense, and part of the result of that is a constant desire to improve student quality in response to increase in demand."
The challenge of university governance
Just as major research universities bear little resemblance to ordinary businesses, the way their governing boards are put together and fit with the institution is different, too. Directors of for-profit companies focus primarily on earnings and shareholder value in judging management. Even most non-profit boards tend to identify discrete, measurable goals since their charitable purpose is clear and specific. As a result, in most cases the board and management see the same ends and the same way forward. Not so for the modern public research university.
Jeffrey C. Walker (McIntire ’77) chairs UVA’s Council of Foundations, a panel of representatives from the boards of the University’s schools and related foundations. He is also immersed in the University’s strategic planning process. Walker’s view is that traditional governance structures fail to recognize the number of stakeholders in a university’s success, and lack the patience necessary for management to make changes that will take time to be accepted and demonstrate results. "The Board of Visitors needs to be listening so people feel like they are part of the process," he says. "No one has ultimate authority or power. If you think you do, you're wrong. Whether it's the administration, the deans, the faculty, the students, the alumni, the surrounding community, the legislature, the governor ... if any of those dominate, it's going to be a problem. There must be an atmosphere that brings together the best of everyone's ideas and then allows people like Terry Sullivan to lead us to the next hill."
Parsky made the same observation about the University of California system. "It was very hard for trustees, students, faculty, and the administration to have a real working relationship," he says. "As the chair [of the Board of Regents], I took an incredible amount of time to meet with each of those groups at various campuses, but it takes that effort to have a link to them."
Being an effective trustee is no longer as simple as showing up at meetings. Trustees may be smart and successful, but they must learn the daily work of the institution as well as the soft skills of a university fiduciary. "Maybe the Board of Visitors should ask one of the former provosts, or a past rector like Gordon Rainey [‘67], to mentor new members," says Walker. "They should go out and start meeting with different sets of deans or spend more time with other constituents. But that takes time, and it's not easy for somebody with their own full-time job. Instead, you have a board that handicaps itself."
The events of last summer at UVA suggest that trustees may underestimate the demands of board service and the reach of their experience. "Trust me," says Walker. "There are a lot of people in the business world who come on these boards, whether it's a hospital or an arts institution or a university, thinking they've been on many boards and can walk in and try to apply the corporate model they know. It doesn't work."
Michael J. Horvitz '75, the former Chair of the Law School Foundation board of trustees, has found that lawyers and consultants often make effective board members even though lawyers are somewhat out of favor on corporate boards. Both spend their entire professional lives persuading people to do the right thing because they cannot force anybody to do anything. Corporate executives often have a more difficult time for that very reason. They make decisions and give orders every day on their own authority. Building consensus takes longer, and may reveal weak support for an idea – but that is the virtue of process in an academic community. Success is achieving objectives that are universally valued inside and outside the university. Anything less risks dividing the institution.
"I've seen corporate executives become very good board members, but I've also seen some drop off boards because they can't stand wasting all this time in meetings,” says Horvitz. “When you translate that, what they really mean is they don't want to have to talk to people and build consensus, they just want to figure out the right thing to do and then tell them to get it done. But that’s just not the nature of board work."
Finding the right person
The path to membership on a university board rewards loyalty and affinity, but also philanthropic and political support. Depending on what mattered most, a new trustee could be an imperfect fit with the culture of the institution or the governing style of the board. Someone accustomed to uncontested leadership will soon recognize that at best they are first among equals. Altruism and humility do not solve every problem, but they do define boards that work well together.
"They should be collegial people who have the best interest of the institution at heart,” says Horvitz. “They should be people who are not looking for their own aggrandizement, or to order the president or dean around. They should be people who can work collaboratively."
Iuliano agrees. "In any sphere – industry, higher education, other non-profits – good governance requires a collaborative and interactive relationship between the board and the administration, and especially between the board and the president. That’s not to say the fiduciaries and the administration serve the same function; they do not. Just as a disengaged board is dangerous, there are also consequences when a board, or some of its members, push too deeply into the roles and responsibilities of the administration.”
An advantage trustees typically have over administrators is their personal connection to elected officials. They are closer to the political process and know the minds of their lawmakers. Parsky believes these are assets that board members should use on behalf of the institution. "One of the things I suggested was to get the regents more involved in Sacramento. It's not just the university administration that should be advocating for the university. It should also be the trustees. Their willingness to do that should be one of the conditions of appointment by the governor."
In that connection, an unintended consequence of public governance is the chilling effect of open meeting laws. Designed to guard against irregularity and promote accountability, they have instead stifled frank discussion. In Virginia, no more than two members of a public board can talk about the business of the board without triggering sunshine laws. “How can anybody have a free flow of ideas?" asks Walker. "Everything is being vetted in front of the press and they're hanging onto your every word and catching every mistake. It's actually debilitating to free speech. In Michigan and other states they can meet as long as they don't vote on and make decisions, so that the decision process is actually public but the consultation and the process can be in any form it wants."
