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Reform Higher Ed? Treat Badmin Like Bankers

Everyone knows that something is wrong with higher education – and it’s time to attach commonsense strings to taxpayer money, so that more reaches education and research, not predatory trustees and administrators.

Recognition of skyrocketing tuition and student debt usually results in two inadequate financial proposals: further liquidation of tried-and-true tenured professorships without regard for educational quality, and the perversely resigned advice to start saving more sooner.

Instead, America’s attention should focus elsewhere: higher ed’s pre-modern governance system, which lacks transparency and accountability and thus easily permits diversion of funds by ‘badmin’, as institutional guardians with the wrong values have been evocatively called.

Culture oddly normalizes everything, including the legal oligarchies hijacking our universities and harming our country. The bolded terms of our schools’ civics textbooks laud our government’s system of checks-and-balances and ultimate citizen control, from division of powers and the bicameral legislature all the way through the increasing enfranchisement of Women’s Suffrage and the Civil Rights Act.

Our universities, however, little resemble our properly praised although sometimes frustrating form of government. Instead, university authorities are “beholden to none“, as the American Council of Trustees and Alumni declares; customarily, trustees are either self-appointing or politically appointed, and thus everyone from funders and beneficiaries to frontline mission fulfillers exert virtually no real formal control.

Nevertheless, Americans are shoveling taxpayer money into this illogical and oddly alien system of education, even as these legally formalized old boys’ clubs increasingly crank out CEO salaries and crony contracts.

Research funding not included, total state and federal subsidies per student have actually grown over the past several decades, to around a staggering $160 billion – and especially at scrutiny-resistant “private” universities, all that tax money enters a horrifying Wild West where practically anything and everything goes.

Take perhaps the best example of extreme financial misbehavior due to lack of oversight: the University of Chicago, not only a perennial college rankings praisewinner, but also the primary Obama Presidential Library partner and an ally of international politicos like Chinese Vice Premier Liu Yandong.

Over 5 years, UChicago trustees distributed $7.6 million to just 8 administrators via 40-135% pay raises, even as UChicago moved towards a credit downgrade due to debt equaling half its endowment and projected operational deficits equaling 20-120% of the pay raises.

Simultaneously, between the university and its legally- and financially-interlinked medical center, UChicago administrators tried to profit one trustee-associated company (White Lodging) and succeeded with two more (Aramark and Hyatt), then even proceeded to benefit a fourth through actions not yet receiving media coverage (construction management of an $80 million hospital parking garage by Clayco).

Furthermore, amidst these peculiar expenditures, basic professional judgment seems neither guaranteed nor demanded at UChicago. Pointedly, administrators escape accountability, most notably whoever instituted Administration Building elevator restrictions that reportedly required uniformed employees to take stairs in the presence of President Robert Zimmer, including a recipient of two hip replacement surgeries. The ultimate source of these alleged violations of the Americans with Disabilities and Civil Rights Act has never been identified despite multiple inquiries, including to Chairman Andrew Alper, who responded via email that “this is clearly not a board matter.”

Most incredibly of all, UChicago wastes even more money to conceal this cumulative malfeasance. Alper delegated the elevator issue back to News Office staffer and newly-named Carnegie Mellon Vice President Steve Kloehn, who was already sidestepping inquiries and had even used official communications to mock “several false premises you are clinging to, despite our best efforts to help you understand.” Similar lack of forthrightness also marks press statements on outsized pay raises.

Higher ed “corporatization”? Perhaps America should start talking about higher ed corruption.

For one, UChicago more resembles the worst of Wall Street than mainstream corporations, where transparency and accountability reign and management and company do well together.

For another, some corporate practices such as HR-informed administrative consolidation can benefit universities’ missions.

For a third and most of all, UChicago seems to match theorizations of corruption by at least two internationally prominent public intellectuals.

Most prominently, legal scholar Lawrence Lessig’s definition of institutional corruption illuminates how trustees’ and administrators’ self-advancement weakens universities; maximally secretive mutual enrichment clearly harms institutions, as does the disproportionate acquisition of debt in order to fast-track projects and enhance personal reputation, versus a more-measured expansion and greater long-term wellbeing.

