Bacon's Rebellion

Democracy Thrives in Sunlight

Is Anyone Prepared to Tame UVa’s Bureaucracy?

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James A. Bacon
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by James A. Bacon

Governor Bob McDonnell has delivered an ultimatum to the University of Virginia Board of Visitors: Get the Teresa Sullivan mess straightened out by Tuesday or he will replace the entire board. The governor, who long seemed disengaged from the controversy stemming from the forced resignation of the UVa president, now has taken ownership of it.

Given the fluidity of the situation, it’s impossible to know what outcome to expect. Will Sullivan be reappointed as president? Will Helen Dragas step down as rector? However the brouhaha is resolved at a personnel level, the fundamental issues at root of the controversy will remain.

Dragas may have mishandled procedural and public-relations aspects of the resignation in explaining her reasons for seeking Sullivan’s ouster, but she has provided the most incisive commentary yet seen on the threats facing the university. In a statement issued last week, she outlined ten main challenges, including the decline in state and federal support, the onrush of online learning, a deteriorating faculty-student ratio, declining faculty compensation compared to peer institutions, declining research rankings, drifting fund raising engagement, insufficient accountability for academic quality and productivity and a need to reallocate resources. This is meaty stuff. Anyone who dismisses Dragas as a politically appointed dilettante needs to read the statement.

The underlying problem is that UVa, like other public universities, is trying to do too much. Even as government support has declined over the years, the university has increased its ambitions. Yet the system continually added more of its resources to administration rather than the areas of greatest concern.

Peruse the April 2002 “Virginia 2020 Priorities Report to the Board of Visitors,” which provides an overview of the strategic plan put into place a decade ago under Sullivan’s predecessor, John Casteen. Priorities included beefing up the fine and performing arts, building science and technology programs, extending the international reach of student and faculty programs, pumping up public service and outreach, improving the quality of student life and providing more generous financial support to graduate students.

To achieve those goals, the university needed more money. The gap between the university’s lofty ambitions and the means to achieve them reached a crisis point on Sullivan’s watch. Recession-battered alumni were not giving as much, the public was revolting against higher tuition and fees, and state government was cutting its commitment to higher education. The obvious alternative to raising more money — cutting expenses — does not appear to have stimulated much serious discussion. The notion of boosting faculty productivity and/or reducing administrative overhead simply are not a part of the academic thought process. Antipathy to “corporate-style restructuring” runs deep in the academic culture.

Yet UVA clearly needs to re-think priorities. Let’s look at the numbers, starting with the 2002/03 academic year (when the UVa annual president’s report began publishing functional data in a format that can be compared with all subsequent years) and ending with 2011/12 (the most recent year for which data is available).

Declining productivity. Full-time-equivalent (FTE) student enrollment increased 5.4% over that nine-year period. Yet the number of FTE employees increased 8.5%. That is all the more remarkable, considering that Dragas has bemoaned a declining faculty-student ratio. The numbers imply an increase in administrative overhead, expansion in non-core activities, an erosion in faculty productivity or a combination of all three.

Rising compensation. While university leaders insist that the relative compensation of UVa faculty compared to peers is falling, that’s not for a lack of pay raises at UVa. In the 2002/03 year, the average compensation per FTE was $73,300. By the 2010/11 year, average compensation had increased to $101,700. Compare that to inflation and the increase in average U.S. wages:

UVa compensation per FTE: +38.7%
National average wage: +25.3%
Consumer Price Index (2002-2010): 21.2%

(Note: Compensation includes wages plus benefits, so the numbers are not exactly comparable. However, comparing percentage increases suggest that the upward momentum for UVa compensation greatly exceeded that for average U.S. wages over the past decade.)

Administrative bloat. Sullivan has decried the fact that UVa faculty are subject to raids from other universities that can afford to pay them more. In her recent missive, Dragas noted a decline of UVa faculty compensation from 26th to 36th since 2005 among Association of American University peers. The implication is that the university is starved of resources. Is it? Or is the problem that the resources are poorly distributed? Consider the expense data below, which show expenditure increases over a nine-year period. Read more.

