ACTA's Must-Reads

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President to higher ed: cut costs

In his first State of the Union address last night, President Obama touched upon one key ACTA issue directly, and raised another one indirectly. In his remarks on education, the President recognized the role that colleges and universities have to play in making higher education "more affordable":

it's time for colleges and universities to get serious about cutting their own costs because they, too, have a responsibility to help solve this problem.

As universities hire and ever-expanding army of administrators, and as tuition increases continue to spiral out of control causing two-thirds of college freshmen to worry about their ability to pay for their degrees, ACTA welcomes the President's belt-tightening message.

The President also returned to one of his campaign promises when he pledged to work this year to repeal "Don't Ask, Don't Tell." Many of our elite universities continue to invoke DADT to justify their opposition to on-campus ROTC programs and it will be interesting to see, if the law is repealed, whether they will adopt a more welcoming attitude toward the military.

On the question of a ROTC participation, as on the need to cut costs, the buck of course ultimately stops with the trustees. They are the key levers of change and they have the fiduciary authority to act--now.

Posted by David Azerrad on January 28, 2010 at 03:06 PM | Comments (0) | TrackBack

Governance in the news

Trustees are from Mars, and faculty are from Venus, if the Association of Governing Board's latest report is any indication. As both the Chronicle of Higher Education and Inside Higher Ed report today, both groups supposedly display a lack of understanding of the others' roles in university affairs--adding yet another layer of confusion in the already murky business of shared governance. But is that all? ACTA president Anne D. Neal weighed in and found fault with the survey's methodology and the study's conclusions--particularly the fact that most of the survey's respondents were administrators rather than trustees. This unfortunately seems to reflect the common view that when it comes to university governance, administrators should be running the show at the expense of the board's authority. While education about all aspects of university governance and operations is crucial for trustees to be able to do their jobs well, their fiduciary role requires them to have the final word.

Posted by Sandra Diaz on January 25, 2010 at 05:03 PM | Comments (0) | TrackBack

Higher ed costs: still going up!

There's still a dirty little secret in higher education and it's called ever-spiraling costs. At a time when families are cutting back and taking out loans to send their kids to college, higher ed costs continue to rise.

You wouldn't know it from the headlines of course, since we are told, in today's Chronicle of Higher Education for example, that "Paychecks Stagnate for Presidents of Many Public Universities." In reality, executive salaries are not staying put -- they are merely increasing at a slower rate. Whereas median salaries increased by 7.6 percent last year, they only rose by 2.3 percent this year.

The same article also tells us that base "salaries stopped growing last year for more than one-third of the 185 public-university chief executives" surveyed by the Chronicle. According to my old-fashioned math, this still means that nearly two-thirds of these CEO's saw their base pay grow! Yes, it's great that some CEO's are declining their bonuses or donating some of their pay, but let's get real.

During economic downturns, most businesses don't increase costs and raise prices. Instead, they find ways to cut overhead and reduce administrative expenditures to make their products more affordable. That's what should happen in higher ed. And yet all too often, journalists, policymakers and families seem to take it for granted that tuition increases are inevitable in times of economic downturn and that higher ed costs -- which are, wouldn't you know, governed by their own inflationary measure -- must always rise.

At a certain point, the cost of a college education will exceed its value. Some would argue we're already well past that point. Isn't it time we started expecting colleges and universities to cut costs and live more like the rest of us?

Posted by Anne D. Neal on January 19, 2010 at 11:07 AM | Comments (0) | TrackBack

Lessons from Stevens

Sweeping governance changes just imposed by the attorney general of New Jersey in a case involving the Stevens Institute of Technology Board of Trustees underscore why trustees need to get their houses in order: If you don't, someone may do it for you! Here are some lessons, for starters.

The full board -- not just the executive committee -- needs to set the pay level of the president and resist the temptation to raise presidential salaries higher and higher. It is interesting to remember that the New York Board of Regents once removed almost an entire college governing board for permitting enormous presidential compensation (of which the full board was ignorant) on the grounds that it was the trustees' legal obligation to conduct adequate oversight.

Boards must insist on clear conflict of interest policies. Self-policing measures will obviate the need for intervention. While outside trustee involvements can sometimes be valuable and informative, they can give rise to inappropriate transactions if the potential conflict is not disclosed. Accordingly, it is imperative that higher education governing boards adopt clear conflict policies that ensure transparency in university operations.

Presidential leadership does not depend on being a member of the board. Presidents of private colleges today commonly have voting rights on their boards. However, this status confuses the governance relationship. Presidents, after all, work for the board and frequently bring proposals to the board; sometimes presidents are also members of the faculty, where various conflicts of interest can arise. Permitting the president to serve as a nonvoting, ex officio member, or to attend board meetings upon the call of the board, can eliminate this problem.

Boards of trustees should insist on their own staff and budget. Currently, most boards of trustees have no staff and no budget. They are, for the most part, entirely dependent on the president's staff for support and for continuing education. It is not surprising that, given this fiscal arrangement, most boards are not independent.

Boards of trustees should regularly ensure donor intent is being followed. As a general practice, trustees should review restricted gifts and ensure the donors' terms are followed as part of their fiduciary responsibility.

