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Governance and Institutional Transformation: Some Lessons Yet to Be Learned
This has been a jarring year for governance and, more generally, for the concept of personal responsibility in US colleges and universities, with two starkly visible cases that trustees and others everywhere would like to understand.
From the ongoing crisis at the Pennsylvania State University,1 trustees everywhere are learning that they really are responsible for what goes on in athletics, and that good governance has come to be more demanding—on trustees; on administrators, faculty, and staff; and, perhaps, on external constituents—more vulnerable to internal and external pressures, and more intrusive or even invasive than anyone had cause to imagine in the past. Good governance seems suddenly to be something that everyone knows on sight and that no one had imagined before.
The crisis at the University of Virginia (UVA) last summer and over the subsequent months involves, among other things, issues that I cannot properly discuss because of my former role there.2 In truth, I know no more than anyone else knows, and that is part of the problem. You and I can read media speculations and angry letters to editors, but we have no explanation from board members of the public interest in, or the reasons for, the actions they took in their roles as fiduciaries of a public trust. From the president’s initial resignation to the present day, UVA’s crisis is an unexplained mystery, one that has damaged the university and continues to do so.
In the case of Penn State, brutally public battles continue over the university’s future, with apparently one yet to come as the governor and some legislators try to overrule the National Collegiate Athletic Association. In the UVA instance, the public has access to little detail or color as to what happened. And the two instances together have contributed little to public understanding of best or worst practices in fiduciary governance or in the management or administration of colleges and universities. The two cases are double black eyes for the public interest.
What, in fact, is governance? Who practices it? How is it empowered or undercut, and who shares in it? It is remarkable how much and how little we know about a system of control that is all but ubiquitous in the United States—and unique to the United States. Most of us are familiar with the Association of Governing Boards of Colleges and Universities (AGB), whose publications, meetings, and training services are available generally to colleges and universities. Centers for the study of governance exist in various places, some distinguished, and quite a lot gets published. Yet, in truth, after AGB’s training programs and trustees’ conferences, the art has not advanced much since the eighteenth century.
In this peculiar system, trustees are fiduciaries—legally responsible for assets, financial and other. As a condition of office, they accept obligations to sustain assets that do not belong to them, and to serve the interests of others. The most common summary (at the level of introductory training materials) of trustees’ functions goes something like this:
- Trustees carry out the purposes expressed by founders or legislatures or whatever benign entity has created an institution (college, museum, foundation) with some traits of corporations for the good of others, and generally for posterity. They accept and live within the limits of the charter or the law or will or whatever.
- They pledge to defend the trust or the asset—to pass it on intact and, generally, to enhance it.
- Therefore, they are obligated to invest assets competently and dispassionately.
- They have accepted the obligation to provide or dispense benefits commonly, and not to benefit themselves or their friends and allies. They owe others their fairness and impartiality.
- A hard point relevant to recent history: they are accountable to the trust’s or the entity’s beneficiaries—in education, to those who teach, who study, who benefit by the research enterprise. In this respect, they seem to me to be unlike corporate directors, whose responsibility is to equity shareholders, to the owners who elect them.
- Trustees must report their actions (hence, annual reports, etc.) to these beneficiaries, a principle perhaps trampled in recent times at both Penn State and UVA.
- Trustees accept specific duties, most notably the legal duty of loyalty: they cannot act against their trust, whose interest comes before their own.
- They cannot hand on these duties to others; they are themselves obligated to carry out their duties.
In this system, trustees and boards of trust accept constraints. These necessarily include obligations as to the processes (open or transparent, selfless, protective) by which they carry out their obligations. Some constraints are legal; others are matters of custom and tradition.
To be a trustee or a visitor, or whatever the term may be, is an honor. That, ultimately, is the motive to serve. To be named a trustee of a charitable entity is to be recognized as a person of integrity and stature. Trustees cannot aggrandize themselves or use their positions for their own profit. They cannot self-deal, a principle that explains why the American system finds secrecy in board dealings repulsive. They cannot engage in conflicts of interest. They must oversee assets in the best interest of the persons who benefit directly from them. Trustees assume conservative duties: because the assets they control are not their own, they must protect them assiduously. In this configuration, their process obligations are essential. The late Adam Yarmolinski, who in a prior time trained many of our boards with regard to their duties, made the legal point in this way: when convened as a board after giving due notice and with the required quorum, boards of trust can do everything that their charters allow; but members have no separate, individual, or single powers outside the board room.
So these are people with obligations, not people with powers—a status they share with elected legislators and others who swear to benefit persons who depend on them. For that reason, perhaps, well-ordered American boards are not likely sponsors of transformation or (to borrow the phrase of the hour in American education) disruption. It may well be that talk about trustees’ personal agendas is a signal that governance is in trouble.
Corporate boards of directors are different. They are accountable to owners, to holders of shares of equity. The test of their success is near-term profitability. Corporate governance may thrive on disruption—unless, of course, the disruption blows up the enterprise, and the shareholders lose their equity, a hazard that turns up regularly when companies founder.
Effective trustees foster institutional transformation whenever they appoint capable deans or presidents, hold officers or administrators and their faculties to institutional and legal account, and disclose openly what they are doing and why. The forces for change that are characteristic of successful US colleges and universities bubble from the bottom up, from the beneficiaries to whom trustees owe accountability. Students and staff and faculty members stand in the place of shareholders, thus the historic importance of great academic leaders and committed alumni.