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  1. reed fawell Avatar
    reed fawell

    “After I had read over the list of persons elected into the (Virginia General Assembly, and the UVA Board of Visitors and Heads of Faculty,) nothing which they afterwards did could appear astonishing. Among them, indeed, I saw some of known rank: some of shining talents, but of any practical experience in the state, not one man was to be found. The best were only men of theory. But whatever the distinguished few may have been, it is the substance and mass of the body which constitutes its character, and must finally determine its direction. In all bodies, those who will lead, must also, in considerable degree, follow. They must conform conform their propositions to the taste, talent, and disposition, of those they wish to conduct: therefore, if an assembly is viciously or feebly composed in a very great part of it, nothing but such a supreme degree of virtue as very rarely appears in the world, and for that reason cannot enter in calculation, will prevent the men of talent disseminated thought it from becoming only the expert instruments of absurd projects! If, what is the more likely event, instead, instead of that unusual degree of virtue, they should be actuated by sinister ambition, and a lust for meretricious glory, then the feeble part of the assembly, to whom at first they will conform, becomes in its term term the dupe and instrument of their designs. In this political traffic, the leaders will be be obliged to bow to the ignorance of their followers, and the followers to become subservient to the worst designs of their leaders.” Thus spoke Edmond Burke On The Revolution in France, after he had earlier pointed out that “A State ( University) without the means of some change is without the means of its conservation.”

    Edmond Burke’s first insight suggests that at the moment the key to putting in place the means to overcome the long term challenges confronting the UVA rests in the hands of the Governor. Some politicians might consider this akin to dancing with The Tar Baby. This would be wrong. On one thing Edmond Burke and Mr. Jefferson would surely agree: taking bold action to keep the University of Virginia a great university is the greatest legacy any Virginia Governor could leave his Commonwealth. Indeed Jefferson, a former President and founder of a nation, considered it his greatest legacy.

    Regarding Burke’s second observation. In most matters concerning The University, its wise to want done what Thom. Jefferson would have done. Hence, a person or group who’d drop the Classics Department from his University is not fit to govern it. However, given that Mr. Jefferson was forced to sell his Library to pay off his otherwise insurmountable debts, I’d lean toward Edmond Burke in matters of fiscal prudence if “some change” is necessary to conserve Mr. Jefferson’s University. To do otherwise is no better than tossing out a great university’s Classics Department.

  2. DJRippert Avatar
    DJRippert

    Best piece on the Sullivan Affair I’ve read (and I’ve read perhaps one hundred).

    My only quibble would be your contention that Bob McDonnell has taken ownership of the problem. He has not. Taking ownership of the problem would require that Governor Bob and the other members of The Imperial Clown Show in Richmond either answer the very legitimate questions raised in your article or demand that their board answer those questions.

    Simply demanding that the board “do something” about Terry Sullivan’s employment status is a far and faint cry from actually addressing the problems which seem to be brewing at UVA.

    1. James A. Bacon Avatar
      James A. Bacon

      Regarding McDonnell taking ownership of the problem… fair enough. He hasn’t. The Board will be hard-pressed to know how to proceed without knowing McDonnell’s sentiments on the matter. After all, he will face the decision very shortly on whether or not to keep Dragas or replace her. How can Dragas hang tough without knowing whether or not she has the confidence of the governor?

  3. emdlc Avatar
    emdlc

    Although you lack the factual inaccuracies of the WSJ op-ed, basing your argument on statistics from 2002/3 to 2011/2 covers 9 years of which Sullivan presided over only two (22%). Why not provide only the data for the two years presided?

    I do agree that your point is that the University needs to address these issues but you would hope that the BOV, with many of the same members, was addressing these concerns with Sullivan’s hiring, otherwise why is their foresight more trustworthy.

    It is disingenuous for you to mix a primarily Casteen record with the Sullivan record, and parse out certain comments to make it seem she has refused to reduce costs. Often large organizations must curb spending before it can reduce it, or do you support recklessness (not like a Univesity can file for bunkruptcy).

    Also, cutting costs in isolation is a simpleton approach to solving financial issues. Just as in business, you cannot diminish your value as an organization with cuts, hoping your revenue will increase by luck.

    A school must maintain and possibly enrich, its faculty, student body, research, facilities and programs in order to give donors and politicians a reason to increase funding. Otherwise, you have conceded to becoming a smaller and smaller University.