Bylaws should provide for trustee term limits, and for removal of trustees for lack of attendance, misconduct, and conflicts of interest. The audit committee (whose members should be financially literate) can be responsible for ensuring that policies are adhered to and conflicts of interest avoided, reviewing compensation (including the 990s) and publicly disclosing top administrative salaries each year.

Posted by Anne D. Neal on January 15, 2010 at 06:15 PM | Comments (0) | TrackBack

Big-time college athletics and the question of priorities

At a time when a number of colleges and universities have resorted to drastic cost-reducing measures (by higher education standards), such as freezing faculty pay and even cutting entire degree programs, it seems that some big sports programs are being exempted. According to an article in USA Today, many institutions saw large increases in direct college subsidies between 2005 and 2008. Salaries of football coaches have also skyrocketed and some now net several million dollars a year.

While athletics does have a legitimate place in the university, its overemphasis has led some colleges to be "more focused on beer and spectacle than on teaching and learning," in Anne Neal's words. When one reads about the University of Alabama cancelling classes so that students could attend a football championship, or Binghamton University dismissing--then reinstating after an outcry--an adjunct after she revealed having been pressured to grade basketball players more leniently, one begins to wonder: what exactly is the highest priority on our campuses these days?

Posted by Sandra Diaz on January 15, 2010 at 04:45 PM | Comments (0) | TrackBack

Trouble in paradise?

In today's Chronicle of Higher Education, the spotlight is on a battle involving faculty contracts at the University of Hawaii. Like many other state governments at this time, Hawaii is dealing with a major budget shortfall and has had to rein in spending in a number of sectors, including higher education. In response, the University of Hawaii has been taking a scalpel to its own budget, and among its incisions is a temporary 6.7 percent pay cut for faculty. Naturally, this has the faculty union up in arms, and they are prepared to fight this pay cut in court if necessary.

While a pay cut, even a temporary one, is certainly not welcome news, it must be viewed in the context not just of Hawaii's budget difficulties, but also of our national economy. Contract issues notwithstanding, this pay cut is a weak measure compared to the scores of layoffs sustained in other industries (not to mention being comparable to what the university administration has already done for itself). It is also one part of the collective wake-up call many colleges and universities are receiving after spending too freely during the good years.

Posted by Sandra Diaz on January 11, 2010 at 05:21 PM | Comments (0) | TrackBack

Letting in the sunshine

Over the past few decades, administrative and other non-instructional spending in universities has exploded relative to instructional expenditures. In fact, much of the increase in staff-per-student ratio since the 1970s has come from non-instructional personnel, helping to drive up costs without appreciably affecting the quality of education. Also grabbing headlines have been reports of generous--some would say exorbitant--salaries for college presidents and other administrators. All of these factors contribute to college costs that continue to outplace inflation, a situation that has received a great deal of attention from the Louisiana Postsecondary Education Review Commission, to which ACTA submitted testimony in December.

With this national backdrop, it is not surprising that during its 2009 session, the Arkansas state legislature passed Senate Bill 55 (renamed ACT 321) in order to "increase salary transparency for administrators in state-supported institutions of higher education." The act stipulates that a "state-supported institution of higher education shall submit a report listing each administrator at the state-supported institution of higher education who earns a salary of one hundred thousand dollars ($100,000) or more to the Higher Education Coordinating Board and the Department of Higher Education by July 1 each year, beginning July 1, 2010."

One can surely sympathize with the legislators' desire for transparency; but it shouldn't take a statute! In 2006, ACTA testified before the Senate Finance Committee Roundtable and called upon boards to take the first steps themselves toward accountability. We recommended boards voluntarily publishing annual reports outlining such information as: compensation of the president and all senior administrative officials, whether conflict of interest policies are in place, board member attendance records, board compensation and the names and addresses of all trustees. "Self-policing measures by the higher education community," we noted, "...will obviate the need for legislative intervention." The higher education community should take note.

Posted by Sandra Diaz on January 07, 2010 at 11:27 AM | Comments (0) | TrackBack

Raising tuition in the Bayou State

ACTA recently had the pleasure of touching base with Louisiana policymakers and submitting testimony to the state's Postsecondary Education Review Commission concerning higher education quality and affordability. Shortly thereafter, the Commission recommended that the Louisiana State Legislature relinquish its authority to set tuition for the state's public colleges and universities. According to this news report, if the Legislature approves this recommendation, tuition and fees at Louisiana State University could rise nearly 25 percent, and there could be increases of almost 60 percent at the University of Louisiana at Lafayette.

This response to the governor's call to increase cost efficiency and streamline budgets ignores a very real problem that ACTA highlighted in our testimony -- high administrative expenditures relative to instructional spending. According to data supplied to the U.S. Department of Education, between 2002 and 2007, the Louisiana State University System increased its instructional expenditures by 63 percent, but administrative spending went up over 87 percent. During that same period, instructional spending at the University of Louisiana at Lafayette went up 21 percent, while administrative spending increased by 41 percent. The rapidity with which administrative costs are increasing is a significant factor in spiraling college costs -- and to raise tuition without addressing it is little more than applying a flimsy band-aid to the wound.

Posted by Anne D. Neal on January 04, 2010 at 04:49 PM | Comments (0) | TrackBack