Category Archives: Governance

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.

Failing to Fix the Unfixable

Cranky (aka John Butcher) is on a tear these days, most recently exposing the Virginia Board of Education’s ineffectual effort to fix the City of Richmond’s broken school systems.

The Richmond’s schools are in turmoil. According to the state board, 27 of the city’s 44 schools are not fully accredited. The school board has booted out the district’s superintendent, who only two or three years ago had been highly touted, for reasons that remain opaque. City and state bureaucracies are moving ponderously to address the deep-rooted dysfunction. But so far, the only product of the teeth gnashing and foot dragging is a “Memorandum of Understanding,” which, in Cranky’s jaundiced eyes, “does nothing but create busy work and a ‘rough draft’ plan that is not a plan.”

Cranky proceeds to dismember the MOU like Jeffrey Dahmer rended his victims. The MOU, he suggests, is vague, redundant, intrusive, and unenforceable. Worst of all, he writes, “VBOE does not know how to fix Richmond’s broken school system. They don’t know what to tell a judge that Richmond should be made to do, so they don’t even contemplate exercising their authority to sue.”

If you want to find yourself laughing and crying at the same time, check out his post.

Business Leaders Demand WMATA Governance Reform

An alliance of Washington-region business groups is calling for a fix for the Washington Metropolitan Area Transit Authority (WMATA) that would create dedicated funding streams for the Metro rail system and a restructuring of the authority’s board.

Twenty-one chambers of commerce and employers groups outlined the proposal in a letter to the region’s political leaders, reports the Washington Post. The proposal is expected to have influence, the Post says, noting that executives with the signatory businesses are frequent campaign contributors.

WMATA has said it needs at least $500 million a year to restore to functioning condition the commuter rail transit system, which has been plagued by maintenance issues, safety incidents, and declining ridership. The letter signatories did not specify a particular funding mechanism.

“We’re not trying to get into the weeds,” said Bob Buchanan, founder of the 2030 Group, told the Post.

One commonly floated proposal is a region-wide, penny-per-dollar sales tax, but Northern Virginians have objected on the grounds that Northern Virginia would wind up paying more than Maryland and the District of Columbia combined.

Describing the Metro as in a state of “crisis,” the letter linked the creation of a dedicated revenue source toward a revision of the tri-state governing compact and a restructuring of the board. States the letter:

We reiterate our strong conviction that any reform effort must include reforms to WMATA’s governing, financial and operational structures. Reform of any one structure alone will not be sufficient. For instance, additional funding for Metro will only be beneficial if it is accompanied by structural changes that give WMATA’s board the flexibility to effectively allocate resources and staff the flexibility to leverage additional resources to make operational improvements.

Governance reforms include “right-sizing” the WMATA board and requiring directors to have expertise in specialized areas, including transit operations, management, finance and safety.

Bacon’s bottom line: WMATA is critical to the functioning of the Washington metropolitan region. After decades of short-changing maintenance, WMATA needs billions of dollars to remain a viable transportation mode. There is no avoiding the necessity for regional taxpayers to cough up more money to restore the rickety system to health. Washington-area residents have been enjoying the benefit of a heavy-rail transit system for years without paying its full cost — now it’s time to pony up. But given WMATA’s dismal history, the NoVa business leaders are absolutely right to demand reforms that will ensure that any new funds are not mis-spent or frittered away in concessions to WMATA labor unions.

Working out a compromise with Maryland and D.C. won’t be easy, but Virginia’s political leaders need to hang tough.

Virginia Needs a New Constitution, Part 2

1901 constitution flyer

by Donald J. Rippert

The Commonwealth’s Cornucopia of Constitutions. Virginia has written, scrapped and rewritten its state constitution many times. Virginia is presently operating under its seventh constitution. While that seems striking compared to the U.S. Constitution, it’s not that unusual for a state constitution. Florida and Pennsylvania have had five constitutions, South Carolina six, Georgia nine and Louisiana a whopping eleven different constitutions. Of the original 13 colonies only Massachusetts has yet to perform a constitutional rewrite.

