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Week 13: Competition, Regulation, and Governance Competition and Regulation Competition and choices define the American research university in the twenty-first century. Universities compete for every resource of significance from quality students to superior faculty, from state tax dollars to federal grants and contracts, from corporate support to private funds and endowment. Universities make choices about the use of these funds that enhance or reduce the institution's ability to improve and compete more effectively. Productivity and quality provide the twin engines of university competition. Productivity matters because it multiplies the value of every dollar spent and because it creates value for the university's customers and supporters. Quality matters because investors in university activities seek a quality product as well as a low cost product. Even though much rhetoric focuses on inexpensive education, the consumer wants quality, the best students want quality, the faculty want quality, the state admires quality, the granting agencies fund quality, and the donors seek association with quality. The competition among universities is fierce, and to restrain that competition as much as possible, the state and the guilds create a wide range of regulatory agencies. Public universities suffer from much more regulation than private institutions, but all universities have some variety of regulatory oversight. All universities suffer from accreditation. Accreditation, originally invented to identify fraudulent institutions and programs, has become the defender of educational fads and the regulator of guild privileges. At the university level, regional associations review institutions on a ten-year cycle with five-year updates in accord with a host of criteria of often questionable validity. Frequently these associations propagate educational fads and encourage member universities to adopt them as the price of a favorable accreditation report. Institutions conform, of course, for to do otherwise is to risk major difficulties with the federal and state authorities that require accreditation. Other associations, focused on particular faculty guilds, use accreditation to distort university funding priorities by demanding more equipment and space, more extensive support services, and lower faculty student ratios than may actually be needed for a quality product. Again, because accreditation status is often required for governmental recognition, institutions distort their allocation structures to respond to the association blackmail on behalf of its membership guilds. While universities often resist the arbitrary standards of accreditation, they also use the accreditation process to leverage added resources from reluctant legislators or other program supporters. This restrains the push of many legislatures to reduce the cost of instruction because the university makes it clear that accreditation will be lost if funding falls too low. The regulatory dance between universities, accreditation associations, funding agencies, and legislatures constitutes one of the more expensive and labor intensive bureaucratic activities of the institution. States almost always have complex regulatory systems for public universities. No matter how the state institution is organized, the state will limit opportunities, divide academic missions, and otherwise attempt to regulate competition and reduce duplication. All this they do in pursuit of economy and access, but often what they end up achieving is extra cost programs and highly politicized systems. No public university lives in a completely free market economy, but the range of market responsiveness varies. In some systems the institution controls tuition and the legislature controls appropriations, in others the legislature controls all aspects of funding and expenditure. Most quality and productivity advances come when the university can be held accountable and is then left to compete, but many state institutions operate comfortably within the safety, political control, and inefficiency of regulated environments that in many ways protect them from the competition and risk of an open market economy. Finally, the federal government regulates many aspects of university operations from laws affecting affirmative action and financial aid to rules about athletics and research funding. The national research agenda exercises a powerful influence over the operation of university research environments, and federal rules determine much about the funding and management of university based research. Universities maintain substantial lobbying enterprises at both federal and state levels to influence this regulatory environment. In addition, from time to time various agencies of the federal government from the executive branch through the congress generate studies, commissions, hearings, and other activities designed to promote a particular educational or political agenda. Many issues arise from the interplay between the university and its regulators.
Governance All universities have governance. Governance appears in many forms, some useful, some benign, and some destructive. The topic of governance means many things to different constituencies. To the faculty, governance means faculty involvement in and control over many aspects of university life, from academic issues through promotion and tenure to budgetary allocations. To the students, it normally means the mechanisms that regulate student life, the power and authority of the student government, and the ability of students to influence institutional policies and practices. In private universities, governance also refers almost always to the boards of trustees who own the university and have responsibility for its operations. In public universities, governance likewise means boards of regents or trustees or supervisors, political structures within which the university operates, governors and education commissioners, higher education commissions or boards of regents, and legislatures. All assert some form of governance control over the institution. To administrative staff, governance may mean the organization of the university's bureaucracy that establishes reporting relationships and lines of authority. All of these participants believe that they have a governance role and a responsibility within the context of university operations. Sorting out this complex structure of authority and responsibility is never easy, and while some commonalities exist in all university governance arrangements, local variations tend to be many and significant. Governing boards are the place to begin. All universities have boards, some have more than one. A governing board (whether of regents or trustees or supervisors, the nomenclature is mostly without significance) generally serves as the ultimate authority for the university, the location from which all power and authority flows, and the place where all accountability returns. In the case of private universities, this description matches reality