Category Archives: Governance

Make College Trustees More Accountable to Students, Taxpayers

Students at Missouri State University’s aquatic center in 2014. Photo credit: New York Times

James V. Koch

In a competition to woo students, public universities are increasingly offering lavish amenities that have nothing to do with education.

The latest trend is lazy rivers, which have been installed at several big institutions, including the Universities of Alabama, Iowa and Missouri. Last year, Louisiana State University topped them all with a 536-foot-long “leisure” river in the shape of the letters “LSU,” part of an $85 million renovation and expansion of its gym. It was L.S.U. students who footed the bill.

At a time when college has never been more expensive, this is the last thing students should be paying for. According to the College Board, tuition and fees at public four-year institutions grew more than 60 percent over the past 10 years. State budgets for higher education have been slashed, and students have to make up the difference.

In the case of L.S.U., the lazy river was financed entirely by student fees, an addendum to their annual tuition. According to the Chronicle of Higher Education, over the past five years, those fees increased by 60 percent, nearly triple the amount L.S.U. students paid in 2000.

Tuition and fee hikes at public universities don’t come out of nowhere. Each has to be approved by a school’s governing board, whose trustees are typically appointed by the governor. Ensuring affordable, quality education is an essential part of trustees’ responsibility, but unfortunately often not part of their practice.

Trustees of public universities are stewards of a public trust that rests nobly on the notion that an enlightened citizenry is vital to a democratic society. They have a fiduciary duty to represent the citizens and taxpayers who support public institutions of higher education, as well as the students who attend them. But even though the best interests of students and taxpayers revolve around college access, affordability and graduation outcomes, too often presidents and boards are more focused on the rankings, reputation and popularity of the institution itself.

In my career as the president of two state universities and a consultant to nearly 50 higher-education institutions, I’ve observed dozens of college presidents skillfully co-opt their governing boards into approving costly projects that make schools look more attractive. (Of course, every college president has to increase costs sometimes. But the goal is to make sure it is necessary, while keeping expenses as low as possible for students.)

Trustees, who typically meet four to eight times each year, are entertained as if they are visiting heads of state, flattered for their service and financial contributions to the institution. College presidents sweeten requests for new buildings and research centers, as well as additional student affairs programming, with cleverly branded words like “promise” and “excellence.” What board would want to withhold promise and excellence from its beloved student body?

College presidents also tranquilize trustees into agreement with impossibly large volumes of reading material. Trustees get binders full of documentation about institutional successes that are padded with expensive plans for increasing growth and reputation. Most come away impressed by their president’s expertise and vision and assured that — thanks to their efforts — the university is on the right track.

The unfortunate truth is that while most college presidents care deeply about their institution’s success, an important part of their job is to shake free more resources. They seldom initiate serious campaigns to contain costs.

This means it falls on trustees to be better prepared to help challenge costly proposals that don’t add educational value. When it comes to state schools, the states themselves should educate trustees to understand their responsibilities to the citizenry and students. Training on big-picture issues and higher-education trends, such as the financial trade-off between instruction and research, the costs of intercollegiate athletics, and the expansion of amenities, would help trustees develop courage to ask college presidents probing questions that look beyond institutional narratives and cherry-picked rhetoric.

Our nation’s governors must also play a role. As they appoint public university trustees, they can and should mandate training to make university boards responsible to taxpayers and students. I don’t mean to imply that trustees should devote themselves to ritual opposition to presidents, who usually possess an unmatched understanding of the institutions they lead.

But presidents are not infallible.

James V. Koch, a member of the board of Partners for College Affordability and Public Trust, served as president of the University of Montana and Old Dominion University. Partners for College Affordability sponsors this blog.

This op-ed, published originally in the New York Times, appears with the author’s permission.

Snuff Out the Smart-Scale Revolt before it Grows

True, I-95 traffic north of Fredericksburg is a nightmare. But circumventing Smart Scale to widen the interstate for 44 miles is a bad idea.

Smart Scale prioritizes road and highway projects in Virginia by collecting metrics for congestion, safety, the environment, economic development and other indicators. Ideally, the scores ensure that scarce road construction dollars will be allocated on the basis of merit, not political pull.

But Smart Scale isn’t working for the Fredericksburg area, argues a Free Lance-Star editorial. A stretch of Interstate 95 between Fredericksburg and the Springfield interchange in Fairfax County has been identified as the location of two of the worst traffic hotspots in the country. Writes the newspaper:

The Virginia Department of Transportation … needs to prioritize the 44-mile project.

VDOT’s Six Year Improvement Program does include $125 million for the southbound Rappahannock River Crossing project, but the last round of Smart Scale did not recommend funding the corresponding northbound river crossing, much less the two-lane expansion Cole envisions.

Instead, Smart Scale directs millions of limited transportation dollars to less-urgent projects, such as pedestrian trails, bike lanes and commuter parking lots.

