The State of Public Oversight

By George Pernsteiner    //    Volume 26,  Number 5   //    November/December 2018
Trusteeship Issue: State of Change - November/December 2018

Whether considering independence or integration, state governments in 2019 have one overarching goal in their oversight of public higher education: accountability to a restless electorate that questions the value proposition of higher education. Here is what some states have done and how others are responding.

Cost savings? Check. Governor’s philosophy? Check. Seamless student transfer? Check. Connect to workforce? Check. Orchestrate efforts to meet state goals? Check. Donor wishes? Check.

These are among the many influencing factors cited by state legislatures in their increasingly complex oversight roles for public higher education during an era of skepticism about the value proposition of post-secondary education—and the attendant demands of voters for greater accountability. Some states, such as Florida, have made frequent changes. Others, like California, maintain structures for years. Many of the changes are disruptive. So why do states continue to consider and adopt them?

Public higher education in the United States has a few basic types of governance oversight: state systems (of universities solely and of both community colleges and universities), separate districts that might include multiple campuses, individual institutions, and state coordinating entities. Each state has chosen one or more of these types. Texas has elected to have all of them.
Some institutions’ governance is enshrined in constitutions (as in Michigan or at the University of California). Others, mostly community college districts, have elected leaders that give them direct access to voters and, hence, some insulation from the state’s other elected officials. But most systems are statutory creatures of states and subject to the pulls and tugs of state political forces. And virtually all public colleges and universities receive state funding, and therefore are beholden to state elected leaders.

QUEST FOR INDEPENDENCE

A flagship that sought independence was the University of Oregon. Beset in the early 1990s by the twin challenges of recession and tax revolt, the state slashed higher education funding. Although universities finally saw increased state support in 1999, the dot-com recession brought more budget cuts. A brief respite in 2007 ended with the budget woes of the Great Recession. The University of Oregon (UO) had weathered these storms largely by attracting thousands of nonresident and international students, who paid three times the tuition of Oregon residents.

By 2011, just 7 percent of the university’s total revenue and 30 percent of its instruction budget came from state support. With further cuts looming, the university began the drumbeat for independence from the Oregon University System and the Oregon State Board of Higher Education, in part because of fear that its resources would be used to bolster small, financially weaker rural institutions. The firing of popular UO President Richard Lariviere by the state board in 2011, coupled with the election of Gov. John Kitzhaber in 2010, gave independence supporters hope. A strong proponent of local control, Kitzhaber had spearheaded the successful 1995 effort to make the Oregon Health and Science University a freestanding public corporation (neither a part of the Oregon University System nor a state agency) when he previously served as governor. Further, supporters included major university donors who claimed an independent UO would be able to raise far more in gifts than a UO that was part of a system.

The University of Oregon found an ally in Portland State University, whose leaders believed they could parlay their location in the economically dominant Portland metropolitan area into both donations and possible local tax sup-port. Matthew Donegan, an appointee of Gov. Kitzhaber who served as president of the State Board of Higher Education, advanced efforts to secure passage of legislation to abolish the board and grant each university independent status. Concurrently, the governor and legislative leaders, interested in advancing progress toward the state’s ambitious education attainment goals, established a Higher Education Coordinating Commission (HECC). That group assumed the functions of agencies charged with coordinating community colleges, regulating independent colleges, and running the state financial aid agency, and absorbed the academic oversight functions of the State Board of Higher Education. From 2013 to 2015, the new structure was approved and implemented, making each university a freestanding entity but estab-lishing a level of coordination over the entirety of higher education that Oregon had never experienced.

Ben Cannon, the executive director of the HECC, served as Gov. Kitzhaber’s advisor during the deliberations on establishing the agency and changing from a single governing board for seven universities to one board to govern each university. He explained that the devolution of governance to individual campus boards with state coordination fit well with the gov-ernor’s philosophy of being tight on out-comes and loose on how those outcomes are achieved. The governor viewed this change as bringing university governance more into line with how the rest of public education was governed in Oregon—with most funding provided to local school and community college districts under performance compacts with the state. The new structure established a similar relation-ship between each university and the state as existed for each school and community college district.