The Spirit of ’76. Virginia’s first constitution was written in 1776. George Mason and James Madison are seen as primary authors. After the obligatory heckling of King George III the constitution got down to the basics of defining the state government – bicameral legislature, governor and so on. The accompanying Virginia Declaration of Rights was a strong point of this first constitution. That document would effectively become the predecessor to the U.S. Bill of Rights. Unfortunately, elitism has been a constant companion to Virginia politics and this constitution was no exception. Voting was reserved for owners of substantial property and men of wealth. The landowners of Southeastern Virginia would be in control of the state.

East vs West – 1830. By the 1820s Virginia was (predictably) one of only two states that restricted voting to landowners. The state constitutional convention of 1829 to 1830 tried to address this distorted concentration of power in the landed gentry. Suffrage requirements were reduced but not enough to address the concerns of the small farmers in the western parts of the state. Virginia kicked the can down the road.

The Reform Constitution, 1851. As the population of western Virginia continued to grow, the Richmond-to-Norfolk “corridor of evil” vainly tried to maintain control of the state through voting rights that required substantial property ownership and a bizarre county-based representation system. Talk from the west of abolishing slavery and / or secession from the state forced the eastern elites to change. The new constitution gave the vote to all white men of voting age and called for election of the governor, the lieutenant governor and all judges by popular vote.

Wartime Constitution, 1864. After years of political abuse by Virginia’s southeastern elite, a number of the counties in the western and northern part of the state decided they would not follow the Richmond-centric rebels into what can only be called an apocalyptic Civil War. The Constitution of 1864 could effectively be called the first state constitution for West Virginia. What remained of Virginia was too busy marching toward utter destruction and unconditional surrender to bother with constitutional niceties.

The Carpetbagger Constitution, 1870. The provisions of The South’s surrender included military occupation of states like Virginia. Given that slavery had been abolished the military commander of Virginia called for a constitutional convention to memorialize America’s new reality. However, the Richmond-based elite would have none of it. Many of the white conservative Virginians who developed the bright idea of a failed secession from the United States now refused to vote for delegates to the constitutional convention. This led the way for a Republican led convention headed by John C. Underwood. In what should come as a surprise to nobody, the “elite free” convention wrote one of Virginia’s best constitutions. The new constitution granted suffrage to all males over 21, established a public school system with mandatory funding and ended the disenfranchisement of former Confederate government members.

The Empire Strikes Back, 1902. Virginia’s short period of competent government was ended as the Democratic Party retook the state legislature. The usual band of elitists called for another constitution to be written. It was a doozy. Poll taxes and literacy tests were included to effectively remove African Americans from the voting booth. Segregation became the law of the land. Power was aggrandized in Richmond with the elimination of the county court system. The State Corporation Commission gave added weight to the centralized government. Since African Americans still could vote based on the 1870 Constitution The Imperial Clown Show in Richmond decided to pass this abomination without a popular vote. This was both Virginia’s worst constitution and its longest-lived.

Do we have to? 1971. While Virginia’s political elite moved smoothly from poll taxes to literacy tests to segregation to massive resistance, the rest of the country progressed. Mounting federal pressure in the form of U.S. Supreme Court decisions like Brown v. Board of Education and legislation like the Voting Rights Act of 1965 made it harder and harder for Virginia’s elite to persecute a large percentage of Virginia’s population. A new constitution was needed. The most heinous racist provisions of the 1901 Constitution were removed and Governor Mills Goodwin managed to convince the delegates to drop the “pay go” policy that had infected prior constitutions. However, the aggrandizement of power in Richmond generally and the General Assembly in particular remained.

The history of Virginia’s constitutions has been the story of a small elite eschewing true democracy in a sad effort to keep the lives of many under the thumbs of a few. To date, progress in Virginia has only come from the barrel of a gun (1870) or the threat of federal action (1971). The present state constitution continues to thwart democracy albeit more subtly than was the case with the 1902 travesty.

In the next section of this series the many flaws of Virginia’s existing constitution will be examined.

Ralph Northam’s Plan to Empower Virginia’s Political Class


Under pressure from his rival for accepting money from Dominion, Democratic Party candidate for governor Ralph Northam has called for a cap on campaign donations and a ban on corporate contributions.