For 2018, VDOT has greenlighted seven projects in the Fredericksburg District, which includes turn lanes, intersection reconstruction and improving commuter parking lots totaling more than $10 million. Another $14.4 million project will widen Exit 126 off I–95 and Route 1 at Southpoint Parkway.

There’s nothing wrong with these projects. But when they take priority over keeping traffic flowing on the busiest interstate highway in the nation, there’s something wrong with Smart Scale.

Del. Mark Cole, R-Stafford, has introduced a bill for the 2018 General Assembly session that would add an additional north and southbound lane to Interstate 95 from Massaponax to the Springfield interchange: ““Such project shall be funded from existing appropriations to the Commonwealth Transportation Board and shall not be subject to the [Smart Score] prioritization process.”

The changes of the bill passing are just about nil. Why would any other legislator wish to privilege Cole’s transportation priority over their own? Passing this bill would open the floodgates for other legislators asking for exemptions for their own pet projects, effectively scrapping Smart Score as an objective means for funding road projects.

I will readily concede that the aforementioned stretch of I-95 is a nightmare. While I don’t commute on I-95, I use it with some regularity to visit my mother in Fredericksburg and my son in Fairfax. The logjams are so frequent and so bad that I periodically vow to never travel that way again. However, while adding lanes would alleviate congestion temporarily, there is ample evidence to suggest that improving travel times would induce more people to live in Stafford/Fredericksburg/Spotsylvania and commute to work in Northern Virginia. Without changing land use patterns, spending billions of dollars on congestion relief would achieve only temporary benefits.

Adding two more lanes for such a distance would cost billions of dollars. The Smart Scale methodology forces us to compare high-profile mega-projects like widening I-95 to smaller projects that may create more value for the money invested. The small projects don’t generate nearly as much attention, but there are a lot of them, and they add up. Smart Scale represents a big advance over the way Virginia used to allocate transportation dollars. We need to keep it, and that means saying no to legislators who want to carve out special exemptions.

Virginia’s Top 10 Stories (Told and Untold) of the Year

Phew! I finally made it through the all-consuming Christmas season, and I’m still alive to tell the tale. Christmas is a wonderful but grueling time of year for the Bacon family, marked by numerous feasts, expanding waistlines, excessive gift giving, shrinking bank accounts, and considerable out-of-town travel to distant relatives. But I’m back in the saddle at the Bacon’s Rebellion global command headquarters and eager to get the blog cranked back up.

Many publications publish a retrospective look at the “Top 10 Stories of the Year.” I have never done this at Bacon’s Rebellion, but perhaps it is time. A few obvious candidates for the Top 10 stories in Virginia’s political-public policy realm come to mind. Please feel free to add, subtract, modify or opine upon this list in the comments.

  1. Republican wipe-out in the November 2017 election. In a wave election driven largely by anti-Trumpism, voters obliterated the seemingly insurmountable Republican majority in the House of Delegates and elected Democrats to all three statewide offices. The Northam administration will look and act a lot like the McAuliffe administration, but it will have more friends in the legislature.
  2. Civil War statues and the Charlottesville riot. Virginia became the cockpit of U.S. culture wars and the debate on race as national and local media alike fixated on statues that memorialize Civil War generals. The controversy exploded as outsiders flocked to participate in, and oppose, the United the Right rally in Charlottesville.
  3. Virginia’s lagging economy. The U.S. economy gained momentum during the first year of the Trump administration, but Virginia’s economy, once a national growth leader, continues to under-perform. Caps on military spending have hobbled growth in Northern Virginia and Hampton Roads, while Virginia’s rural, mill-town economy continues to struggle. Governor Terry McAuliffe has shined as the superlative state salesman, but his policies have not budged economic fundamentals.
  4. Dominion on the defensive. Dominion Energy, a dominating political presence in Virginia, was a big loser from the election, as an unprecedented wave of anti-Dominion politicians was elected to the General Assembly. Despite making great progress toward solar energy, the electric utility found itself under attack for its rate freeze, the Atlantic Coast Pipeline, and coal ash disposal. In a dramatic, end-of-year gambit, Dominion proposed upgrading its transmission and distribution systems to a more resilient, renewable-friendly smart grid.
  5. Higher-ed mobilizes to defend status quo. The year began with sharp criticism of Virginia’s public colleges and universities for runaway costs, tuition and fees. The year closed with an industry P.R. blitz highlighting the link between higher ed and economic development. Virginia is nowhere near a consensus on how to balance the competing imperatives of affordability, access, workforce development, and R&D-driven innovation.
  6. Death spiral for Obamacare. The Affordable Care Act health insurance exchanges in Virginia entered the year in a slow-motion death spiral due to internal flaws and contradictions. Policies enacted by Congress and the Trump administration accelerated their swirl into oblivion, while offering nothing obvious to replace them. The election of Democrat Ralph Northam will renew the debate over expansion of Medicaid, all but guaranteeing that the focus in Virginia will be on the zero-sum question of who pays for health care rather than how can we improve productivity and outcomes in order to lower costs for the benefit of all.
  7. Interstate 66 and HOT lanes. The McAuliffe administration advanced its signature contribution to Virginia’s transportation infrastructure by developing major upgrades to Northern Virginia’s I-66 transportation corridor. The opening of HOT lanes inside the Beltway erupted in controversy over the fairness and effectiveness of using dynamically priced tolls to ration scarce highway capacity.
  8. Accountability in K-12 education. By some measures, Virginia’s system of public schools made progress in 2017 but by other measures it continued to struggle. One of the most important trends, neglected by the media, is the continued effort by state bureaucrats to use Standards of Learning tests to hold local schools accountable and the continued gaming of the rules by local officials to avoid accountability. Meanwhile, revisions to disciplinary policies to advance social justice concerns has undermined school discipline and made a difficult job — teaching disadvantaged kids — even more difficult. The breakdown in discipline makes it ever harder to recruit teachers to the most challenging schools.
  9. Salvaging the Metro. The Washington Metro heavy rail system needs billions of dollars to compensate for past failures to invest in maintenance, even as it struggles with union featherbedding, declining ridership, and an unwieldy governance structure. Representatives from Virginia, Maryland, Washington, D.C., and the federal government can’t seem to agree on much. Metro is critical for the functioning of the Northern Virginia economy, but Virginia wants to see labor and governance reforms before coughing up billions of dollars to prop up a failing system that, lacking those reforms, inevitably will come back and ask for more in the future.
  10. Turn-around at Virginia’s ports. This end-of-the-year list is gloomy, with an emphasis on crumbling and failing institutions. But there is at least one good news story (which I have neglected to cover on this blog): the revival of the Ports of Virginia. Traffic is booming and profitability has revived.

