AGB Releases Research on Higher Education Governance Practices that Shows Boards to be Engaged but in Need of Continuing Education, Development

Washington, D.C. – The Association of Governing Boards of Universities and Colleges (AGB) today released new findings on the practices and engagement of the governing boards of over 700 public and independent colleges and universities. The research, part of a series of similar reports, documents the extent to which boards are following good governance practices and identifies resources and practices that will improve board performance and engagement in these areas. The research focuses on seven key areas: recruitment, risk management, board and presidential assessments, presidential compensation, board committees, the audit committee, and board engagement.
 
“While boards have shown some increases in the use of best practices in the last two years, the survey findings indicate that further improvement is needed in such areas as risk assessment, board-member assessment, and board understanding of some financial matters, including institutional budgets, and strategic use of resources to achieve priorities,” said AGB Executive Vice President Susan Whealler Johnston, the report’s author. “We hope the report will motivate conversation and change, where necessary, for continuing improvement.”
 
Highlights from the AGB 2011 Survey of Higher Education Governance include:

Overall, boards of institutions with larger budgets are more engaged in key areas of board work than are those with smaller budgets.

Recruitment: Board recruitment is more challenging now than it was five years ago for 20 percent of public boards and 26 percent of independent boards. Time constraints and concerns about increased fundraising expectations and increased accountability are most often cited as the reasons for recruitment challenges.

Risk assessment:

• Only about one-third of all boards have a formal process for comprehensive risk assessment.
• Top areas for risk assessment, for both public and independent boards, include finances, compliance, facilities, and campus security.

Board Assessment: Boards of independent institutions are much more likely than those of public institutions to have formal processes for assessing individual board members: 69 percent to 12 percent.

Presidential Assessment: Almost all boards—fully 90 percent—annually assess their presidents. But only 50 percent of boards do a comprehensive presidential assessment every three to five years, as recommended by AGB.

Presidential Compensation: More public boards (96 percent, up from 92 percent) than independent boards (72 percent, up from 64 percent) report that all board members are informed of the president’s full compensation package.

Board Committees: A separate audit committee can be found at 65 percent of independent institutions and 45 percent of public institutions, a slight increase for both over the 2009 survey data.

IRS Form 990: Since the new IRS Form 990 went into effect in 2009, there has been a substantial increase in the percentage of independent boards reviewing the completed form, from 8 percent in 2009 to 72 percent today.

Board Engagement:

• Over 60 percent of boards reported that they were “about right” in terms of size for board engagement.
• Fundraising is an area of under-engagement for both public boards (71 percent) and independent boards (49 percent).
• Engagement in financial matters has suffered since the economic downturn began, with 70 percent of public boards informed and appropriately engaged in budget review and approval (down from 74 percent) and 68 percent of independent boards appropriately engaged (down from 72 percent).
• Approximately one-third of all boards lack some understanding of institutional budgets and the strategic use of resources to achieve priorities.

“Higher education faces greater and different challenges today than it has in the past,” said AGB President Richard D. Legon. “While financial trials are perhaps the most obvious, demands for greater accountability and transparency, questions about educational quality and higher education’s business model, growing health-care costs, and a loss of public confidence are also at issue. This latest AGB research shows us that boards take their responsibilities seriously and are following good governance practices, but that full engagement at the policy level, including thoughtful participation in decision making, is crucial.”
 
AGB is grateful to the TIAA-CREF Institute for its support of this project.

To purchase a copy of the 2011 Survey of Higher Education Governance, visit AGB’s Web site. Survey copies are $25 for AGB members, $35 for nonmembers.

For 90 years, the Association of Governing Boards of Universities and Colleges (AGB) has had one mission: to strengthen and protect this country’s unique form of institutional governance through its research, services, and advocacy. Serving more than 1,240 member boards and 36,000 individual citizen trustees, AGB is the only national organization providing university and college presidents, board chairs, trustees, and board professionals of both public as well as private institutions and institutionally related foundations with resources that enhance their effectiveness. In accordance with its mission, AGB has developed programs and services that strengthen the partnership between the president and governing board; provide guidance to regents and trustees; identify issues that affect tomorrow’s decision making; and foster cooperation among all constituencies in higher education.