Education First: Ohio Higher Education Report for 2016-2017, Part 6

POSTED BY MARTIN KICH

What follows is the sixth section of the most recent higher education report produced by the Ohio Conference of AAUP. John McNay, the President of the Conference, and Sara Kilpatrick, the Executive Director of the Conference, deserve kudos for doing the bulk of the work on this report. The report has been distributed to all of the members of the Ohio legislature and the state’s major newspapers, several of whom have done follow-up investigative reporting on the topics covered in the report.

The previous Ohio Higher Ed Report was similarly published in sections to this blog. The links to those posts, as well as to the two posts in this series, are provided at the end of this post.

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BOARDS OF TRUSTEES

Voting trustees of Ohio’s public institutions of higher education are appointed to nine-year terms by the governor, with the advice and consent of the Ohio Senate. Student trustees also are appointed, but to two-year terms and without voting rights. At certain community colleges, local appointments are made in addition to the gubernatorial ones. In addition, at some institutions, a faculty member has a Board seat, but like the student positions, lack a vote and are excluded from “executive sessions,” where most of the real business of the board is conducted.

Ideally, a board of trustees would comprise people with a wide range of experience who broadly represent their community. Emphasis should be on those in education and/or non- profit organizations, who have higher degrees, as well as have a familiarity with student life and the inner-workings of the institution. The reality, unfortunately, is quite different, especially at four-year institutions.

Percentages of trustees by their industry/sector in total from Ohio’s four-year public universities.

As can be seen in the above chart, only six percent of the voting university trustees in the state hail from the public or non-profit sector. More than half of trustees are from the corporate/business and banking/finance world, typically holding the title of president, CEO, or CFO. Attorneys, as well as physicians and others in the healthcare industry also make up large pieces of the pie. The “Other” category includes individuals in the media and entertainment industry, as well as those whose backgrounds could not be identified.

Community college boards are somewhat different. As can be seen in the chart on the following page, community colleges overall have about the same percentages coming from the corporate and banking sectors. However, they have a far greater number that come from the public and non-profit areas. In general, community colleges have more well- rounded boards (although there is variation from institution to institution), something university boards should emulate.

Percentages of trustees by their industry/sector in total from Ohio’s community colleges.

Regardless, many of the trustees outside of the public sector often have no relevant experience in running a nonprofit educational institution, with the exception of perhaps being alumni of the institution they serve. Typically, these are patronage positions given to friends of and contributors to the sitting governor. The overemphasis on those from the private sector has directly influenced the shift to universities being run more like businesses than public, non-profit institutions that produce well-rounded, educated citizens.

This shift has been manifested in several ways, starting with universities lavishly paying and showering perks on high-level administrators similar to what one would see in the corporate world. Moreover, they are hiring individuals from the business and banking worlds to assume high-level administrative positions. These individuals have started the trend of universities outsourcing what have been deemed “auxiliary services.”

Dormitories are being run by private companies, with capacity guarantees similar to what one would see in agreements between governments and the private prison industry. Dining services, too, have been contracted out; and in at least one case, to a food vendor that was kicked out of a prison due to pests in their food.[11] Institutions are making short-sighted agreements, the finances of which will catch up to them; but the can has been kicked far enough down the road for those in charge now to not have to be worried about accountability later.

Additionally, we see this shift in how institutions have viewed and run their endowments. Universities have invested in the private prison industry and risky hedge funds. While we question the morality and ethics of investing in an industry that profits off of incarceration, we are also troubled by the soundness of hedge fund investments, which have produced lower returns than index funds and carry much higher fees. It has not been uncommon for an endowment to spend more on management fees than on student scholarships in any given year. [12] Some universities seem to be unnecessarily and foolishly hoarding money in times of scarce resources.

The most obvious and disastrous form that corporatization of higher education has taken is the treatment of the heart and soul of the institutions: faculty. Instead of being the most valuable assets of the institutions, in many instances, faculty are treated no differently than widget-makers. Cuts to instruction have been among the first made when institutions have been faced with budget challenges. These cuts have taken on several forms, including phasing out full-time, tenure-track positions by failing to fill vacancies created through retirements. It also has involved eliminating full-time non-tenure track positions and opting for part-time labor.

The business model will not work for higher education and will cause more problems than it helps until the course is reversed.