Appointing Lawmakers to Executive Boards Violates the State Constitution

Virginia constitutional convention, 1830

The boards of 21 state entities are exempt from the state law prohibiting legislators from serving on boards, commissions and councils within the executive branch. They include:

Branch Pilots
Southwest Virginia Higher Education Center
Southern Virginia Higher Education Center
New College Institute
Teacher Education and Licensure
Virginia Interagency Coordinating Council
Board of Veterans Services
Roanoke Higher Education Authority
Online Virginia Network Authority
Virginia Geographic Information Network Advisory Board
Standards of Learning Innovation Committee
Virginia School for the Deaf and the Blind
Substance Abuse Services Council
Criminal Justice Services Board
State Executive Council for Children’s Services
Virginia Board of Workforce Development
Volunteer Firefighters’ and Rescue Squad Workers’ Service Award Fund Board
Secure and Resilient Commonwealth Panel
Forensic Science Board
Southwest Virginia Cultural Heritage Foundation
Virginia Growth and Opportunity Board

Not every one of these organizations has a member of the General Assembly serving on its board, but many do. For example, at the Online Virginia Network Authority, a collaborative initiative to promote online learning delivered by public universities, eight of twelve board members serve in the legislature. Another entity, the SOL Innovation Committee, has four delegates and three senators on its board along with 28 local education administrators.

The author of the following legal article, who goes by the pen name of Publius, argues that permitting legislators to sit on executive-branch boards is an unconstitutional violation of Virginia’s constitutional separation of powers.

— JAB


Would It Be Constitutional to Appoint a Virginia Legislator
to a Board of Visitors of a Virginia Public University
or Other Executive Branch Boards?

by Publius

 The question arises whether it would be constitutional to appoint legislators to serve on the Board of Visitors of a public university in Virginia or on other Executive Branch Boards. Based on the clear constitutional text, on the practical consequences, on the decisions of the Virginia Supreme Court, and on decisions elsewhere, such an appointment would violate the separation of powers.  The answer to the question is not close.

I. The Separation of Powers Clauses

There are two Separation of Powers Clauses in the Virginia Constitution. Article I, § 5, titled  “Separation of legislative, executive, and judicial departments,” requires

That the legislative, executive, and judicial departments of the Commonwealth should be separate and distinct;

And Article III, § 1, titled “Division of Powers,” provides:

The legislative, executive and judicial departments shall be separate and distinct, so that none exercise the powers properly belonging to the others, nor any person exercise the power of more than one of them at the same time;

Appointing a legislator to a university’s Board of Visitors would legislatively interfere with executive branch functions, with no necessity for doing so, thus violating the Separation of Powers Clauses as they have been interpreted by the Virginia Supreme Court. Even more clearly, such an appointment would result in the same person exercising both legislative and executive functions at the same time, with no justification whatever, thus violating the clause I have italicized from Article III, § 1.

These restrictions are not mere formalities. They are designed to protect the people by preventing the concentration of power in one or a few individuals, or in any one branch of government. Each legislator shares in the awesome power to make laws for the entire Commonwealth, including for its universities. No legislator may augment that power by also sharing in the executive-branch power to administer those universities.