    This is a tough problem, as you suggest, and one that Dragas defined in her letter (which tenets seem to come from Sullivan) but does not elude to any solutions.

    1. James A. Bacon Avatar
      James A. Bacon

      emdlc, While I noted that the crisis came to a boil under Sullivan, I made it very clear that the strategic plan she inherited originated with Casteen. No reasonable person would blame Sullivan for the predicament UVa now faces. But that’s not the issue. The question facing the BoV was what was Sullivan willing to do about it. I have seen nothing in any of her public utterances that she recognizes the problem of administrative bloat at UVa or the decline in productivity (as measured by the ratio of faculty and staff to students).

      You are quite correct that the president should not whack away indiscriminately at the cost structure. But I don’t see anyone doing any whacking at all. I don’t even see anyone doing any judicious pruning.

      1. emdlc Avatar
        emdlc

        I don’t have numbers either way, but Sullivan has claimed she has already started to address this, agreeing with your stance on administrative overhead needing reduction. From her first response after resignation (http://washington.cbslocal.com/2012/06/18/ex-uva-president-teresa-sullivan-full-statement-on-resignation/):

        “The academic mission is central and must be protected. Strategic cutting and large-scale cost savings have therefore been concentrated in non-academic areas, and these areas have become notably leaner and more efficient.”

        I’m assuming that she has a way to support this claim along with her “new internal financial model”. For two years, unless she’s flat out lying, I think she’s done as much as you can expect. Give her at least 5 years to see if it has merit.

  4. Peter Galuszka Avatar
    Peter Galuszka

    Sorry but it is NOT the best piece I have read on Sullivan.
    You raise all of these questions such as declining state funding, ect, etc. etc. That has been going on for years. Why cashier Sullivan when she just got there? Why is this suddenly Sullivan’s fault?
    The Post noted that the North Carolina public system spends a lot more per capita on their students that cheap-o Virginia does. Yet you keep saying it’s all overspending here.
    Five bucks says Sullivan stays. If you don’t take this bet I am going to tell everyone on this blog you are a Euroweenie.

    1. DJRippert Avatar
      DJRippert

      I say it is the best piece on the Sullivan Affair because it properly separates the handling of Ms Sullivan from the underlying issues.

      Unlike our elected representatives in the state legislature and governor’s mansion, Jim Bacon gets to the nub of the issue – money.

      Now, in fairness, an even better article would take into consideration the declining level of funding provided by The Imperial Clown Show in Richmond and the relativel levels of funding provided by various states vs the level provided by Richmond.

  5. James A. Bacon Avatar
    James A. Bacon

    Peter, Your comment totally ignores the main thrust of the piece (a) the increase in the employee/staff-to-student ratio and (b) the bloat in administrative overhead.

    You may be right about Sullivan staying. If she does, hopefully, she’ll have a keener appreciation of the BoV’s concerns and will be willing to act a little more aggressively and a little less incrementally.

  6. reed fawell Avatar
    reed fawell

    I believe Mr. Bacon raises many very interesting points. One of those points has to do with public disclosure and accounting.

    Perhaps, for far too long, the University has been operated as a private preserve by a highly select group of leaders who, no matter how well-intentioned, have been allowed, indeed encouraged, to operate behind a screen of secrecy. If so, such a culture, quite understandably, has led to our current mess. That is: how Ms. Sullivan came to resign, and how the financial threats that confront the University were allowed to accumulate without public disclosure until Ms. Dragas’s bold statement.

    Secrecy has no legitimate roll when leaders are tasked to protect and enhance a treasured and critically important public asset, a great university whose mission is to educate citizens using monies paid In Trust. And to insure that Monies paid by students and all Virginia’s taxpayers, and the billions of dollars entrusted to the University by tens of thousands of Alumni and other donors living and dead, are husbanded and spent to absolutely best advantage in accomplishing UVAs mission.

    Surely this is not a place where leaders should collect, spend, and otherwise divvy up other peoples’ money, or exercise the unchecked power that does so, behind closed doors. Those paying money into the University can deal with Truth. Indeed they have a right to demand the truth, all on a regular and timely basis. It concerns the health of their University, and means being taken to assure it. Why not? To do otherwise insures trouble. Secrecy over time cannot fail to waste a grand Public Asset, whether through corruption, sloth, incompetence, political favor, pet projects, or the entrenched power of a whole variety of special interests.