“Virginia’s campaign finance system is a boondoggle that alienates its citizens and makes them lose faith in government,” Northam said in a statement. “Virginians across every part of the political spectrum want a system that is more responsive to the people, and less reliant on big checks from a few donors.”

Reports the Washington Post:

Northam’s plan would limit donations to $10,000 (with political parties excluded), bar businesses and corporations from giving and require nonprofits trying to influence Virginia elections to reveal their donors.

Hmmm. Interesting plan. Let’s see how it would work out in the 2017 gubernatorial race.

Based on campaign contributions reported so far on the Virginia Public Access Project website, the $10,000 cap on donations would hurt Northam but cripple his opponent Tom Perriello. Northam would lose $832,000 from the capped donations while his radical chic opponent, reliant upon a handful of well-heeled donors, would lose $1,243,000. The ban on business contributions would harm Northam to the tune of $220,000 while not touching Perriello at all — not one business entity was reported to have contributed to him — but the sums of money contributed by business are trivial compared to those donated by individuals. (For purposes of this analysis, I counted only business donations of $1,000 or more.)

If Northam’s plan had been enacted in this election cycle, it would have effectively knee-capped his opponent for the Democratic Party nomination. As the party-establishment candidate, Northam would have surged from a two-to-one fund-raising advantage over Perriello to a more than four-to-one advantage.

Of course, if Northam’s campaign-finance plan were enacted, it would apply to future elections, not this one, so no one can accuse him of designing it with the idea of taking out Perriello. But the numbers show how campaign reform proposals potentially can have an anti-democratic effect. Personally, I have no use for Perriello or his leftist brand of populism. I believe that Perriello would be a disaster as governor. But I do believe he injects a healthy competition into the democratic process.

Virginia’s political process is dominated by a two-party oligarchy which has erected all manner of rules to maintain the status quo. Northam’s plan would stifle the democratic impulse even more by making it even more difficult for outsider candidates to make a credible run at office.

Yeah, Virginia’s system of unlimited campaign contributions sucks. It gives rich people far more influence over the electoral outcome than ordinary Virginians. But is the alternative any better — bequeathing the advantage to those who rise up through the political machinery of the two-party duopoly and freezing out outsiders? The only way a third party — a Libertarian Party or a Green Party — stands a chance to make a successful run in Virginia is if an insurgent can persuade a handful of deep-pocketed sponsors to underwrite his or her campaign.

You can count on the two-party duopolists re-writing campaign donation laws to benefit themselves and squelch competitors. Northam proposes to outlaw business contributions. Why would he not also outlaw labor union contributions? Because labor unions donate overwhelmingly to Democrats — duh! It’s an iron rule of politics: People in power rig the rules to perpetuate their hold on power.

How about donations cycled through “leadership” committees? Northam would specifically exclude political parties from his caps and bans. As it turns out, he has received $110,000 from Common Good VA, a “leadership” committee set up by Northam’s political ally Governor Terry McAuliffe. Since 2014, the committee has raised $8.6 million in donations. Under Northam’s plan, contributions by Common Good VA to candidates would be exempted from the ban. Less clear from his press release is whether big donors would be permitted to contribute more than $10,000 leadership committees like Common Good VA and similar entities on the Republican side.

Northam’s plan does include a couple of good ideas. It would ban the personal use of campaign funds, and it would mandate donor disclosure for nonprofits seeking to influence Virginia elections. But the main effect of his proposals would not be to rid money from politics, but to fortify the control of Virginia’s political class over the money and suppress insurgent candidates. I don’t know anyone who thinks that’s a good idea but members of the political class.

GMU Should Cough up Terms of Charles Koch Donations

Charles Koch. Yeah, he's a bogey man for the left. Even so, the public has a legitimate interest in knowing what strings he ties to his donations to GMU.

Charles Koch. Yeah, he’s loathed by left. Even so, the public has a legitimate interest in knowing what strings he ties to his donations to GMU. Image credit: Huffington Post.