II. The Boards of Visitors

The Boards of Visitors of Virginia’s public universities are plainly state agencies in the executive branch, and courts have treated this fact as obvious.[1] Similarly, the General Assembly’s Joint Legislative Audit and Review Commission has recognized that these Boards are part of the executive branch.[2] The Governor appoints persons to the Boards of Visitors,[3] and the Governor can remove Visitors for “malfeasance, misfeasance, incompetence, or gross neglect of duty.”[4] This gubernatorial appointment and removal power plainly locates these Boards in the executive branch.

These Boards exercise executive authority and perform executive functions. They supervise and administer large institutions with substantial assets, many employees, and many students, and in some cases, hospitals and medical practices. They are statutorily authorized to manage their institution’s funds, appoint its president and its faculty, fix salaries and tuition, and buy and sell real estate.[5] They are authorized to regulate parking and traffic, the hiring and firing of employees, and the admission, discipline, and expulsion of students.[6] They are instructed to manage their institution’s endowment[7] and given many powers necessary for the management of medical centers.[8] They have law enforcement responsibilities; they are authorized to establish a campus police department[9] or, at the Board’s election, require a contiguous local government to provide police protection on campus.[10] Continue reading

What the Numbers Tell Us

How do Virginia’s public higher-ed institutions rate on the goals established in the 2005 Restructuring Act and embedded in state code? The data is incomplete.

This is the fourth of four articles exploring higher-education accountability in Virginia since enactment of the 2005 “Restructuring Higher Education Financial and Administrative Services Act.”

The 2005 Restructuring Act created a new covenant between the Commonwealth of Virginia and its system of higher education. In exchange for greater freedom from state regulation, colleges and universities would be held accountable for achieving 12 core state goals. Those goals are still part of the state code. But over the intervening years, priorities have changed and many benchmarks have been dropped.  The state publishes no comprehensive report card for individual institutions based on achievement of those goals.

Yet the State Council for Higher Education in Virginia (SCHEV) does compile much of the data needed to track progress in achieving the state goals. The numbers can be extracted from a searchable database the council maintains on its website.

In the concluding chapter of this series, Bacon’s Rebellion extracts that information to see how Virginia’s higher-ed system has performed since 2005. The task of extracting the data for each of the state’s public institutions would be too arduous to undertake within a reasonable time frame, so we show data for the system as a whole.

Goal 1: Ensure Access to higher education, including meeting enrollment demand.

Virginia’s system of higher education has expanded significantly since enactment of the 2005 Restructuring Act to accommodate a growing student population. Between 2005 and 2016, total enrollment at public, four-year institutions increased 11%. However, almost all of the increase took place by 2011. Enrollment has leveled off since.

Are Virginia’s public colleges and universities keeping up with demand for higher education? That’s impossible to say. SCHEV has not defined enrollment demand or set any benchmarks.

A related metric is the number of degrees awarded. A stated goal of higher education policy is not simply to increase enrollment, it is to increase the number of Virginians graduating with degrees. Indeed, the 2011 Top Jobs Act, which amended the 2005 Restructuring Act, set an explicit goal of increasing the cumulative number of two-year and four-year degrees awarded by public colleges by 100,000 over 15 years. To award more degrees, colleges must enroll more students and/or increase the retention rate.

As with enrollment, the number of degrees granted each year increased at a robust pace from 2005 to 2011 — and then plateaued. Ironically, that tapering off coincided with the Top Jobs legislation, which was enacted with the goal of boosting enrollment. It is not clear why enrollments have plateaued. One possible explanation is that students signed up during the depths of the recession because so few jobs were available; once economic recovery took root, students returned to the job market. Another is that students began balking at the rising cost of attendance.

The Top Jobs Act put special emphasis on awarding more STEM (science, technology, engineering, math) and health degrees. SCHEV data indicates that the higher-ed system boosted the output of STEM-H degrees by 11.1% between the 2011-12 and 2015-16 school years — double the 5.3% increase for all degrees. STEM degree awards are on an upward trajectory.

Goal 2: Assure affordability, regardless of income.

As discussed in Part III, SCHEV did not develop an overall affordability metric for individual institutions. However, its annual Tuition & Fees report does provide a measure for the higher-ed system as a whole: average undergraduate charges (tuition, fees, room, board) as a percentage of per capita disposable income. After bottoming out at 31.8% in 1999-2000, charges rapidly outpaced Virginia earnings. By the 2016-17 school year, a year’s charges consumed 47.6% of per capita income. Continue reading

What Virginia Needs Is a Good Local-Government Report Card

Speaking of government report cards for states (see previous post), Virginia could use a good system for rating its local governments. As it happens, the Virginia Tea Party Federation is mobilizing to grade Virginia local governments on the basis of 20 to 30 key performance indicators on fiscal health and quality of government services.

The data will be extracted whenever possible from authoritative sources such as local Comprehensive Annual Financial Reports (CAFRs), Mark Dougherty, chairman federation’s Local Government Committee (LGC), said yesterday at the Tuesday Morning Group gathering of conservative and libertarian activists. The LCC hopes to release results in late 2017 after fiscal 201 data becomes available this fall.