Cannon noted that progress toward the state’s attainment goals has continued since the change. In addition, the University of Oregon has received significant new gifts. “Perhaps the biggest surprise has been how well the transition has gone,” Cannon said. “Hundreds of people performed thousands of tasks to make this happen.”

INTEGRATION AND CONSOLIDATION

Connecticut’s state colleges and universities (exclusive of the University of Connecticut) are beginning their second transformation since 2011, merging the administrations of community colleges and regionalizing their management.

Enrollment has declined at Connecticut’s colleges and universities. Their faculty and staff are highly unionized and protected from layoff for the next several years while benefit and salary costs are set to rise.

In 2011, the state established the Connecticut System of Colleges and Universities, bringing together four-year colleges and community colleges under a single board of regents. Mark Ojakian, now president of that system, was chief of staff to Daniel Malloy, the newly elected governor at the time, and helped design the new structure. The purposes for the change were to enhance student pathways and save money for students. The first was advanced as faculty at the 17 institutions designed and implemented 26 pathways in disciplinary areas to permit the seamless progress
of students to degrees. To provide the same transferability using the prior approach would have required more than 1,300 transfer articulation agreements. Emblematic of the second purpose is the transit pass that students can purchase for $20 per term, allowing them to use mass transit anywhere in Connecticut.

But pathways and volume purchasing contracts alone could not offset the enrollment decline (and resultant tuition loss) or insulate colleges and universities from state budget crises. Institutions were draining reserves to stay open and faced structural deficits. In 2017, the board of regents asked Ojakian to develop options to serve students while maintaining fiscal integrity. He was directed to look at alter-natives, from no system at all to community colleges as branches of universities. The board was clear that students needed to be educated effectively and the system must achieve financial stability. Ojakian and his team had a single mantra: “students first.”

Their strategy is two-fold: 1. integrate administrative functions to leverage talent and achieve economies of scale to free up funds for higher priority areas, and
2. consolidate the 12 community colleges to focus on serving students in regions at lower cost.

Although the change would have affected only the community colleges within the system, university faculty opposed it. The regional accreditor, the Northeast Association of Schools and Col-leges, did not act on the system’s request for a substantive change to establish the institution as a single accredited entity, but voiced concerns. The system is now implementing a slightly different plan, with three regional community college districts as part of a single accredited com-munity college to reduce administrative costs and foster a more streamlined cur-riculum. The consolidation is scheduled to be completed by 2023.

“Regents and legislators are supporting this plan because they know the state will not have the resources anytime soon to put a lot of new money into the system, requiring institutions to reduce cost while focusing on student services and education,” Ojakian said.

In Tennessee, Gov. Bill Haslam has an ambitious agenda for higher education. For years, some of the universities within the Tennessee Board of Regents System had sought independence. In 2015, Gov. Haslam agreed, proposing that each of the six universities be governed by its own board. The board of regents remains the governing body for community and technical colleges. In proposing the change, Gov. Haslam said it would allow the universities to focus on regional needs and permit the regents to focus more intensely on the needs of the community and technical colleges.

IMPROVING STUDENT SUCCESS

Improving student success was upper-most in the minds of the leaders of the University System of Georgia (USG) when they began consolidating campuses. Governed by a single board of regents, USG was a system of 35 institutions in 2011. The structural change from 2012 to 2017, backed by the regents and spearheaded by two successive chancellors (Hank Huckaby and Steve Wrigley), involved merging two campuses into a single institution, something that now has been achieved nine times, bringing the number of institutions to 26. Savings (estimated at $32 million per year) have been redirected at each campus into faculty, advising, and other programs to advance student degree completion. Another goal of the effort was to enhance economic development in local communities. Early results suggest improvement in student success and provision of a richer mix of baccalaureate degrees in some communities.

Chancellor Steve Wrigley emphasized that support of the board and Gov. Nathan Deal, sustained over the six years of the change effort, was essential. The key elements leading to success in each merger were strong campus leadership (with the president of one of the institutions tasked with advancing the work), a committee of representatives from both campuses to design the details, and strong and constant communication. The board, the chancellor, and the campuses worked according to a schedule aligned with that of the Southern Association of Colleges and Schools, the regional accrediting agency, so that full accreditation was maintained.