Process integrity during times of transformation inevitably challenges governance, management, imagination, and stamina in colleges and universities. Harvard College’s deliberations during Henry Rosovsky’s tenure as dean make this point as well as anything. The debate over Harvard’s core curriculum took place over the course of almost three years, and it caught the attention of virtually everyone in American higher education.
If one wants a renewed American academy, a reinvigorated liberal tradition in American colleges and universities, then one necessarily wants and takes part in the vigorous debate by which propositions are advanced, tested, reformulated, won, or lost. Transformation necessarily demands the processes of collaborative planning, consolidation, and elimination by which entities of limited means control their own destinies. That’s the price.
Last year, I worked with Rick Legon, Rich Novak, and Merrill Schwartz and others at AGB and some twenty-five leaders from higher education on a Knight Commission grant. Our assignment was to examine the proper role of boards in Division I intercollegiate athletics, and to recommend best practices. Our report, Trust, Accountability, and Integrity: Board Responsibilities for Intercollegiate Athletics (Casteen and Legon 2012), appeared in October 2012. We began our work in October 2011. The Penn State crises began in November 2011.
We did not set out to study Penn State, and, in fact, we did not do so. But much of what we learned resonates with related work at AGB and elsewhere on board responsibilities for academic programs. All of us grew up understanding that presidential control means that presidents are accountable. That’s still true, but it doesn’t mean (as Penn State has acknowledged) that trustees can walk away from trouble. Adam Yarmolinski taught a rule that defines board obligations in both areas: noses in, fingers out.
People with power, particularly the power to disrupt the lives and learning of beneficiaries, need to know what they are doing. The system is ripe with prospects for misfeasance and malfeasance. That we tolerate the practice by which governors reward political donations by appointments to college and university boards—a not-so-ancient practice that is, I am convinced, the Achilles heel of America’s public colleges and universities—defines a fundamental risk. That universal, ongoing training for board members is all but unheard of points to another risk. Neither public nor private appointment processes pay proper attention to trustees’ fiduciary obligations.
I admire Penn State’s board for realizing that it had to know a great deal more than any board has ever known in order to carry out its obligations—for acknowledging that the honor of serving carries with it heavy obligations. Penn State’s internal research, use of expert outsiders, ongoing training, and commitments to reform and transparency define new best practices.
We talk at meeting sessions about unprecedented challenges, the accumulating stress of a diseased economy, the cost to students of systems (educational and others) that lag behind the national interest. That talk is legitimate. So is our engagement with transformations, with inventing anew our commitments to the varieties of learning, of knowledge, that make people free. We should talk and engage, and indeed we must; that’s our job as faculty members and deans and others inside colleges and universities.
And yet this dialogue has to go elsewhere—to boardrooms, to news broadcasts, to legislative hearings—where thoughtful people have their own parts to perform. In our young country, we talk quite a lot about founding fathers and national tradition—more, I suspect, than happens in any of Europe’s republics. Learning—actually, classical learning of the kind that modern utilitarians sometimes seem to want out of the common schools—has everything to do with America’s anomalous revolution, as it had also to do with Newtonian and Darwinian science and, indeed, with the consensus about curricula, about what learning’s progress through schooling ought to be for most students, that still informs our best schools and colleges.
Institutional transformation in response to the issues raised during this annual meeting may come suddenly, as perhaps it has with MOOCs. Provocative disasters like the Penn State and UVA crises are rare. And, for now at least, only Penn State appears to be engaged in successful, accountable reform. My own guess is that widespread reform will come slowly, over decades rather than years, as we sort out our terms and as we challenge or engage others—the trustees, governors, and business people who also make decisions about their own lives and the lives of their children and their communities. The stakes are too high for us to do anything else.
Casteen, J. T., III, and R. D. Legon. 2012. Trust, Accountability, and Integrity: Board Responsibilities for Intercollegiate Athletics. Washington, DC: Association of Governing Boards of Colleges and Universities.
1. In 2011, it was alleged that officials of the Pennsylvania State University had enabled and subsequently sought to cover up the sexual assault of several underage boys by longtime assistant football coach Jerry Sandusky. The ensuing scandal had far-reaching consequences for the university, including the imposition of sweeping penalties by the National Collegiate Athletic Association.
2. In June 2012, the University of Virginia Board of Visitors announced that Teresa M. Sullivan, president of the University of Virginia (UVA), would resign just two years into her five-year term of office. After it emerged that the resignation was the result of a dispute between Sullivan and members of the board concerning the future direction of the university, UVA faculty, students, and alumni, along with members of the broader academic community nationwide, rallied in support of Sullivan. Ultimately, the episode led to the removal of both the rector and vice rector of the board of visitors and the reinstatement of Sullivan as president of the university. The author, John T. Casteen III, preceded Sullivan as president of UVA, serving from 1990 to 2010.
ed in higher education are also less likely to be retained (Moreno et al. 2006).
John T. Casteen III is president emeritus of the University of Virginia. This article was adapted from the author’s address to the opening plenary session of the 2013 annual meeting of the Association of American Colleges and Universities.
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