The goal is to educate citizens and local government officials and to highlight opportunities to improve governance, Dougherty said. CAFRs run 200 to 300 pages long, and they are difficult for ordinary citizens to plow through. The Tea Party is looking for volunteers willing to compile data for each of Virginia’s 95 counties and 38 cities.

It will be a challenge to create a “fair” rating system, acknowledged Daugherty, who hails from Staunton. Virginia localities vary in size and needs from sparsely populated Highland County, with a $7 million annual budget, to massive Fairfax County with more than a million people and a $7 billion annual budget.

The Tea Party report cards will rate Virginia’s localities on the basis of standard measures and ratios that apply to all, but may adjust for a locality’s unique attributes. Bonus points might be awarded, say, to a county that posts its checkbooks online for public inspection, while penalties might be levied for self-declared sanctuary cities (on the grounds that the presence of illegal aliens runs up local government costs).

As an example of the kind of analysis he hopes citizens will be able to conduct, Daugherty cited Henrico County, where 20 fire-and-rescue stations serve 330,000 residents. Of its 47,000 calls last year, only 825 responded to fires. Clearly, the vast majority were non-fire related. Before Henrico builds another fire station, might it be feasible to have a light fire/rescue vehicle to patrol areas of the county that generate the most calls?

Another example: City of Richmond public schools have between 2,000 and 3,000 students in each of its elementary school grades but only about 1,200 in its high school grades. Are kids dropping out? Are parents keeping their kids in elementary school but then yanking them out of middle school, either to put them in private school or to move out of the county? That would be helpful to know in formulating educational policy. Another question arising from the data is whether the school has adjusted its infrastructure — number and size of public school facilities — to the lower number of high school students.

Daugherty pointed to Goochland County’s “Strategic Plan Report Card,” with five goals and 23 measures, as a potential template for what the Tea Party has in mind. Goochland not only looks at its property tax rate but tracks the ratio of commercial to residential property, new taxable commercial investment, and new taxable investment within its eastern growth management area. The report also measures financial liquidity, the debt-to-expenditure ratio, patrol area covered per deputy, emergency response times, and annual government employee turnover, among other indicators.

Melting Metrics

The General Assembly enacted the 2005 Restructuring Act with the idea of holding public universities accountable to a set of performance metrics. Many measures have fallen by the wayside.

This is the third of four articles exploring higher-education accountability in Virginia since enactment of the 2005 “Restructuring Higher Education Financial and Administrative Services Act.”

Upon becoming governor in 2002, Mark Warner made higher education a top priority. An entrepreneur who had made his fortune in cell phones, he saw Virginia’s colleges and universities as vital institutions for preparing a technology-ready workforce and for creating R&D-based innovation centers. He arranged a $900 million state-backed bond initiative to pay for a college building program, and he pushed through a tax increase to offset the spending cuts he’d enacted previously to balance a recession-hammered budget.

Warner paid keen attention to higher ed issues. In 2003 Virginia became one of five states to join the National Collaborative for Postsecondary Education Policy. The ensuing discussions brought another priority to the fore — the gap in access to higher education experienced by different races and ethnic groups. African-Americans and Hispanics lagged the population in college attendance, and given the increasing proportion of minorities in the college-bound population, lawmakers worried that the disparity in access could get even worse.

At the same time, Virginia’s public universities had their own agendas, which entailed winning more freedom from regulation and less state meddling with tuition. In 2005, Warner and the higher-ed establishment struck a grand bargain enshrined in the “2005 Restructuring Act” — universities would get more autonomy, and Warner would get more accountability.

“Restructuring was a historic effort by the Commonwealth to establish a new relationship that would both help to ensure the viability and the effectiveness of public higher education for the citizens of the Commonwealth,” says Peter Blake, director of the State Council of Higher Education for Virginia (SCHEV).

The legislation enshrined eleven goals, to which a twelfth was added after the 2007 Virginia Tech massacre. Public institutions would:

  1. Ensure access to higher education, including meeting enrollment demand.
  2. Ensure affordability, regardless of income.
  3. Provide a broad range of academic programs.
  4. Maintain high academic standards.
  5. Improve student retention and progress toward timely graduation.
  6. Develop uniform articulation agreements with community colleges.
  7. Stimulate economic development.
  8. Increase externally funded research and improve technology transfer.
  9. Work actively with K-12 to improve student achievement.
  10. Prepare a six-year financial plan.
  11. Meet financial and administrative management standards.
  12. Ensure the safety and security of students on college campuses.

The 2005 Restructuring Act put the Governor and Secretary of Finance in charge of developing financial and administrative measures, and tasked SCHEV with devising and tracking metrics for the other goals. SCHEV would publish an “Assessment of Institutional Performance” every year that ascertained whether or not institutions met the goals. Falling short would jeopardize a college’s access to revenue sources estimated in 2008 to be worth about $60 million across Virginia’s higher-ed system. (The incentives have declined to less than $20 million in recent years.)

