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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 investment of these funds that enhance
or reduce the institution's ability to improve in order to 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 the scourge of 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 universities on a ten-year cycle
with five-year updates in accord with a host of criteria of dubious validity.
Often these associations propagate educational fads and drive 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 higher salaries, higher
support services, and lower faculty student ratios than may actually be required
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 in turn 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 the funding falls too low. The regulatory
dance between universities, accreditation associations, funding agencies,
and legislatures constitutes one of the more expensive and labor intensive
regulatory 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 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 then left to compete, but many state institutions
prefer the safety, political control, and inefficiency of regulated environments to 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 research 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 management, 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 refers almost always to the boards of trustees who own the university
and have responsibility for its operations. In public universities,
governance also means boards of regents, political structures within which
the university operates, governors and education commissioners, higher
education commissions, and legislatures, all of whom assert a governance
control over the institution. To administrative staff, governance
may mean the relationships within the university's bureaucracy that establish
reporting relationships and lines of authority. All of these participants
believe that they have a 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,
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 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 fund raising activities of the university.
Private university boards generally have a tight focus on the issues of
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, prove the most important
qualification, followed by distinguished public service. As is the
case in the corporate world, 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 many 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 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 is often without major power
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 legislator, 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
interference.
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 the general public) than they are to the interests
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 interests while the private board exists to maximize the university's
performance and support its work.
Public university boards generally
have most of the same powers as the private board with the exception of
control. Public boards do not usually control the university completely
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, a much more difficult and unpredictable activity than
normal legislation.
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 in their own terms. For this
reason, most private universities can be more focused, more effective,
and more consistent over time because they are not as easily subject to
local enthusiasms as are the public institutions.
Governance for faculty,
naturally, involves the question of how faculty can engage 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 promotion and tenure. These all represent primarily guild functions,
and most universities recognize the faculty's authority, although in many
institutions the law and other administrative rules inhibit 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 strict 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 the
issues of faculty governance. Labor unions of the variety of AFT, UAW,
NEA, or even 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 most institutions, the unions studiously
avoid engaging in 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. 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 for resolution.
The principal leadership of
the faculty, however, does not come only 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 a student government election.
In addition, special focus
groups of students organize and lobby, whether women's groups, gay and
lesbian groups, environmental groups, black student unions, Hispanic student
associations, Asian student groups, 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 or groups to
support a particular cause such as environmental issues 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 rulemaking 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 puts them in place 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 involves
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 outcomes.
Through
the agency of aggressive public records and public meeting rules, the media
become a participant in the decision process of the university under the
guise of informing the public. In these contexts, the press 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
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 the 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 record 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 many
states have reasonable limits on what is open and what is confidential.
University
governance structures show a decided bias towards inaction. The 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 crashing on the rocks
of inertia. In the public sector, governance does not require change
because the engine of survival consists of an entitlement driven by undergraduate
students. Unless the undergraduates go somewhere else, the public
university of any significant size is protected against much significant
change.
Private universities also
resist change, for they too live through their guilds. But in the
private sector 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 on their shoulders and not
on the largess of the tax paying public.
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 in pursuit
of a 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 fundraising 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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