rather well. Private university boards, often of rather large size reaching as many as 60 or more, serve to hire presidents, ensure the fiscal solvency of the institution, and approve major policies. They often approve appointments of senior administrative officers on the recommendation of the president, they frequently approve tenure appointments on the recommendation of the faculty and the president, they almost always award degrees on the recommendation of the faculty and president, and in every case they expect to participate continuously and energetically in the fundraising activities of the university. Private university boards generally have a tight focus on the specific issues of their university, and recognize that their job is to promote the university's success. They are single minded in this pursuit, and while they may make mistakes or fail to understand some issues, their interest in the university tends to be undivided. Large private university boards organize themselves into committees and subcommittees to do the work of the institution, and often the major direction of the board comes from its chair and its executive and finance committees. Private boards are, for the most part, self-perpetuating, and they select and appoint their members. Some boards have terms for their members while others have indefinite appointments. Many qualities earn membership on these private university boards, but significant contributions to the university's welfare, often in the form of substantial donations, provide the most important qualification, followed by distinguished public service. The board members often have a major financial investment in the success of the institution though their own large gifts to endowment or through family bequests. Private university boards tend to meet infrequently, perhaps quarterly at most, and do the majority of their work though their committee structure. In most cases the president of the university serves as an ex-officio board member. Public university boards are much different. These boards in almost all cases are politically created, although the mechanisms for that creation vary. In some states, the legislature or the governor appoints the members; in a a few others the board members stand for election before the general public. Many states give the authority of appointment to the governor and confirmation of that appointment to the legislature. In others, the university's board, in addition to politically appointment members also has alumni members elected by the alumni. Many boards have student members, normally appointed by the governor but sometimes elected by the students. The variations on these themes are many. In some states, with complex university systems, the university does not have a board but instead the system of universities has a board that supervises all universities. In these cases, the board is really external to the university and has its own bureaucratic support structure with an executive officer called either chancellor or president depending on tradition (the other name being used for the institutional head). Some systems have a super board at the state level and then individual university boards. However, in these cases the university board may be without significant authority and serves primarily as a fundraising and lobbying entity. In the public sector, in most cases, the members of a university's governing board do not have a single focus on the university's best interests but instead serve multiple masters from governor, to legislators, to other special constituencies. In multi-university boards, the members often have geographic loyalties and serve not only to seek the benefit of the system but also to protect and advance the specific political interests of their geographic region and the institutions within it. Good public boards also serve to protect the university against the vagaries of the daily political process of legislative and executive branch interference. Boards that respond too readily to the whims of elected officials or special interests of one kind or another do their institutions a significant disservice. In theory independent and significant, these public board members can serve the institutions well. However, because public universities have widely differing standing within the political and bureaucratic space of their respective states, and because they speak primarily to these local constituencies, generalizations about public university governance are difficult to make accurately. In addition, because of their highly politicized nature, state university boards differ dramatically in their performance and effectiveness depending on the particular circumstances and personalities of the political moment. What works well in one political era may prove singularly ineffective in another. Given the appointment process of public university board members, it is not surprising to find them more responsive to the interests of their external constituencies (governors, legislators, and various special interests) than they are to the academic success of the institution they supervise. Indeed, it is fair to say that one of the most important differences between the public board and the private board is that the public board exists to regulate the university within some concept of the public interest as defined by current politics while the private board exists to maximize the university's performance and support its work. Public university boards generally have many of the same powers as the private board but have less complete control of the institution as these institutions and the board itself must respond to a wide range of laws, rules, regulations and other constraints placed on them by the political history and structure of the state. In some states, universities are constitutional, in that their existence is part of the state constitution. Those universities and their boards tend to have somewhat more autonomy from the intervention of state legislatures and governors than universities that exist by virtue of a state law. When the university is a creature of the legislature, changes in its status, functions, autonomy, and authority require only the action of the legislature and the governor as is the case with any state law. When the university is a constitutional entity, however, the legislature can still have great influence, but it cannot change the basic powers and authority of the institution without invoking the process of constitutional change, an often difficult and unpredictable activity. Public universities exist to serve the public interest as defined by their boards and their legislatures and governors. Private universities, while they too serve the public interest, define the public interest on their own terms. Most private universities can be more focused, more effective, and more consistent over time because they are not as easily subject to temporary, local, and political enthusiasms as are the public institutions. Governance for faculty, naturally, involves their engagement in the decision process