After the law passed, the state began diligently devising metrics and compiling data, some of which SCHEV had been collecting already, and Virginia’s public colleges and universities incorporated the state goals into their own planning processes. Several years later, the 2011 “Preparing for the Top Jobs of the 21 Century” act, modified the goals, establishing an objective of increasing the number of degrees awarded by 100,000 over 15 years. Top Jobs put an emphasis on STEM (Science, Technology, Engineering and Math) and health disciplines.

We saw in Part II of this series that the 2005 Restructuring Act has brought some tangible financial benefits to Virginia’s colleges and universities. In exchange, the state expected to hold them accountable for achieving the 12 state goals. How did those goals translate into metrics? How carefully did the state keep track of those metrics? And what happened if and when institutions fell short?

While outside observers hoped that the new covenant between the Commonwealth and its higher-ed system might provide a new model for the nation, administering the 2005 Restructuring Act proved more difficult than anyone anticipated. The accountability-by-metrics piece bogged down in a legislative-bureaucratic morass.

SCHEV and the Secretariat of Finance still monitor student enrollment and degrees granted, and they track an array of financial and administrative measures for the institutions that have signed Level II and Level III autonomy agreements. SCHEV compiles these limited metrics in biennial performance reviews for each institution. Further, SCHEV maintains a rich database of higher-education statistics, much of which is relevant to the 12 state goals, and it publishes metrics for a strategic plan, the Virginia Plan for Higher Education.

But changes implemented over the years have undercut accountability. Hewing to directives from governors and the General Assembly, SCHEV no longer sets benchmarks or monitors metrics for all 12 state goals at each college and university. If institutions fall short of metrics that SCHEV does track, they suffer no public rebuke. Most significantly, while Virginia’s higher-ed system continues to meet some state goals, the apparatus put into place by the 2005 Restructuring Act has proven unable to rein in tuition cost increases or prevent a crisis of middle-class affordability.   Continue reading

Cutting the Strings

The 2005 covenant between the state and higher-ed has given public institutions more autonomy, flexibility, and, above all, control over tuition.

This is the second of four articles exploring higher-education accountability in Virginia since enactment of the 2005 “Restructuring Higher Education Financial and Administrative Services Act.”

In 2005, when leaders of Virginia’s most prestigious universities were angling for more autonomy from state control, they complained about the bureaucratic hoops they had to jump through. State regulators made the College of William & Mary install an exit sign in a picnic shelter. Whenever outdoor events were rained out, the University of Virginia had to apply for permission to erect a tent. The $300 fees were bad enough. But approval often didn’t come until the events were over.

Such nit-picking dictates were mere irritants, though, compared to other grievances. Procurement rules led to lengthy delays in capital outlay projects. Human Resources policies designed for government bureaucracies were ill suited for an academic setting. In theory, boards of visitors were free to set their institutions’ tuition and fees, but in practice lawmakers meddled frequently: capping, freezing or even rolling back tuition increases.

University presidents felt whipsawed by state cuts to higher ed. Governor Mark Warner had balanced a recession-battered budget by cutting FY 2003 higher-ed expenditures 22%, and then in 2004 had pushed through a tax increase that allowed him to restore $278 million. While the replenishment of funds was welcome, universities wearied of the “feast or famine” pattern that made a mockery of strategic planning.

While the three elite institutions — UVa, W&M and Virginia Tech — abandoned their quest for “charter” university status, which would have treated them like independent political subdivisions of the Commonwealth, they did get much of what they wanted. In the 2005 Restructuring Act, a compromise hammered out with Warner and the General Assembly, higher-ed institutions were assigned one of three levels of autonomy, depending upon their financial and administrative competence. In exchange, the state would hold them accountable to performance metrics for 12 policy goals.

“The name of the game on this thing all along was tuition, as well as regulatory relief,” David Breneman, an expert on restructuring activities and dean of the Curry School of Education at UVa, told Lara K. Couturier, whose 2006 essay, “Checks and Balances at Work: The Restructuring of Virginia’s Public Higher Education System,” remains the definitive study of the restructuring act.

Colette Sheehy vice president for management and budget at UVa., and a key player in negotiating the legislation, seconded the view. “We felt we had to get control over one of our key revenue sources: tuition.”

Virginia law already gave boards of visitors the power to set tuition and fees — but governors and legislators ignored it, arguing that they had never given up the power of oversight. The restructuring act reaffirmed the law in the hope that lawmakers would stop trying to set tuition policy… at least for a while.

“In law, in code, it’s probably no stronger than it was before,” then-Secretary of Education Peter Blake told Couturier. “[It] will last as long as the Legislature doesn’t want to override it. … In the minds of the decision makers, the balance probably shifted a little bit to give institutions a little more autonomy over their tuition.”

Twelve years later, how well has the restructuring act worked out for Virginia’s public colleges and universities?

The answer: pretty well from an operational perspective. Higher-ed institutions say they appreciate the increased flexibility and reduced red tape that comes with autonomy. The law also has worked out very well from a revenue perspective. The 2005 deal provided cover for years of relentless increases in tuition and fees.