The classic economic argument to explain why cost reductions do not work in labor intensive organizations is called “Baumol’s cost disease” based on a paper published in 1966 by economists William Baumol and William Bowen. They argued that one cannot improve the performance of a Beethoven string quartet by using only two or three musicians.

As explained by historian Christopher Newfield: “Universities that depend on skilled faculty and staff labor thus cannot match the cost reductions that one sees in manufacturing.

University cost increases will always exceed measures tied to the prices of manufactured goods such as cars and smart phones.” [13] Wages go up over time and faculty member numbers at best stay the same and both of these factors reduce or even eliminate productive gains in labor-intensive industries.

All of these considerations amount to an argument for state government leaders to rethink how trustees are selected. While it makes practical sense to have minds from the business, banking, legal, and healthcare fields on our boards, more emphasis should be on appointing people that know how to run a nonprofit or government organization that ensures a focus on educational integrity. Until lawmakers and stakeholders can come together to devise a whole new way of selecting trustees, there are actions that could be taken in the short-term to bring new, meaningful perspective to boards.

The first is to grant full voting rights to student trustees. We have heard the arguments against this – that students are not mature enough and that their position might feel more like a student representative than a trustee expected to make the best decisions. These arguments grossly underestimate and demean our students. College students are adults. They can vote, can be drafted into the military, and are in the midst of making important decisions about their futures. Student trustees are capable of understanding their roles and are able to bring that on-the-ground perspective that seems to be lacking – much as a businessperson is able to bring his or her business acumen to the table.

Our second recommendation is to install voting faculty positions on the boards. If current faculty are viewed as holding conflicts of interest given that boards approve faculty union contracts, retired faculty can be tapped to fulfill this role. It is, after all, the faculty who perform the essential functions of the institutions (e.g. teaching and research), and to not have someone that can speak to this role is hampering boards’ ability to make fully informed decisions that appropriately keep the instructional mission at the core. Many faculty remain with their institutions throughout their productive careers, while administrators come and go and, frankly, are sometimes more concerned with what will advance their own careers than with what will best serve the long-term interests of their institutions.

Finally, the Ohio Senate can take a more active role in its duties to advise and consent on trustee appointments. While respect should be given to the governor’s selections, there must be more consideration given to ensuring well-rounded and diverse boards, ones that emphasize public and non-profit experience. Otherwise, the make-ups of the boards will remain unchanged, and we will continue to see the square peg of business fail to fit the round hole of public education.

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[11] “University of Akron outsources dining services.” Cleveland Plain Dealer. August 25, 2015. http://www.cleveland.com/metro/index.ssf/2015/08/university_of_akron_outsources.html.

[12] John Lasker, “OSU Fund Managers Pig Out: Scholarships Not Awarded to Students,” Columbus Free Press, Sep. 26, 2015. http://columbusfreepress.com/article/osu-fund-managers-pig-out-scholarships-not-awarded-students.

[13] Christopher Newfield, The Great Mistake: How We Wrecked Public Universities and How We Can Fix Them (Baltimore: Johns Hopkins University Press 2016) 147-48.

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Previous Post in This Series:

2017 Ohio Higher Education Report, Part 1: https://academeblog.org/2017/05/22/education-first-ohio-higher-education-report-for-2016-2017-part-1/.

2017 Ohio Higher Education Report, Part 2: https://academeblog.org/2017/05/24/education-first-ohio-higher-education-report-for-2016-2017-part-2/.

2017 Ohio Higher Education Report, Part 3: https://academeblog.org/2017/06/17/education-first-…2016-2017-part-3/.

2017 Ohio Higher Education Report, Part 4: https://academeblog.org/2017/06/24/education-first-ohio-higher-education-report-for-2016-2017-part-4/.

2017 Ohio Higher Education Report, Part 5: https://academeblog.org/2017/07/05/education-first-ohio-higher-education-report-for-2016-2017-part-5/.

Links to 2015 Ohio Higher Education Report

2015 Ohio Higher Education Report, Part 1: https://academeblog.org/2015/06/20/2015-ohio-higher-education-report-part-1/.

2015 Ohio Higher Education Report, Part 2: https://academeblog.org/2015/06/20/2015-ohio-higher-education-report-part-2/.

2015 Ohio Higher Education Report, Part 3: https://academeblog.org/2015/06/21/2015-ohio-higher-education-report-part-3/.

2015 Ohio Higher Education Report, Part 4: https://academeblog.org/2015/06/21/2015-ohio-higher-education-report-part-4/.