"Boards are deliberative bodies," says Horvitz. "They can't function in a fishbowl." The board should be able to unpack issues in a candid and confidential environment, while keeping public the actions they take and the rationale behind them. "But the public doesn't need to know every single thing that somebody considered and decided not to do," cautions Horvitz. "Their inability to have candid discussions about options hamstrings the board. It's easy to get off track. You need the group discussion to bring you back to reality."
Moreover, a board should set priorities and guidelines for an institution and not try to manage how to implement them. "That's the administration's job," says Horvitz. "The rector doesn't have the right to be giving orders to the president. The job of a member of a governing board, particularly a chair of a governing board, is to build consensus to get disparate factors moving in the same direction. That requires a very different skill from being an effective corporate executive or an effective military general, where your job is to give orders and expect them to be followed."
The Law School Foundation, for example, has an independent board that oversees the management of private gifts held exclusively for the Law School. The Foundation funds a material portion of the Law School’s budget. In theory, the board could express disagreement with the dean by withholding money, “but I've never seen that happen," says Horvitz, who chaired the Foundation board from 2002 to 2008. "I've seen plenty of collaborative discussions about priorities between the dean and the Foundation trustees, but the culture of the Foundation really works hard to foster a strong relationship with the Law School. We view our mission as supporting the Law School and not trying to direct it or move it off course."
The "Defining Moment"
The UVA community learned last June that it was not immune to boardroom drama after the Rector and Vice Rector emailed a stunning edict. "On behalf of the Board of Visitors," it read, "we are writing to tell you that the Board and President Teresa Sullivan today mutually agreed that she will step down as president of the University of Virginia effective August 15, 2012."
What ensued was a backlash against poor governance. The BOV’s action was seen as a breach of trust, at odds with faculty and student opinion and short on courtesy and due process. The BOV eventually reinstated Sullivan as president, a popular move that let the healing begin. It was, in Sullivan’s words, a "defining moment."
Cohen, who had been installed as Chair of the UVA Faculty Senate only a few days earlier, was in San Diego for a wedding when he read the announcement. He immediately recognized there were serious corporate governance failings. Cohen also wanted, and expected, a fuller explanation from the BOV. "My first reaction was that there must be some kind of scandal for the BOV to have acted so suddenly, but there wasn't," Cohen says. "In terms of governance, it's just not good business practice to dismiss a university president without following a transparent process."
From the start, the BOV was beset by questions of process and fairness and never spoke as one about why it demanded Sullivan’s resignation. The Rector's refusal to elaborate, other than to claim “philosophical differences” and privileged “personnel matters,” only inflamed public suspicion. The Rector could have canvassed the Visitors’ positions in an executive session of the whole board. Instead, it appears she conducted a series of private conversations with individual BOV members. "I think she made the wrong decision," Horvitz says. "A lot of good comes from talking through these issues with the full board. When you are deprived of that, you get the kind of result that happened last year."
Ten days after it started, the BOV voted unanimously to undo its action and re-unify the University. "I think we all feel good about the fact that we rallied to her defense and got the president back,” says Walker.
A months-long investigation of the matter by the American Association of University Professors concluded in March that the "breakdown in governance at the University of Virginia ... was only partly a result of structural failure; indeed, the board ignored its own recently adopted guidelines on presidential evaluation. In much greater measure it was a failure by those charged with institutional oversight to understand the institution over which they presided and to engage with the administration and the faculty in an effort to be well informed. It was a failure of judgment and, alas, of common sense."
For his part, Cohen emerged as a visible leader of an invigorated Faculty Senate. As a law professor, he concentrated on matters of governance to help resolve the crisis. Faculty groups around the country have consulted him to improve relations with their own governing boards. "It's interesting how much this story has resonated with such a wide variety of people," he says. "These are people who are very worried and would like the magic formula for how we did it, but there is no magic formula. We had a very lucky alignment of the planets, and it's not easily replicated."
To its credit, the BOV moved swiftly to address these questions after it reinstated Sullivan. It created a special committee on governance and engagement to recommend policies that would facilitate its interaction with the administration. The BOV also gave its imprimatur to a special committee on strategic planning to develop, with the administration, goals for the academic enterprise.
Fryer notes that governance often entails making hard calls without the benefit of hindsight. What seems like a good decision may later prove unwise. He therefore cautions university leaders to think beyond the moment. "First, you have to be careful and considerate and reflect on the long-term implications, not just the mood of the day, about what kind of governance structures to adopt. Second, you need to distinguish between individuals who may not be up to the task and a flaw in the structure itself. Individual failures can force changes in structure that may not be warranted."
The UVA Council of Foundations has also created a committee to study governance at the University and make recommendations to the BOV. It is coordinating its efforts with the strategic planning working groups. A central theme is emerging. "Governance follows rather than precedes," explains Fryer. "If you're designing governance for an educational institution, you do so after you've set your mission and general agenda and then structure yourself accordingly. The fact that the University is embarking on this at the insistence of the Board of Visitors, and with the cooperation and leadership of the president, means there should be a significant degree of patience to allow that process to play out."