    Perhaps I overstate the problem. But if so, then why did it take Ms. Dragas’ dramatic statement to bring all these issues into the light of day, and get all this attention? There’s been a systemic problem somewhere. And, surely the standards and methods of disclosure and reporting for UVA should substantially exceed that of a publicly traded stockholder company. If they don’t, they should be fixed. Nothing should be allowed to be pushed under the rug for so long and so regularly as apparently has happened over the past decade at UVA. As often the case, in a way, everyone is to blame, I suspect.

    But, whatever else went wrong, Ms. Dragas’ Statement, if true, is an act of high public service. Those who disagree should show where her statement is in error. Then, absent error, they should move off the blame game, and get about the task of fixing the problems she has raised.

    1. James A. Bacon Avatar
      James A. Bacon

      I suspect that just as Sullivan was not inclined to rock the boat, the BoV was not inclined to make waves for a very long time. I imagine that the atmosphere was all very genteel. Everyone was very polite and deferential to one another. As a point of comparison, the board members on the Commonwealth Transportation Board are a very collegial group — and not very aggressive in their questioning. Most are inclined to go along to get along. It’s precisely that genteel attitude, I would surmise, that allowed the situation to fester for so long at UVa.

      1. DJRippert Avatar
        DJRippert

        Jim:

        Can you name any appointed board in Virginia that is not a genteel good old boys’ club?

        Can you name any appointed board in Virginia that takes the issues confronting the organization it supports and exposes those issues to the light of day?

        There is a reason that Virginia gets an “F” for transparency and that reason is the Imperial Clown Show in Richmond. There is no transparency because the clowns we elect don’t want transparency. Of course, watching Dave Albo on video telling an “unfunny”, boring and ribald joke during last winter’s General Assembly might explain why the Clown Show eschews transparency.

        1. James A. Bacon Avatar
          James A. Bacon

          From my limited experience, people serving on public boards and commissions in Virginia shy away from conflict. No one wants to be unpleasant. All very mannerly and gentlemanly. But the tough questions don’t get asked. No one digs very deep, and people will accept B.S. answers at face value. I have no experience with boards outside of Virginia, so I can’t say if that’s a “Virginia” trait, a “Southern” trait or if it’s widespread. But it’s got to change.

  7. reed fawell Avatar
    reed fawell

    Yes, Mr. Bacon, I suspect the genteel atmosphere contributed much to the BoV turning away from growing problems. Such an atmosphere also allows those with special interests to successfully push their agendas, without opposition. Here perhaps is where the Governor can make his greatest contribution. Namely, by putting on the Board highly effective people with track records of performance who can change the Boards’ culture, and creatively confront problems by effectively working with Dr Sullivan assuming she’s reinstated. The biggest fault I find with current board is their inability to deal openly and effectively with Dr. Sullivan. Perhaps the genteel culture you suggest prevented that: hence too Dragas’ dominate personality was not sufficiently checked. So she took the unfortunate indeed tragic route that she did.

    I also agree with emdlc’ comment about cost cutting. It’s got to done in tandem with new and creative restructuring so that 2 minus 1 equals 4. That requires great leadership. And its what UVA needs. Just need to get the right combination of people to work to Sullivan or whoever is Pres, I think.

  8. larryg Avatar
    larryg

    I thought Jim’s piece was quite excellent and really enabled others to get further down the road on their thoughts.

    At the end of the day, though, I do not see how UVA is unique with regard to these (very legitimate) issues. I still think Dragas is a klutz. How many of the Dragas “10” challenges were articulated/agreed to by Sullivan when hired?

    Would the Dragas imperative now translate into a de-facto “this is what you must accomplish” as a candidate to lead UVA?

    See this is not about what Dragas thinks the challenges are. It’s not about her. It’s if the BOV strongly espouses the Dragas Imperative – publically AND they send a strong message BEFORE they hire leaders that these ARE the marching orders.

    See Jim sez that it’s really not about Sullivan..that she kinds got “caught up” in all of this AFTER she was hired.

