EVENTS

Date:	Wednesday, April 16, 2008
Time:	9:00 AM -- 12:00 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

Active College Trustees Can Stop Campus Scandals, Hold Leaders Accountable

WASHINGTON, APRIL 20, 2008 -- Campus controversies in the last several years have gained national attention. In 2006, Dartmouth alumni voted overwhelmingly against changes to their historically significant role in governance--but the following year, the board of trustees voted to increase its size and diminish alumni input, kindling a national dialogue on the role of alumni and trustees in college governance.  On several campuses, financial aid officers have been accused of steering students toward "preferred lenders" in exchange for kickbacks from those lenders, leading to investigations, including several by New York state attorney general Andrew Cuomo. American University (AU) president Benjamin Ladner resigned in 2005 after using university funds to pay exorbitant personal expenses. These practices have raised questions about higher education governance and the role of trustees in preventing and resolving such controversies. This was the topic of discussion at a recent conference sponsored by AEI and the American Council of Trustees and Alumni. As Dartmouth trustee Stephen Smith stated, "oversight is critical."

Benjamin Lawsky, deputy and special assistant to Attorney General Cuomo, stated that strapped financial aid offices were "sitting ducks" for lending companies, which have much to gain from such arrangements. Ninety percent of families take loans from lenders a university tags as "preferred," making this a very lucrative label.

Pointing out there are regulations on the books to prevent these kinds of arrangements between financial aid administrators and lending companies, the New America Foundation's Michael Dannenberg quoted Cuomo, who has said there has been "a regulator asleep at the switch."

"Universities have really become a very important bottleneck for companies to fight through to get to the student market," Lawsky said. "What are the special responsibilities of schools when they deal with businesses that want to get to its students?"

Richard Legon of the Association of Governing Boards lauded the unique system of organization governance in the United States, pointing to trustees' qualities of "citizen volunteerism" and "philanthropy." He called on boards of trustees to stand for four principles: "academic freedom, institutional autonomy, self regulation, and meeting the public trust." In a similar vein, Smith said that "every trustee needs to view him or herself as an audit committee of one."  Trustees have the responsibility and authority to oversee administrators' practices on campus--such as those that caused the controversies mentioned above--and report malfeasance. Limited access to the campus and board dynamics can sometimes prevent trustees from effectively playing this role. 

Jane Tatibouet, a regent from the University of Hawaii, related that accreditors at the University of Hawaii instructed the board to remain distant, and--if occasionally venturing into university affairs--to remain at the "10,000-foot" level.  

During a discussion of why boards of trustees do not always function effectively, Nancy Rapoport, a law professor at the University of Nevada, cited peer pressure and the diffusion of authority among trustees, who each assume that someone else will blow the whistle. Rapoport added that trustees often find it difficult to balance short- and long-term concerns. "There is a fear that if you poke or prod long enough, internally you'll be branded as a troublemaker and you might get thrown off"--and miss the chance to do any good within the organization over the long run.

Speakers particularly addressed transparency on boards, which Arthur Rothkopf, a trustee of AU and senior vice president at the U.S. Chamber of Commerce, called "a key objective." Following the 2005 Ladner controversy, AU's "goal, of course, is to be as open as possible." Speakers agreed that communication between trustees and campus administrators should be a two-way street. Transparency--regarding the issues that trustees consider and how decisions are made--is an important check to hold the board itself accountable for doing its job and keeping those on campus informed. 
 
Tatibouet replied: "Yes, transparency is a positive, healthy goal for all parties in governance--but you must be careful what you wish for." Hawaii's sunshine law, she continued, creates "sunshine to the point of where our hands are tied . . .  [which] allows the administration and the faculty to run the university."  She noted that a serious campus incident occurring the night before a board meeting would not be discussed at the meeting, because the board is required to abide strictly by an agenda submitted to the lieutenant governor's office ten days prior. 

Smith explained that the Dartmouth board's records are sealed for fifty years after each meeting and that trustees take an oath not to disclose discussions or disagreements. Many universities' administrators and trustees are concerned with an institution's reputation, a concern that Smith said can be "excessive." For instance, Smith noted the Dartmouth governance committee's decision to add eight additional appointed--rather than elected--trustees to the board because they viewed elections as "divisive." "We do have differences, and those differences are healthy," Smith concluded.

Trustees are voluntary stewards of a university or college and occupy a unique role. Incentives in higher education have led some administrators to operate outside the confines of acceptable conduct, and inattentive trustees can be responsible for an institution's missteps. If their role is taken on conscientiously and thoughtfully, however, trustees can be visionaries for their institutions and play an important role in shaping their futures. 

--JULIET SQUIRE

For video, audio, and more information about this conference, visit www.aei.org/event1690/.

AEI's Education Policy Studies program is a national leader in research on higher education reform. Frederick M. Hess, director of education policy studies, recently edited Footing the Tuition Bill: The New Student Loan Sector (AEI Press, 2007).

For more information about education policy studies at AEI, contact Morgan Goatley mgoatley@aei.org or 202.828.6031.

For media inquiries, contact Véronique Rodman at vrodman@aei.org or 202.862.4870.

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