A “Grand Bargain”
At the head of the strategic planning effort is President Sullivan. Her goal is to "assess UVA's strengths and weaknesses, set priorities, and chart a bold, achievable course for the University's future ... [that will] re-examine and re-imagine the University as we approach its third century." She oversees working groups devoted to faculty retention and development, resources, student life and career services, technology, synergy, and the ideal of the public university.
Sullivan has asked this last group to answer three primary questions. What does it mean to be a public university in the 21st century? To what extent can a public mission be pursued in the face of declining state support? How do we make a compelling case to the people and legislators of the Commonwealth that the world-class excellence of UVA benefits them as well as the nation?
Walker is encouraged. "I was in the 2020 process [an earlier strategic planning effort begun in 1998] and this one is much more collaborative, less top down with more teams representing all the stakeholders radiating up from below,” he says. "To ensure full involvement by the BOV, I suggested that the [BOV] Strategy Committee co-chairs, Frank [Atkinson ‘82] and Lin[wood Rose], participate more often in the administration-led joint stakeholder strategy committee meetings. I also hoped the rest of their board committee would also come so that when we present our strategy plan in August it will be a partnership-oriented document where everyone is already on board."
Sullivan’s report to the BOV in February reveals her ambitions for the University. "We are not trying to move from mediocre to good, or from good to great. We are trying to move from great to greater. We have no peer institution to serve as a model for what we want to become, no single peer to which we can affix our aspirations, because our aspiration is to be something unique and greater than any of our peers. Our aspiration is to create a future version of this University that is better, stronger, and more innovative than our current self."
The BOV’s Committee on Governance has already implemented some recommendations born of Sullivan’s botched dismissal, such as having faculty on BOV committees as non-voting, consulting members. The BOV is also turning the mirror on itself, addressing the duration of term limits, teaching new members to become meaningful fiduciaries, and re-thinking an appointments process that lacks continuity from one board to the next.
But Fryer thinks these are small issues compared to the one that holds enormous political valence in Virginia: Should the University's relationship with the Commonwealth change in some significant degree? "Some issues – more autonomy for the University, in-state/out-of-state ratios, tuition – are so controversial that if you merely put the words out there you create a political firestorm, and that's part of the problem," says Fryer. "An analogy might be to the Grand Bargain they keep trying to get in Washington. You can't get the little things done because they're intractable, so the only way to get the little things done is to have a Grand Bargain."
In California, Parsky found that once such questions move into the political arena, officials seeking headlines try to highlight things that distort the picture. "They will pick out the fact that a chancellor might make six or seven hundred thousand dollars and say that's a reason they don't need any more money, they earn too much,” says Parsky. “What they don't appreciate is that in order to maintain the quality of the public institution, you have to compete with private institutions for the highest quality administrators and faculty. The administration of a public university has to be prepared for this."
Anticipating those challenges and knowing that many of California’s legislators graduated from the UC system or had children in it, Parsky always started with the proposition, “Do you want to maintain the quality of this institution?” "The answer is always yes," he says. "Then you have to walk them through what that takes and be able to demonstrate that you are carefully controlling administrative costs, and then defang the politician by saying here's what the costs of administration were ten years ago, and here's what they are today – and we're educating more students."
Parsky also found that a strong advocacy program that challenges politicians who want to cut state support for the university can put those legislators on the wrong side of the issue. "You've got to handle it delicately, but if you can show that the university wants to keep education affordable for students, and reducing state funding will force an increase in tuition, you'll be positioned on the right side."
Fryer acknowledges that there are those who just want to smooth over the obvious edges in the governance structure and then declare victory. But there are others who want to wait for the strategic planning effort to play out and then work on governance. "I'm more in that latter camp because I hope that the strategy process lives up to its objectives and that it sets the course for the University in a positive, material way. I think the danger here is that you end up with a ‘small ball’ outcome that won't serve the University well. There are understandable concerns about controversy and political management, but to lose the opportunity at this particular juncture, which may be the best time to consider a major change, would be profoundly disappointing."
Few observers think that UVA’s prevailing reputation – a major university famed for delivering an intimate and powerful student experience – will change. But the opportunity is there for Virginia to lead a broader national effort that re-defines the nature of a great public university. Jefferson established the University for that very reason under similar circumstances. A combination of imagination and courage could re-launch UVA on the eve of its bicentennial in 2019.
"The alumni would financially embrace innovative thinking," says Fryer. "This is the time to do it." He is encouraged by the concerted effort on Grounds to meet this challenge, and hopes it ends in success. "I've been in touch with several of the leaders of these groups and, believe me, they're up to the task," says Fryer. "They're not going to shirk from big thinking. The question is, are they going to be allowed to tackle the really big issues?"