But memories fade with time, and Warner’s grand bargain is threatening to unravel. Legislators are rebelling against a cost of college attendance that has outstripped the increase in Virginians’ household incomes and put an increasing strain on middle-class families. A bipartisan coalition of delegates and senators submitted a bevy of bills in the 2017 session that would restrict the freedom of universities and their boards to set tuition. Senior legislators fended off the bills this year, but not the resentment.

Three levels of autonomy. The 2005 Restructuring Act created three tiers of autonomy. Only institutions with advanced managerial capabilities and a minimum of AA- bond ratings qualified for Level III. UVa, Tech and W&M qualified immediately, and Virginia Commonwealth University has since made the cut. Each institution negotiated a management agreement that defined its prerogatives relating to capital outlays, leases, information technology, procurement, human resources and financing/accounting. Continue reading

Autonomy and Accountability

Under the 2005 Restructuring Act, Virginia universities got more autonomy in exchange for more accountability. Today, they still have autonomy but there’s less accountability.

This is the first of four articles exploring higher-education accountability in Virginia since enactment of the 2005 “Restructuring Higher Education Financial and Administrative Services Act.”

The year 2005 was a watershed for higher education policy in Virginia. Lawmakers struck a grand bargain that gave Virginia’s public colleges and universities greater autonomy from state regulations in exchange for more accountability in meeting state goals.

Virginia’s elite universities — University of Virginia, Virginia Tech and the College of William & Mary — had been lobbying for “charter” status that would liberate them from suffocating state controls and reaffirm their right to raise tuition without interference from politicians. At the same time, Governor Mark Warner was articulating what he wanted from the state’s higher education system: expanded enrollment, access for minorities and the poor, and greater progress in obtaining external R&D funding, among other priorities.

Lobbyists and lawmakers struck a compromise: All of Virginia’s colleges and universities would get more day-to-day operational freedom, with the elite three gaining the greatest latitude, and Warner would get more accountability for progress toward state goals. The 2005 “Restructured Higher Education Financial and Administrative Operations Act,” or “2005 Restructuring Act” for short, spelled out the new covenant between the state and its universities.

“Warner worked really hard to get a consensus around it,” recalls Pat Callan, president of the National Center for Public Policy and Higher Education, who was involved in articulating the accountability goals. “It had a pretty good shot at being successful.”

Mirroring a tug of war between states and public universities taking place in every state, the 2005 Restructuring Act garnered widespread attention in the world of higher ed. Some observers speculated that the law would provide a model for other states.

“The Virginia case represents one of the most coherent and thoughtful efforts to deregulate and decentralize while working toward an explicit state agenda that we have seen,” wrote Lara K. Couturier, a colleague of Callan’s, in a 2006 analysis.

But the jury was still out on whether the impact of the legislation would be positive or negative. Would legislators respect the spirit of the legislation and remain hands-off on tuition? Would universities prompt a political response by continuing to raise tuition aggressively? Would the benefits of autonomy outweigh the burden of compiling more reports and statistics? How effectively would the state hold colleges accountable to Warner’s goals, often referred to as the “state ask”?

In 2008, the Joint Legislative Audit and Review Commission (JLARC) published a two-year review of the Act, with special attention to the management agreements that UVa, Tech and W&M negotiated with the state. “It appears that the management agreements have generally worked in a satisfactory manner to date,” the report concluded. Streamlined procedures didn’t address every gripe university administrators had, but the new arrangements were a clear improvement over the old.

It was too early at that time to gauge the impact of restructuring on students, but signs seemed positive. The three universities covered by management agreements had committed to increase access for underrepresented student populations and to facilitate transfers by community-college students, JLARC said. “The management agreements should also make college more affordable for most students,” the authors added hopefully.

In 2011, however, higher education policy took a sharp turn with the passage of “The Virginia Higher Education Act of 2011” during the McDonnell administration. Also referred to as the “Top Jobs” act, this legislation set a new goal of awarding of 100,000 additional degrees by 2025. The shift in priorities entailed the creation of some new accountability measures and the abandonment of others.

By 2017, the grand bargain of 2005 was showing signs of breaking down. State support for higher ed was eroding, putting pressure on Virginia’s public universities to shift costs to students. Runaway tuition was making higher education increasingly unaffordable, not just for the poor but the middle class. In line with national trends, Virginia students were taking on ever heavier debt. Although a college degree was perceived as an admission ticket into the middle class, the high cost of attendance required ever greater financial sacrifices. Responding to constituent complaints, lawmakers submitted a slew of proposals to assert more state control over college tuition and governance. Higher-ed’s friends in the legislature bottled up those bills in committee, but the educational establishment was on notice — the natives were getting restless.

Since JLARC issued its two-year review in 2008, no one has taken a comprehensive look at the 2005 Restructuring Act. The commission did conduct several narrow-bore studies in 2014 that illuminated drivers of higher costs such as administrative bloat, academic productivity, spending on athletics, and cuts in state support for higher education. But no one has thought to question the premises of the 2005 Restructuring Act.