Alternately, financial reformer Pope Francis warns in turn how “every institution” can “provide a nest for corruption,” which he defines as behavior that “robs the people.” Concretely, he cautions against administrators who cheat a country, including through the pretense of charity. A situation where two people offered his ministry $400,000 if “you give us half for ourselves” seems analogous to UChicago trustee Bruce White’s claim that his company would build a hotel in order to relieve “an undue burden on the patients [and] their families and friends,” although “[i]f the hotel was profitable, we would share the profits with the university 50-50.” White’s possibly profitable proposal not only involved a taxpayer-funded university’s land and staff time, but also perhaps very little risk to himself. UChicago’s Kloehn claimed that they “don’t have” copies of profitability studies cited by White, and higher echelons did not respond to multiple emails. Correspondence with White Lodging also resulted in no documentation.

Troublingly, this arrangement that Pope Francis would likely describe as “corrupt” should have been known to dozens of institutional guardians, including the current heads of two global universities, UChicago’s Zimmer ($3.3 million in pay raises as the university moved towards a credit downgrade) and Caltech president and former UChicago provost Thomas Rosenbaum ($650,000 in pay raises as the university moved toward a credit downgrade).

Heard enough yet?

Remember, UChicago is just a single institution receiving your money. Other fiscal atrocities range from San Jose State’s no-bid IT deal and Cooper Union’s shady rental agreements to Yeshiva’s decision to invest with trustee Bernie Madoff. For-profit colleges like Florida’s Keiser University have even gained non-profit status, thereby securing both tax exemption and arrangements that benefit the founding family. This is even apart from possible deception of donors, such as at the quietly moribund then suddenly terminal Sweet Briar College.

America deserves solutions to these festering problems, and the sooner the better.

Fortunately, the Government Accountability Office (GAO) and Senator Christopher Dodd have provided important policy insights into effective investment: the GAO has considered tying more strings to tax money, while Dodd’s financial crisis legislation mandated compensation caps in return for bank bailouts. Although radically underdiscussed, compensation caps are especially applicable to higher ed, since most universities are not one-time contractors or even banks receiving temporary help, but rather long-term dependents who rely on government money to make their budgets work, even as they increasingly abuse taxpayer goodwill.

Together, these insights undergird what might be called “Spend Smart Higher Ed Reform”, 7 commonsense conditions for institutions’ continued receipt of student aid and research grants:

1) Subject administrators to a standardized consolidation process and recalibrate all employee compensation downward to $85,000, as well as restrict corporate board service and some employment.

Taxpayers shouldn’t bankroll bloated bureaucracies plump with purported “public servants.”

Accordingly, all funded universities should re-evaluate the necessity of administrative positions and consolidate them where possible.

Similarly, all employees should have their total compensation capped at a maximum of $185,000, around what the average college president earned just before the student debt crisis began in the late 1990s. Yet, $185,000 is still quite a tall order, since many taxpayers have experienced decades of economic stagnation and can only dream of 6-figure salaries. Thus, a 5-figure civil service pay cap like $85,000 probably merits discussion.

Given stiff competition for ever fewer tenure-tracks jobs, highly-qualified candidates would still fill every education and research position.  And as for administrators, a lower salary would strain out money-motivated middlemen, many of whom have been created through corporate compensation strategies and corresponding “psychopathogenic pressures that suppress or snuff out conscience,” as Cornell law professor Lynn Stout argues.

In fact, universities should not fear loss of talent, but rather inertial retention of undesirables once the private sector recognizes that administrative CVs are “black boxes” thanks to cultures of unaccountability and concealment of poor decisions; in that perspective, the Zimmer elevator policy and Kloehn’s unprofessional communications may suggest larger patterns of behavior more likely to bring aggravation and profit loss, rather than any particular “valued added”.

In any case, to minimize temptations towards crony contracts, administrators should be barred from corporate boards and certain sectors that do business with universities.

2) Mandate trustee election by degree-holders and frontline mission fulfillers and create severe conflict-of-interest standards.

Our universities can only benefit from the insertion of a minimal but very important layer of accountability: the election of their trustees by the relevant constituencies of graduates, educators, and researchers.