“This is a human undertaking,” Wrigley said. “The systems and details are important, but even more important is communicating with people to answer the question of ‘why is this happening to me?’” Essential to the effort are recognizing that the purpose of the merger is to improve student success and having the board, system staff, and campus leaders maintain their resolve. “It really is worth doing,” Wrigley added. “It is worth taking a chance. The status quo won’t get us where we need to be in this dynamic age.”

Maine is a state that made changes within its current governance oversight and campus structure. In 2012, Chancellor James Page and the board of trustees of the University System of Maine forecast that by decade’s end the system and its universities would have exhausted reserves and would face an ongoing structural deficit due to the decline of student enrollment and the erosion of Maine’s working-age population. The board and the chancellor wanted to focus more effectively on student success and on linking graduates to Maine’s current and expected workforce. Their goal was to reduce operating costs and invest in financial aid and programs needed by students and Maine’s employers.

The plans involved centralizing a variety of administrative and support functions, reducing some academic programs, and cutting administrative costs while increasing funding for research, some academic programs, and financial aid. Over the past six years, the system of seven universities has reduced recurring operating costs by $80 million per year and reallocated an additional $6 million to research and selected instructional programs—all while freezing tuition and providing more financial aid. The system also has improved credit trans-fer among its institutions and with Maine’s community colleges.

Page credits the board of trustees with vision and perseverance. Moreover, he said, “the development of a unified financial management structure, which we had not had before, enabled us to develop a strategic plan that serves the entire state and allows funding allocations to be made in view of the long term, not just reactively, year by year.”

The chancellor and the board encouraged universities to link with employers and employer groups and developed mechanisms that multiplied those connections into a statewide approach to workforce engagement, not just for current needs but for what Maine will need in 10 or more years. The development of these connections and the changes in academic programs are designed to help Maine keep its economy vibrant even while its work-force shrinks.

Although there was some pushback from campuses not wanting to centralize services and cede their unique financial management systems, the board and the state’s governor and legislature held firm because they understood the system’s vision and the need for action.

New Mexico, a state of 2 million people, has a decentralized governance oversight structure, with more than 150 members on 31 boards overseeing its institutions—with 10 boards enshrined in the state’s constitution. The state has an ambitious attainment goal: 66 percent of working-age citizens by 2030. Despite spending more of its budget on higher education than most other states, New Mexico has not seen the level of student outcomes state leaders have sought. The legislature asked the Department of Higher Education to consider whether structural change would help improve such outcomes.

An October 2018 report suggests the state consider two alternatives for governing institutions: (a) three mission-specific boards, one for research universities, another for comprehensive institutions, and a third for community colleges; or (b) four boards, geographically based, with one for a University of New Mexico system (UNM), one for a New Mexico State University (NMSU) system, one for New Mexico Tech, and one for community colleges not included in the UNM and NMSU structures. The report also suggests changes in the role and appointing authority for the state’s Department of Higher Education to permit better coordination.

“The legislature has recognized the disparity between our state’s investment and our outcomes and is coming to understand that trying to orchestrate 31 separate institutions and their boards
to achieve our education goals is not efficient,” said Barbara Damron, the cabinet secretary of the New Mexico Department of Higher Education. Legislation has not yet been proposed, but the incoming governor and legislature will face governance choices in 2019.

Will 2019 bring other proposals to change governance? Almost certainly. For the past few years, some in Florida have suggested a state college system. West Virginia University President Gordon Gee is seeking a new funding model for the state’s universities and calling for local governance of each one. In North Dakota, a November 2018 task force report, endorsed by Gov. Doug Burgum, recommends abolishing the statewide board that governs universities and replacing it with three boards: one for the University of North Dakota system, another for the North Dakota State University system, and a third for the community college system.

While it remains to be seen whether any of these proposals makes it into legislation, governance oversight changes have been a staple of higher education discussions in virtually every year since the Great Recession. States have different reasons to make—or not make—such changes. The leadership of boards, the governor, and other state officials is essential for successful governance change. Even in the absence of change, the same kind of leadership can allow campus consolidations, shared service arrangements, and bold initiatives that advance higher education.