Unlike my friends of a leftish persuasion, I don’t have a problem with Charles and David Koch. I largely agree with their libertarian political philosophy. In a nation awash in foundations that underwrite liberal and progressive causes on college campuses, I am happy to see at least one organization backing free-market/limited government principles. In particular, I’m a big fan of the Koch-supported Mercatus Center at George Mason University, whose scholars I quote frequently in this blog. Without the Koch brothers, academia would be even less diverse intellectually than it already is.

But my personal affinity for the Koch brothers does not alter my opinion that any dealings they have with public Virginia universities should be fully transparent. Therefore, I am inclined to endorse a lawsuit filed by Transparent GMU, a student group with legal backing from the liberal-left Appalachian Mountain Advocates, against GMU. The purpose of the lawsuit is to compel GMU, under the Freedom of Information Act, to release records about donor agreements between the Kochs and the university.

The Charles Koch Foundation has donated $48 million to GMU between 2011 and 2014. Charles Koch himself serves on the board of the Mercatus Center. It is a legitimate matter of public inquiry to know what strings might be attached to Koch’s donations. Of course, the same holds true not just with Koch but any and all mega-donors to the university, including industrialists pursuing business interests and philanthropists backing liberal and progressive causes.

GMU officials argue otherwise, according to Fourth Estate, GMU’s student-run news outlet.

“Philanthropy is a critical aspect of George Mason’s success, especially in a time when public universities are receiving fewer funds from the Commonwealth,” GMU spokesman Michael Sandler told the publication by email. “We are grateful to the thousands of donors who give to Mason for a variety of reasons. Some of these donors wish to make their gifts public. Some wish to remain anonymous, which is their right and something the university and the Foundation have a responsibility to respect.”

Privacy is a serious matter worthy of debate. But that wasn’t the logic given in GMU’s response to Transparent GMU’s FOIA request.

In a Jan. 9, 2017, FOIA filing, Transparent GMU sought any records, including grants, cooperative agreements, gift agreements, contracts or memoranda of understanding, related to to contributions that Koch-related entities made to the university. On Jan. 12, Elizabeth Woodley, FOIA compliance officer, replied that GMU was not in possession of such records.

Transparent GMU then asked if the George Mason University Foundation would provide the records. GMU refused to turn over any foundation records on the grounds that it was a separate, private, 401(c)3 charitable organization not subject to FOIA. Citing a fee it enacts on gifts its accepts on GMU’s behalf and its close working relationship with the GMU administration, the lawsuit argues that the foundation is a “component unit” of the university.

The lawsuit is much bigger than GMU and the Koch brothers. Conservatives and libertarians might be inclined for reasons of partisanship to side with GMU in this instance in order to shield Charles Koch and the Mercatus Center from scrutiny. That would be short-sighted, in my view. If there are terms and conditions, then Koch and Mercatus should be willing to defend them.

The internal workings of public research are a black box. GMU alone has dozens of centers and institutes. Last year, I blogged extensively about inadequate oversight of GMU’s Institute for Global Environment and Society, some of whose principals engaged in double dipping. More recently, I have tried to probe the link between the pursuit of research dollars and higher tuition at public Virginia universities generally. We need to crack open university finances. We need to understand the forces at work influencing the affordability and academic integrity of higher ed. Conservatives and libertarians have much more to gain than lose from a court ruling subjecting donor agreements to the reach of FOIA.

Probing the Political Economy of Higher Ed

The political economy of higher ed.

UVa President Teresa Sullivan addresses the Faculty Senate in 2012. In this case, faculty and administration united to buck control by the Board of Visitors.

Growing administrative overhead is a major force driving up the cost of higher education. While there is no simple, uni-causal explanation for bureaucratic bloat, George Mason University law professors Todd Zywicki and Christopher Koopman observe that growing higher-ed bureaucracy coincides with a long-brewing power shift in academe from faculties to administrators.

“Of particular concern and importance appears to be the relationship between the faculty and administration that has, in many ways, created a permissive culture in which administrative bloat has been allowed to thrive,” they write in a new paper, “The Changing of the Guard: The Political Economy of Administrative Bloat in American Higher Education.” “The faculty is either unwilling or unable to take on the growing administrative bureaucracies.”