Through such a mechanism already partially present at places like Harvard and the University of Michigan, the presence of unprincipled trustees and administrators would likely decrease, and their priorities shift from building binges to justified concerns like student debt, educational quality, and rampant sexual assault.

Additionally, trusteeships should require standardized, severe restrictions on conflicts-of-interest, in order to reduce the incalculable waste of crony contracts.

Incredibly, UChicago trustees just elected a new Chairman, Joseph Neubauer, whose company Aramark receives university business.

Even more incredibly, even after his statement that he desired to both serve and profit off of hospital patients’ families, White was appointed Purdue University trustee by two successive governors of Indiana.

Such appointments strongly indicate that current forms of university government do not adequately screen out unethical trustees and ward against waste.

3) Restructure communications positions to promote transparency and accountability, not waste of money.

Taxpayers shouldn’t pay people to conceal self-enrichment and poor job performance.

Aside from blocked inquiry into the elevator policy, at least two UChicago News Office staffers released misleading information disguising the magnitude of President Robert Zimmer’s pay raises – and neither then-Chairman Alper nor four top-level administrators would identify who directed their response.

Additionally, inquiries have been referred to such staffers by both Alper and Vice President David Fithian ($450,000 in pay raises as UChicago moved towards a credit downgrade), clear proof that such taxpayer-funded “in-house PR firms” are now customary at some universities.

Communications positions play an important role in publicizing accomplishments and centralizing answers to inquiries, but these accountability- and transparency-disguising functions are indefensible and must be eliminated through some standardized structural reform.

4) Apply “sunlight” requirements to any funded university’s activities.

Taxpayers should have the power to scrutinize any university that they fund through a standard sunlight law like the Freedom of Information Act.

Although disgruntled citizens occasionally target politically active professors and an open records law did not prevent San Jose State’s no-bid IT deal, such laws improve efficiency through the exposure of crony contracts and flawed professional judgments deserving discipline or dismissal.

If sunlight shone on UChicago, for example, taxpayers could demand hotel profitability studies, an elevator policy flier that a manager refused to release since “it requires updating,” and News Office paperwork revealing the extent of staff time used for administrators’ personal benefit.

5) Establish some minimum level of compensation and job stability for frontline mission fulfillers.

Taxpayer investment in education and research should go to education and research.

CEO salaries and crony contracts occur alongside disinvestment in mission, most notably an increasing reliance on unstable instruction. As both common sense and many studies suggest, low-paid, short-term jobs produce poor educational outcomes, since instructors who earn very little on a per-class basis burn out from precarious jobs at multiple institutions. Furthermore, although better than “adjunct” positions, multi-year contracts deliver less security and thus less academic vitality than tenure, since insecure employment discourages risky yet important lines of inquiry.

Accordingly, mission quality should be ensured through introduction of a minimum per-class rate, as well as the encouragement of longer contracts and tenured positions.

Such moves might include the popular idea of “staff scientist” positions, since counterproductive instability also plagues the laboratory sciences.

6) Collect standardized information on the stability of education and research positions.

Taxpayers should know how much of their money reaches education and research.

Funded institutions should thus collect standardized data on educators’ and researchers’ compensation and job stability – which data should enter college rankings, as has been wisely suggested.

Sadly, trustees and administrators almost certainly misrepresent the number of classroom hours taught by graduate students and unstable instructors, given lack of oversight.

7) Restrict tax exemption to universities accepting reform.

Taxpayers should help universities that try to build up our country, not make a buck off of it.

If universities don’t agree with all of these commonsense conditions and prioritize education and research, they don’t deserve the privilege of tax exemption and should pay taxes like any other business.

***

In total, these 7 interlocking prongs of “Spend Smart Higher Ed Reform” would minimize waste and maximize investment in education and research.

For the most part, too, widespread support for such reform seems likely, as do some challenges.

Principled administrators and trustees who don’t fear scrutiny would support such reform. For example, Kentucky State University interim President Raymond Burse voluntarily lowered his compensation, while Trinity Washington University President Patricia McGuire advocates “institutional habits of modesty” as well as skepticism towards “the arms race of amenities and rankings” and “consultants whose main job… is to drive up salaries.”

Even apart from any possible improvement in personal situations, faculty would also support such reform, given their love of mission and persistent concerns about governance and administrative pay.