    To which I would gently chide – WTF?

    One thing is also for sure. No matter what the costs and funding are or why – you must live within your means. You MUST make the financial choices. There is a budget for that. I doubt seriously that it’s “Sullivans’” budget alone.

    So they hired Sullivan who was not what they really should have hired so now she’s gotta go because they made a mistake in vetting ?

    lord.lord.

  9. reed fawell Avatar
    reed fawell

    James Bacon’s brief expense analysis, however brief, is devastating. UVA seems to have wandered away from its core mission of educating citizens. Indeed, based on how its been spending its money over the past decade, its been draining money away from the faculty’s need for competitive compensation and the modern tools and organizational structures they need to best disseminate their knowledge, in order to pursue far less relevant needs (some of which indeed may be rather frivolous). If so, the faculty has reason to complain but have been firing at the wrong target.

    In any event this proves the need for rigorous public disclosure. It allows people like James Bacon to poke into the numbers and ask serious questions that otherwise might remain under the rug for fear of the US News and World Report, or someone losing their pork barrel project paid for at student, public and/or Donor expense.

  10. larryg Avatar
    larryg

    “James Bacon’s brief expense analysis, however brief, is devastating…”.

    Yes. I AGREE with much if not most of his points (and Dragas also) BUT how did this all come to fall on Sullivan?

    Most of these things outlined not only are probably true but they’ve been a while in building and it appears that the BOV …knowing this… hired her ..without these things being her specific marching orders – a boni fide condition of employment.

    If at the “firing”, it was stated that Sullivan knew the game when she was hired and failed to perform… that puts Dragas in a whole different light ESPECIALLY is she had significant public support from her fellow BOV.

    So we have all these things that need to be addressed and Sullivan is the sacrificial lamb…. so sorry….

    come on guys – this sounds convoluted as heck…

  11. stan maupin Avatar
    stan maupin

    Come on Jim, Kind of a lazy analysis of the bloat don’t you think?
    First, you made a mistake. You need to take $100m out of research to make it add up correctly. But, more importantly, you make a mistake that plagues many business people. You mix %’s and dollar amounts.
    Using your definitions, the total increase in bloat is a high percentage. However, the total dollar amount of that increase in overhead is only $60m. The major part of the dollar increase in costs is from patient services and auxiliary services ($545m) that are used to generate revenue that offset the costs and your core categories ($145m). The total of these two groups accounts for 80% of all increased costs.
    “Bloat” on the other hand, accounts for $60m of increased costs (7%).
    So, if you assume that inflation plus the increase in number of students accounts for 50% of the growth in overhead, you would be able to increase spending on your core categories a whopping 3.5%.
    As Dragas has learned, it is sometimes a good idea to ask someone who is in a position to know before making sweeping conclusions based on a cursory review of the data.

    1. James A. Bacon Avatar
      James A. Bacon

      Stan, Please explain: “You need to take $100m out of research to make it add up correctly.”

      If I made a mistake, I’ll own up to it. But I don’t understand what you’re talking about. The numbers look correct to me.

  12. reed fawell Avatar
    reed fawell

    In reply to larryg, I agree. I suggested last week that Dr. Sullivan be reinstated. Here’s why.

    Surely the BoV, using Due Process, has the power to formulate then establish a Strategic Plan for the University. The President then has the obligation to implement that Plan. If the President should fail or refuse to implement it, the BoV then has a right to replace her with someone who will.

    The problem here is that the Board did not make its case that this is what happened. Indeed, they left themselves wide open to charges of subterfuge, deception and basic unfairness. Such charges may be true or false, but to my mind they remain extant. Hence the Board’s action will not get my vote on removal. Thus, too, the board has failed to meet a critical test of effective leadership of a public University. This puts in question its competence to effectively lead UVA. The tragedy here is two fold. Quite possibly, the BoVs failure could easily have been avoided. And, when finally the Board “came clean” with its 10 points of concern, I largely agreed that their concerns.

    So based on what little I know, I agree with Ms. Dragas’s Statement of the Substantive Problems confronting the University. But, to this day, Dr. Sullivan has provided far the better case concerning her right to due process and the boards failure to provide it to her and to the University generally. And her case fatally weakened the Boards authority.

