In his book Restoring the Promise: Higher Education in America, Richard Vedder asks “Who owns and runs America's universities?”
The answer is complicated. Competing factions make up the shared governance model. In the excerpts below, Vedder uses terms like “clueless trustees,” “quasi-profits,” “in-fighting…made nasty,” “uneasy truces,” “decline in..bargaining position of faculty,” “parking for..faculty, sex for..students, and athletics for..alumni” to describe the property rights and management of America’s universities.
Vedder teaches us that university governance is shared by
A formal governing board (which goes by various names);
The faculty;
Senior administrators;
The university president;
Senior officers (such as a provost, the chief financial officer, and deans of schools);
Alumni;
Students;
Governor and state legislature (state schools);
Church (if religiously affiliated);
In answering the question “Who makes the decisions?” Vedder writes:
In a typical university (if there is such a thing), many factions think they are part of the governing group running the school. All the various factions want to make decisions, but also typically want to disclaim responsibility if and when there are negative consequences. There is, of course, a formal governing board, variously called the board of trustees, board of regents, board of visitors, board of governors, board of curators, and so forth. These boards usually have the legal authority to make really big decisions involving the school—who its president shall be, whether new programs should be created, what tuition levels should exist, and so on. But others argue that they, too, have a claim on a role in governing, hence the term "shared governance" is often used to describe the leadership model in higher education.
The faculty have a solid claim. After all, there can be no university without a faculty. They do the teaching that defines the instructional mission and perform the research that at some institutions is at least as important as teaching itself. No great university has existed without at least a somewhat distinguished faculty. At most schools, the faculty have either an important or dominating role in determining the institution's instructional offerings.
At some universities, faculty are important in hiring or firing senior administrators—a decade or so ago, Harvard's faculty showed strong disapproval of some remarks of then president Larry Summers; shortly after he was gone. At many schools, the faculty role is somewhat institutionalized in Faculty Senates (or organizations with similar names) which have varying amounts of power.
The university president has an argument for being an important part of governance as well. After all, he or she was appointed to be the chief executive officer, to lead the university. Therefore, at the very minimum, he or she has a big role to play in what the school does—what new programs to offer, what buildings to construct, what tuition to charge, how selective it will be in admitting students, and so on. Sometimes, the president partially shares these powers with other senior officers, especially a provost who is, effectively, the chief operating and academic officer (in charge of routine daily operations), and the chief financial officer, who has some control over the purse strings. Deans of schools and colleges within universities typically think they are a meaningful part of the decision-making process as well.
There are schools where the alumni and other "friends of the university" play a strategic role. Many have given a lot of money, and they expect to at least be listened to with regard to major university decisions. Their gifts can alter the curriculum or even the nature of students accepted. Some feel decades of loyalty and devotion give them at least a modest say in what the university does and how it does it. At some schools, the alumni have a right to select some of the university governing board, and often have alumni associations or similar booster groups with varying amounts of influence.
Increasingly, students even feel they have a role to play in governance. Their tuition fees (often paid by parents or borrowed from the government or others) provide a large part of university income. Like with the faculty, the university would not exist without the students. So some universities will put a student on its board of trustees, or allow them to vote on whether to, for example, fund through extra fees a new student union building or recreational center. And most schools have some sort of student councils or senates.
The situation is more complicated at so-called state schools—institutions which receive large state government subsidies. At those institutions, the governor might feel he or she has a role to play, such as recently when the governor of Kentucky fired most of the University of Louisville's governing board. In many states, the governor picks members of the governing board, so he or she is a force to be reckoned with. Similarly, the legislature must approve university appropriations, so leaders of the legislature sometimes involve themselves, occasionally successfully, into substantive campus matters.
He describes the vicious politics within universities.
The decision-making ambiguities lead sometimes to major campus controversies, and often to uneasy truces between various factions jockeying for influence. The in-fighting is often made nasty by the fact that some of the major participants, namely the faculty, usually have tenure, so they can suffer relatively little negative consequence from losing in a campus power struggle. This, I think, is why several major politicians who have served in both academia and government say the politics of universities are far nastier and more brutal.