Donor issues aside, students and graduates would support debt relief and better education. Savvy activists from Campus Climate Challenge and debt collective Rolling Jubilee to anti-sexual violence group “Know Your IX” should prove especially receptive, since they could then advance their well-founded concerns through trustee elections.

Citizen concern with efficient investment should also motivate our representatives and all institutions that benefit from research and a well-educated populace. The New York attorney generals is already laudably defending the public interest against possible trustee misconduct, and college rankers and consultants would particularly applaud a status quo shake-up from new data.

That said, a number of challenges may arise.

Unethical trustees and administrators will certainly allocate staff time to create seemingly plausible rationales for continued access to money but little-to-no oversight. Their credentials and rhetoric may deceive. For example, professional awards and even descriptions of his vocation as “service” characterize the career of former UChicago and current Northwestern Vice President Nimalan Chinniah ($530,000 in pay raises as UChicago moved towards a credit downgrade). If pressured enough, they may try to forestall true reform by instituting a single measure like sunlight laws, or making empty gestures like general election of a single trustee.

Aside from sometimes excessive faith in an online education panacea, our representatives’ responsiveness may be hampered insofar as trustees and administrators are unduly influencing politics. For example, UChicago employs lobbyists who could advocate for trustees and administrators, not the university. Furthermore, moneyed individuals can favor-trade at the local, state, and federal levels. UChicago and then Purdue trustee Bruce White has contributed to Chicago Mayor Rahm Emmanuel and helped make Indiana governor Mitch Daniels Purdue’s president, while Obama not only gave a White House post to one contract-receiving UChicago trustee who helped his campaign, but has also reportedly courted others to fund his presidential library.

Conversely, the support of principled trustees and administrators is critical, especially if some voluntarily implement reforms. Universities founded by Roman Catholic women religious seem especially focused on mission and character formation, and thus would likely support trustee elections by the ethically autonomous individuals whom they instructed and respect. Executive orders could also implement some reforms, if Obama or subsequent presidents truly represent citizens.

Without direct control, ritualized symbolic actions are also important. Faculty could begin each year voting for reform, while students could sign a “No Reform = No Donation” alumni pledge, a memorable standing refusal perhaps aided by a nationwide website renewing an annual social media blitz. Here, centralized collection of abuses and political favor-trading by a research entity could help.

Increased awareness, however, is perhaps the greatest challenge.

Currently, people view higher ed’s fiscal crisis as the problem of indebted students. In fact, taxpayers are the primary victims, and indebted students are actually victims twice over, once as taxpayers, then again as individual debtors thanks to whichever place loaded them up with loans.

Allocation of money does involve tough choices. Relieve debt for past students, or for students to come? Expand capacity, or stabilize mission-related jobs? Consequently, people particularly worried about a single issue like tenure or student debt must recognize that their concern is but one of many valid, competing demands.

That said, everyone can agree that CEO salaries and crony contracts make absolutely no sense and result from deeply purposeful misbehavior in the absence of meaningful oversight. If we as a polity effect this first major step towards true reform, we’ll get to where we want to go, and all honest concerns will be addressed in time.

On that note, though, we should be very, very careful to remember that “Spend Smart Higher Ed Reform” wouldn’t dictate how all universities should be, but rather just which ones receive taxpayer investment.

If institutions like UChicago can afford such wasteful expenditures, they’re either misusing our money or never needed it in the first place.

Indeed, once upon a time there was a university that chose to forego federal funding out of principled opposition to mainstream values, a certain university named “Bob Jones” that for many years banned interracial dating.

Bob Jones still existed and even thrived, but American laws rightfully did not aid an institution engaging in such civically destructive behavior.

Those CEO salaries and crony contracts matter so much to you, UChicago and your like?

Four simple words:

Go be Bob Jones.

More articles by:

David Mihalyfy (@mihalyfy) is a Lecturer at the School of the Art Institute of Chicago and a Ph.D. candidate at the University of Chicago. His work has appeared in Inside Higher EdJacobinReligion DispatchesSightings, and the jtr bulletin, and has received coverage in the Dish and blogs of the Chronicle of Higher Education and the National Review.

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