of the institution. In general, although variations are many and significant, faculty own the curriculum, the general academic standards of the institution, the definition of degrees, and the approval of candidates for degrees. Faculty also have the most influence over questions of hiring, promotion, and tenure of faculty. These all represent primarily guild functions, and most universities recognize the faculty's authority, although in many institutions the law and other administrative rules limit the faculty's freedom of action in some of these areas. The mechanisms of faculty governance are very guild-like and consist primarily of committees, councils, and senates (representative or participatory in nature). These collections of faculty, defined primarily by guild criteria, exist at all levels from the departmental faculty meeting to the university-wide faculty council or senate. The rights and responsibilities of the faculty normally exist in written form in a faculty constitution or handbook of some variety that describes what the faculty's rights are, how they are to exercise those rights, and who has the ability to overrule the faculty. In most universities, the president/chancellor has the right to overrule the faculty on almost all matters, but of course only does so with very good reason and relatively infrequently when dealing with core guild matters. However, faculty also want to be involved in fiscal and budgetary matters. In this, universities vary significantly. Most universities permit the faculty to have an opinion, to have a committee that takes cognizance of the university's financial issues and perhaps offers opinions and counsel. But almost no university gives the faculty the right as faculty to manage the money. This is because the faculty are not responsible for the money. Authority and responsibility must be placed together and so the trustees of both public and private institutions insist on clear lines of fiscal authority and responsibility, for if these boards have one obligation it is for the fiscal solvency and integrity of the institution. The rise of the labor union movement has also had a significant impact on issues of faculty governance. Labor unions of the variety of AFT, UAW, NEA, or AAUP take the industrial trade union movement as their model and proletarianize the faculty's economic issues. These are mostly issues of work load, salary, and benefits, although other issues sometimes come into play. In many institutions, the unions carefully avoid engaging in academic guild matters, restricting themselves to major workplace and compensation issues. One consequence of the union movement has been the decline in the power of faculty governance in other areas. Because money matters, the administration and the union resolve the money matters outside of the normal, guild driven traditional governance system using traditional labor-management conflict resolution managed be professional labor/management negotiators. On other issues of guild importance, the governance has less significance because the participants are not also participants in conversations about money. Also, the unions resolve many difficult issues for administrators. With a union, grievance issues no longer fall into a settlement mode dominated by faculty committees but instead fall into a labor union mode dominated by bureaucratic rules of procedure, essentially civil service types of conflict resolution. This offers protections to the faculty in many cases, but it also makes it easy for administrators to ignore faculty academic concerns that may be part of grievances because the bureaucratic rules give them a ritualized path through the union rules for resolution. The principal leadership of the faculty, however, does not only come from the councils and governance organizations, except on curriculum and in considerable measure on promotion and tenure. Instead, it is the deans and department chairs who carry the faculty voice in the conversation about university policy and procedures. They are the intermediaries between the corporate nature of the university and the guild spirit of the faculty. While they speak for and on behalf of the guilds, they serve at the pleasure of the corporation. Consequently, they represent the transfer point between the guild's ancient academic traditions and the corporate university's competitive, commercial, labor union, and market driven imperatives. Students in all universities have their own agenda. They want low tuition, an active campus life, and authority or at least a significant voice in all aspects of university management that affect students. They think they should participate in guild issues like promotion and tenure; they believe they should help allocate the budget; they believe they should help drive the curriculum; and in most cases, they know that student life is both their responsibility and their base of power. Students operate though many structures, the principal one being student government. In most large public universities, student government is controlled by a relatively small fraction of the student population and primarily by already organized students through fraternity and sorority structures where those exist, or by other affinity groups capable of mobilizing the relatively few students required to win student government elections, generally characterized by low turnout. In addition, special focus groups of students organize and lobby, whether women's groups, gay and lesbian associations, environmental activists, black student unions, Hispanic student associations, Asian student associations, and the like. Some of these are interest groups of long standing, institutionalized by the university in such entities as Black Student Unions, Hispanic Student Associations, and Women's Centers. Others arise as ad hoc organizations in support of a particular cause such as environmental or labor issues. Whatever their origin, these subunits of the student population lobby both the established student government for more money and involvement and the university for more influence over university policies related to their particular concerns. Within this structure, the governance of the institution takes place in accord with written policies and procedures as well as traditions. Public universities tend to have more bureaucratic structures with many more written rules and regulations, primarily to protect the institution against the intervention of outside political influences. The public university uses the bureaucratic process of rule creation and enforcement to buffer the many political micro-constituencies that seek advantage, opportunity, or platform within the institution. Because the public university's authority is weak and derived in most cases from a potentially volatile political process, the rule making system creates safe havens for decisions that will make some constituency unhappy. Since large public universities have a large number of constituencies, almost every decision has the potential to generate a political controversy. The rules and