College boards turn to business-style approaches
The governing boards of colleges and universities are increasingly demanding that their presidents perform more like corporate chief executives, much to the chagrin of academics who say treating colleges as businesses doesn't fit the mission of higher education. Experts say the recent moves largely have been spurred by federal and state funding cuts.
In Charlottesville, Va., the Board of Visitors ousted U.Va. President Teresa Sullivan earlier this month because some members thought she was moving too slowly to address shrinking government funding, develop more online courses and position U.Va.'s hospital to better compete with private health care providers.
Sullivan was reinstated Tuesday in a unanimous vote by the board nearly three weeks after her secretive ouster. The Faculty Senate and college deans stood behind Sullivan as students, faculty and alumni protested the forced resignation.
In the days before the vote, Rector Helen Dragas said Sullivan's self-described "incrementalist" style stood in the way of the university's long-term success. In defending her performance since she took office in August 2010, however, Sullivan said: "Corporate-style, top-down leadership does not work in a great university."
Late last week, Dragas issued a statement describing the concerns that led the board to Sullivan's removal. Among them were a lack of an overall strategic plan and a list of 10 difficulties the school was facing. The recurrent themes in the list included competition, technology and scarce resources. Many also referenced a lack of planning or leadership.
"For some time, the Board of Visitors has been concerned about the following difficult challenges ... and we concluded that their structural and long-term nature demanded a deliberate and strategic approach, not an incremental one," Dragas said in the statement.
Dragas said Tuesday she supported Sullivan's reinstatement and the two pledged to work together. But the president acknowledged that differences remain.
"I do not ask that we sweep any differences under a rug, but rather we engage each other with candor and respect," she said after the vote.
The ordeal has sparked a debate on the merits of traditional academic leadership versus results-driven management.
"Universities are not corporations. Universities are nonprofit, public entities that have missions of teaching, research and public service," said Matt Hedstrom, an assistant professor of religious studies and American studies at U.Va. who backed Sullivan. "Those are not the same mission as a corporation. They also don't have the same cultures and governance. They're much less hierarchical."
Purdue University's board last week named Indiana Gov. Mitch Daniels as its president, a choice that made faculty members apprehensive. Critics noted that Daniels had appointed seven members and reappointed three to the board that selected him president, calling it a conflict of interest.
As governor, he's linked college funding to performance measurements such as degree attainment, and since 2009 ordered more than $150 million in cuts to public education — including $30 million to Purdue. But many Indiana GOP legislators back Daniels, a former White House budget director and executive of pharmaceutical company Eli Lilly.
"I think in today's world that the president of a university, No. 1, has to be a great fundraiser, and I think Mitch Daniels has proven he's a good fundraiser," Senate Education Committee chairman Dennis Kruse told Indiana Public Broadcasting.
In addition to improving fundraising, universities are increasingly looking for ways to use resources efficiently, cut costs and develop new revenue sources. More than a third of universities were considering privatizing operations — such as bookstores or food service — for short-term revenue in 2011, and more than four in 10 were looking at privatization for long-term revenue, according an Association of Public and Land-Grant Universities survey of 81 research universities plus six university systems.
At the University of Texas, a committee of executives from Accenture, Dell, Boeing and several capital-management firms are developing strategies for efficient use of the school's $2.3 billion operating budget. The group will develop performance measurements, interview university employees and measure efficiency.
Trustees at Ohio State University on Friday approved a proposal to lease school parking operations for $483 million to an Australian company over a 50-year contract. University officials say the deal will give the school more money for salaries, student aid and other improvements — a contention critics have questioned.
"No parking spot has ever cured cancer," President Gordon Gee said, according to a report from The Lantern student newspaper, "but the money we can get from this can."
Paul Beck, an Ohio State professor of political science who fought to scuttle the parking plan, said university boards "seem to be more in control these days and more corporate-oriented, which is the world they know best."
Anne Neal, president of the American Council of Trustees and Alumni, says the changes in management style reflect a need to address unprecedented shifts in the higher-education landscape.
"This is really a question of changing ways of doing business," said Neal, whose organization supported the decision to remove Sullivan.
Some business leaders agreed.
Hedge-fund leader and U.Va. alumnus Peter Kiernan wrote in an email disclosing his advance knowledge of Sullivan's dismissal about the need for risk-taking and proactive "strategic dynamism," indicating that Sullivan perhaps wasn't business-oriented enough. Another prominent U.Va. benefactor and billionaire hedge-fund manager, Paul Tudor Jones, wrote in an opinion piece that Sullivan's ouster was a "clarion call" from the board.
"Why be good when there is outstanding to be had?" he wrote.
The traditional model has been more collaboration between faculty and top administrators, recognizing strengths that professors can bring to key decisions, said Anita Levy, senior program officer for the American Association of University Professors. Levy says college presidents today are under more pressure to make decisions quickly and perhaps without thorough consultation with faculty and other administrators.
U.Va.'s Hedstrom notes that public universities largely are in the spot they're in because legislators have made the political decision to defund higher education in recent years. Over the past decade, public funding for each in-state student has nearly been cut in half, according to the school. This fiscal year, U.Va. expects only about 10 percent of its operating budget from the state.
Amid pressure to keep tuition down, Virginia and other schools are increasingly relying on private fundraising and big gifts from wealthy donors, who often end up on the school's board.
"We need more private dollars to survive and prosper but there are new problems that come along with private dollars, such as increased influence by a handful of people on the governance of a university," U.Va. political scientist Larry Sabato said.