Perhaps it is time that someone asked if the law has lived up to expectation. Have colleges and universities benefited from their freedom from state controls? Have Virginia’s higher-ed institutions delivered the “state ask”?

In articles to follow, I will argue that the Act delivered on some of its promises but contributed to a bigger, over-arching problem: an affordability crisis for the middle class. Among the conclusions:

  • Accountability has been narrowed to a few metrics. Of the 12 “state ask” goals, some are impossible to quantify, and some are no longer of interest to legislators. Today, the state tracks mainly enrollment and the number of degrees awarded, along with compliance with administrative and financial standards.
  • Falling short of performance goals incurs no sanction. The State Council for Higher Education in Virginia works quietly with institutions behind the scenes to get them back on track.
  • Struggling to define “affordability,” the state did not adopt an affordability benchmark or metric until 2011, and then the Top Jobs act suspended it. Universities suffer no rebuke for increasing tuition aggressively.
  • The state does not monitor the cost drivers of tuition. Other than two JLARC reports published in 2014, the state has conducted no formal analysis on the relationship between increasing higher-ed costs and increasing tuition.

The state goals enshrined in the 2005 legislation and the metrics that flowed from them ignore cost drivers such as athletic subsidies, faculty productivity, administrative costs, building maintenance, obsolete programs, and the “Club Ed” effect on dorms, cafeterias and other student amenities.

As the old business adage goes, “You manage what you measure.” The overseers of Virginia’s higher-ed system didn’t establish cost-related metrics, so the institutions didn’t make a priority of managing them. As institutions sought to achieve other goals against a backdrop of shrinking state financial support, raising tuition & fees was the path of least resistance. The result: more students are borrowing, and they are borrowing more.

In Part II, I will discuss the benefits of the 2005 Restructuring Act to Virginia’s colleges and universities.

Sixty Percent of Slover Foundation Budget Goes Toward Administration

Paul Fraim. Photo credit: Virginian-Pilot

The Slover Literary Foundation, a tax-exempt charity set up to support Norfolk’s flagship Slover Library, plans to spend more on salaries next year than on direct aid to the library, the Virginian-Pilot reports today.

The Slover foundation will spend almost 60% of its fiscal 2018 budget on administrative costs including a $150,000 salary for former Norfolk Mayor Paul Fraim, according to figures Fraim provided the Pilot. The highest-rated charities on Charity Navigator tend to spend 10% or less on administration, the newspaper notes.

Foundation board members argue that the salary paid to the 67-year-old Fraim is worth it. The former mayor brings a vast network of relationships to the foundation and can make things happen. His skills and connections have helped bring high-profile events to the library such as a NATO panel and a “future of the Navy symposium as well as guest speakers, music, and youth programs.

Slover is one of 13 public libraries in Norfolk. The city has tried to make it a cultural destination with technology, architecture and events.

Bacon’s bottom line: Read the Pilot article on the pros and cons of paying Fraim a $150,000 salary. I can see both sides of the story. But I’m mainly interested in a different point: Whether the salary is justified or not, transparency is vital. If a charity or non-profit benefits from tax-exempt status, it owes an obligation to the public. Tax exemptions, after all, are an indirect subsidy from taxpayers.

Most charities report this data in 990 forms. But The Slover foundation did not release the data for four years. Reports Eric Hartley:

Until now, it had been difficult for donors or other outsiders to evaluate the Slover foundation’s spending. Founded in 2008 to raise money to build a downtown library, the organization did not make its finances public between 2013 and this year. Its outside accountants said it was not required to, unlike most charities, because it was a “supporting organization” to the city government.

The justification for not releasing the financial information is specious. If anything, its affiliation with the City of Norfolk means it should be held to the same Freedom of Information Act standards as Virginia government! Who could be blamed for suspecting that Fraim avoided so long releasing the information to avoid embarrassment of having it appear in the Pilot?

There’s a bigger point here: the lack of accountability of non-profit organizations generally. Nonprofits are required to basic financial information in 990 forms. But non-profits have minimal government regulatory oversight. They have no shareholders to answer to. They receive little press scrutiny. (The Pilot’s coverage of Slover is a rarity). And boards of directors are typically clubby conclaves of well-heeled members of the business and political elite who don’t want to rock the boat.

I’m reminded of a recent column by Walter Williams, an economics professor at George Mason University, who wrote of university trustees:

Every board of trustees has fiduciary responsibility for the governance of a university, shaping its broad policies. Unfortunately, most trustees are wealthy businessmen who are busy and aren’t interested in spending time on university matters. They become trustees for the prestige it brings, and as such, they are little more than yes men for the university president and provost.

The same critique extends to many government boards and nonprofit boards. There are always exceptions — in my coverage, I’ve seen a few individuals willing to ask tough questions — but they are rare. I sometimes wonder if the best way I could “give back” to the community when I retire is to convert Bacon’s Rebellion into a platform for covering governance of Virginia’s foundations, charities, universities and health systems. I’d be interested to know what readers think of the idea.