procedures through which the university implements decisions buffer these controversies and usually, but not always, permit the institution to do what needs to be done. Policy formation at major universities is both complicated and varied. Some universities have well-ordered structures for making policy that involve councils, meetings, and other representation articulated through formal procedures. Most universities, however, have traditions and expected behaviors for making policy decisions. Part of the policy process involves deciding in whose domain the content of the policy falls. If it is fiscal, it belongs primarily in the administrative domain; if it involves curriculum and academic standards, in falls primarily in the faculty domain. But most policies actually involve both. If the university changes its academic standards in some way it is likely to have a fiscal impact (more or fewer students, more or fewer faculty). If the university changes its fiscal policies in some way, it is likely to have an academic impact (if we spend more on deferred maintenance and less on the library it impacts the library; by spending more on parking we may spend less on laboratory equipment). Further, students take a keen interest in these issues and often student interests and faculty interests do not coincide (students want low tuition, the university wants to raise tuition to raise faculty salaries; students want more recreation space, faculty want more laboratory space). As a result, the process of university governance involves a wide range of complex negotiations, meetings, consultations, all designed to buffer the conflicting interests. In some states, the role of the public media looms large in the university's decision process as various factions manipulate the media's enthusiasm for controversy to influence particular internal outcomes. Through the agency of aggressive public records and public meeting rules, the media become participants in the decision process of the public university under the guise of informing the public. In these contexts, the press, the various internet enabled communications channels, and other media outlets serve primarily to exaggerate conflict, minimize consensus, encourage cynicism, and stifle open discussion. At the same time, the public nature of complex discussions encourages university people to conduct their business as much as possible off book, out of the formal processes, and off the public record. This produces some consequences. It makes the process less visible in one dimension, and it makes the visible process a less accurate reflection of the issues. It often moves the discussion from the structured forums of the academy into a brokered discussion through the media. It eliminates from the conversation the thoughtful voices of faculty who may have a doubt and substitutes for them the manipulative voices of those who take extreme positions. It also eliminates from the conversation those individuals who do not choose to do their thinking in public. Finally, the more aggressive and effective the public records and open meeting laws, the less effective the collegial activities of the guild. Different observers will have a different evaluation on the cost-benefit ratio associated with opening all the university's activities to the press. Private universities, of course, do not suffer as much from this, and some states have reasonable limits on what is open and what is confidential. University governance structures show a decided bias towards inaction. Complexity and bureaucracy, especially in the public sector, tend to absorb change and dissipate it across a wide estuary of bureaucratic swamps and regulatory tributaries so that the flow of change slows to a virtual stop. The process, however, is so constructed that as the flow of change is captured it gives up its energy in an often dramatic or at least showy display of verbal pyrotechnics. Committee reports, statements of intent, high sounding charges to committees, thoughtful consultations, multiple reports and data displays, all these are the foam of change dissipating in the estuary of inertia. In the public sector, governance does not require change because survival floats on an entitlement tide of undergraduate students. Unless the undergraduates go somewhere else, a public university of any significant size is protected against much significant change, absent a state fiscal crisis. Private universities also resist change, for they too live through their guilds. But in the private sector, for most universities, the entitlement of endowment is not enough to sustain the scale of a major research university, and so the faculty, students, and administration, while they may not always agree, recognize the realities of the marketplace within which they compete. They tend to be more focused on the economic realities of the academic world. No less self-absorbed than their public university counterparts, they nonetheless recognize that the economic success of the university rests to a large extent on their shoulders and not on entirely the largess of the tax paying public or the enthusiasm of donors. Part of the difference between public and private university behavior reflects the rate of change. In the public sector, change is resisted until some event forces a relatively significant readjustment (a downturn in the economy, a budget cut, a legislative outburst). In the private sector, where each year is a challenge to earn the revenue that will ensure the guilds' prosperity, change comes incrementally, as needed, as the market for academic goods and services dictates. Consequently, private universities often appear changeless precisely because they must be constantly changing in pursuit of comparative advantage within their marketplaces. Nonetheless, even private universities at times become lost in their own worlds and lose sight of the realities that surround them. They can defer maintenance and keep faculty salaries high until a crisis arises that demands a budget readjustment to fix the decaying and now dangerous buildings. They can borrow money to build elegant facilities in anticipation of donation dollars that never arrive, waking up one day to the need for dramatic readjustments to meet unavoidable fiscal realities. Private universities, because they live on their own revenue and because they depend on their administration and their trustees to keep them sound, live in a riskier world than public universities, surrounded as they are by multiple watchers and accountants and critics. Private university crises often do not appear in the public media, although from time to time a crisis reaches such magnitude that it cannot be hidden. Usually, but with notable exceptions, the public notice of such a crisis involves smaller private colleges with fewer resources to buffer failures or misjudgments. Governance, then is a complex and fascinating topic for those interested in the micro-politics of small societies. Some issues that drive this conversation are as follows:
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