Zywicki and Koopman identify other forces at work as well. One contributor to bloat is the pressure to provide students with more luxurious accommodations — the so-called “Club Ed” phenomenon — and the increasing subsidies in the form of federal loans and grants to students to pay for it all. But the overarching theme in their paper is a shift in internal power from faculties to administrators.

“The faculty essentially ran universities for their own personal benefit, adopting policies that benefited the faculty and which they rationalized as being good for the university as a whole,” the authors write. “Faculty salaries and perquisites increased, teaching loads decreased, and faculty increasingly asserted control over many of the core functions of the university.”

In recent years, however, the balance of power has tipped to administrators who have captured the unprecedented flow of tuition revenue (financed by federal loans and grants) and lush endowments to pursue their agenda of expanding bureaucratic fiefdoms and enhancing institutional prestige.

Universities have plowed more resources into administrative hires and compensation than into faculty. Between 1980 and 2009, spending per student increased 61.2% for administration while spending on instruction increased 39.3%. Universities now have more full-time employees devoted to administration than to instruction, research and service combined. It takes 39% more full-time administrators to manage the same number of students than it did in 1993.

As administrators have taken the lion’s share of resources, so have they abrogated power, say Zywicki and Koopman. “Today the faculty has little or no input or control over student admissions, a task that has been completely delegated to bureaucratic specialists.”

Decisions with respect to hiring and promotion are increasingly hemmed by a raft of guidances and limits imposed by administrators, such as diversity mandates and the like. Perhaps most astonishingly, core policies regarding academic freedom for students and professors — such as the existence and terms of a university speech code — have increasingly been ceded to student life offices and other non-academic university administrators. Administrators have also unilaterally imposed student and faculty disciplinary procedures for certain controversial topics such as allegations of sexual assault, routinely overriding faculty objections. Thus, not only do university bureaucrats consume an increase amount of university resources, they also have gathered an increasing amount of power and decision-making authority.

What is driving the power shift? One explanation is increasing federal regulation and ever-expanding requests for information by state and institutional governing boards. Whenever federal legislation on higher education is enacted, Zywicki and Koopman say, the government establishes a new office to administer the law. Subsequently a “clone” of that office appears on most major university campuses.

Faculty members have largely acquiesced to the growing bureaucracy. One possible reason, the duo says, is that they have benefited from the outsourcing of traditional duties, such as advising students, to academic administrators.

The prototypical professor … has three related objectives: job security, freedom to spend his time on activities he prefers, and maximization of professional reputation and income. The prototypical administrator seeks to keep his job, build his reputation, and to free his own time for outside income opportunities. Further, the administrator also shares the goal common to all managers, such as the desire for status and power manifested in a large office and support staff.

Thus, senior professors devote more time to their own research and writing while sloughing off teaching and other duties to instructors, graduate students and others. Administrators are happy to take up the slack, expanding their spheres of responsibility.

The two GMU profs have no concrete recommendations to reverse administrative bloat, although they suggest that the non-profit structure of public universities is part of the problem. Under a for-profit model of higher ed, they suggest, equity holders would focus on efficiency. “In such a governance system, a runaway growth in administration is unlikely as it reduces the bottom line profit. … A for-profit ownership and governance model could better align the incentives of owner, managers and students in a way that the current structure does not.”

Bacon’s bottom line: Privatization is an interesting idea, although I think it demands closer scrutiny. The track record of for-profit education in an era of indiscriminate federal student loans has been less than glorious. And, unless privatization is handled properly, university administrators will control the process and enrich themselves. Think Russia, Yeltsin, privatization and oligarchs.

More rewarding for our purposes here at Bacon’s Rebellion, Zywicki and Koopman provide a useful framework for understanding public colleges and universities in Virginia. In all my scribblings on the topic of higher ed, I had never paid close attention to the “political economy” inside public universities, much less the balance of power between faculties and administrators. I had more or less assumed that the interests of the two groups were aligned in protecting university prerogatives against tuition-paying parents, soundbite-spewing legislators and other pitchfork-wielding Philistines who would claw back tuition, fees and state support. But I now appreciate that there might be an ongoing struggle between faculty and administrators over the spoils. I will be more attentive to this dynamic in my future coverage of Virginia colleges and universities.