    Why is this so? In a nutshell. Dr. Sullivan’s Public Statement started off: When Hired as President, I was told not to involve myself in Strategic Planning. (i.e. Strategic Planning was not in my job description.) At the conclusion of her Statement, she said: I am not a mind reader. If the board has concerns, they need to express them to me. If she was not hired to propose a strategic Plan, and if indeed the Board did not ask her to draw up (much less implement such a plan) based on the Boards input, how then can she be summarily fired (which in fact she appears to have been).

    I make the last claim based on what little I know or can reasonable suspect on the basis of it. Namely: The Rector engaged for many months on the ouster of the President without the full participation (indeed without even the knowledge) of all board members, much less a full discussion and vote before a duly assembled Board. Yet, at the same time the Rector involved numerous people outside the Board in the decision making process, including the means of removing her, and replacing her. In addition, the complaints lodged against her are for failure to perform duties outside of her job description, and indeed for which she was not given the power, much less the opportunity, to perform. Nor was she given the opportunity to state her case before she was ineffectively removed under threat firing. Indeed, it appears she was “Set Up for the Fall” by the Rector’s May request for her thoughts on Strategic Challenges confronting the University. A Documents somehow leaked to the public as part of the Terminating Process. Of course, all of this was compounded by other factors the Board brought onto itself, such as 1/ its initial explanation that came across as arrogant, sophomoric, and shallow, 2/ its enlisting a Student Representative to the Board as a “Human Shield” while the Board Members “went into Hiding,” 3/ its misusing two trusted hires and aides of the President in effort to establish their authority instead of earning their authority by effective conduct fitting for their position and obligation. In short an outsider is left with impression that the BoV refused to work cooperatively with (and effectively establish their authority over) over Dr. Sullivan, but instead worked to covertly undermine her, without cause.

    These comments are tough. But these were my, an outsiders impressions, watching events unfold. The UVA community reacted exactly as one would expect. Talk about a Pubic Relationship Nightmare! The BoV has only itself to blame.

    The last tragedy will be if the Boards Latest Statement (the one so long overdue) gets lost in the outrage and political maneuvering now going on to bury it. Because in the end, I believe Ms. Dragas is right. The BoV did the right (indeed courageous) thing, in a very wrong way. Hopefully now all concerned will do the right thing: that is focus on the Boards Last Statement – and thereby prove what’s in error in it, and work for the good of the University to correct the rest.

  13. stan maupin Avatar
    stan maupin

    Jim:
    Add up the 2002-03 column and you get $1,356.

    BTW – you say that average salary per FTZE has climbed faster than average salaries overall. Did you look to see it the mix of FTE’s at UVa changed? I recognize that the mix would not necessarily change in a direction that would cause the average salary to grow, but not factoring that in means that you are really comparing apples and oranges. Why don’t you compare it to salary increases in other large state universities with medical centers?

    1. James A. Bacon Avatar
      James A. Bacon

      You are correct about the mistake in the data. Good catch. The correct number for Patient Services is $589,806, not $489,806. I made a typo when transferring the data to my spreadsheet. I will make that correction. But that doesn’t change my analysis of what the priorities are in the academic side of the university.

  14. James A. Bacon Avatar
    James A. Bacon

    Stan, I don’t see it as my responsibility as a journalist, lacking access to the data that UVa has, to be perfecting this kind of analysis. Why haven’t we seen the same kind of analysis coming out of either the UVa administration or the BoV? The fact that they aren’t asking questions about productivity and administrative overhead, even if to conclude that all is well, tells me all I need to know — these are not issues of interest to them.

    Do you conclude that all is well at UVa? If so, what basis do you have for reaching that judgment?

  15. reed fawell Avatar
    reed fawell

    Mr. Bacon – you have posed an excellent to Stan: namely, I don’t see it as my responsibility as a journalist, lacking access to the data that UVa has, to be perfecting this kind of analysis. Why haven’t we seen the same kind of analysis coming out of either the UVa administration or the BoV?

    The time for leaders of the University running it if they were members of the “7” Society is long past. The Alumni of the University (and all other Donors) should require as as condition of their further giving, a regular, detailed, and forthright accounting of all University income and expenditures, if such information is not now publicly available.

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