Vedder explains why university presidents struggle to lead.
With powerful tenured professors and deans (who often carry academic tenure as professors) to deal with, university presidents do not typically have quite the power or clout of the CEO of a private for-profit corporation. The legendary former president of the University of California, Clark Kerr, once told a faculty meeting, talking about his job as chancellor of the Berkeley campus, that his job was "providing parking for the faculty, sex for the students, and athletics for the alumni." Presidents cannot easily fire many troublesome subordinates; therefore, they usually seek détente with them, for example, by forming committees to guide major decisions, where the various powerful campus vested interests are usually all represented. While that can reduce campus discord and increase presidential job security, it also can lead to tepid decision-making. The president may propose to boldly expand enrollments by adding new online programs and an overseas branch campus, but the faculty see potential quality dilution and a reduction of their clout, so they oppose it. The committee comes in with a compromise—perhaps, do the overseas campus in conjunction with a foreign university to reduce financial exposure, and limit the online expansion to a pilot involving one or two academic programs. As Scott Masten puts it, dubious "academic bargains" are reached. Bold initiatives become smaller, arguably less innovative. This slows the rate of change in higher education, change that is arguably needed as financial and other pressures mount.
He writes that “not-for-profit” institutions are typically misunderstood. Here’s how they actually work.
The distinction between "profit" and "not-for-profit" institutions is typically misunderstood. Universities and colleges earn financial surpluses as revenues rise faster than costs, and these are akin to "profits" as conventionally measured in competitive profit-maximizing firms. Let's call them "quasi-profits." Where do they go? This depends on who "owns" or controls the university. Usually there are many claimants: professors, senior administrators, students, among others. These are akin to stockholders and they, working with the college president, divide up the quasi-profits, with the blessing of the governing board. Powerful professors with tenure are the equivalent of important stockholders who receive dividends in good years—-they receive some of the quasi-profits in the form of higher salaries, more money for travel, lower teaching loads, and so forth. The president likely gets a big salary increase, often disguised for public relation purposes in the form of deferred compensation, or has the presidential residence nicely remodeled according to the dictates of the president's spouse.
In a sense, the claimants of the quasi-profits are like rentiers in the original French sense of the word. They are academic aristocrats whose tenure is almost like hereditary titles of nobility, or, if you prefer, like major stockholders in a profitable corporation. The adjunct faculty are mere employees, not co-owners, as is true of most of the nonprofessional staff. Since the "ownership" rights are nebulous and not well defined by well-specified shareholdings, there are occasional fights for control and ownership, for the right to claim the quasi-profits. In some cases, faculty unions try to define the ownership rights contractually.
In a for-profit university with clearly defined property rights the shared governance concept is lacking and control of the university is more straightforward. Vedder writes:
Interestingly, there are for-profit universities where the property rights are very precisely defined, and where control is far more straightforward and subject to less controversy. Typically the faculty are not large stockholders, so they are treated more like respected senior employees, not co-owners. The concept of shared governance is lacking. To attract good instructors, the administration must pay a competitive wage and benefits similar to noneducational profit-maximizing institutions, but not share financial surpluses with employees, although perhaps some key employees own stock, have stock options, and so forth.
He concludes the chapter with a warning.
While generalizing about universities is very dangerous given their vast diversity, a large proportion of schools seem like they will be facing significant challenges in the next decade, aggravated by stagnant enrollments, a sharp slowdown in net tuition fee growth, intensified competition for public funds from pension and healthcare needs, slowing economic growth, and so on. The same business officer survey referenced in the previous paragraph showed that a large majority (68 percent) of business officers generally agreed (a four or five on a five-point scale) with the statement that "my college is too hesitant to shut down academic programs." The failure to provide brutally frank and honest information about the school to the governing board may be contributing to an inadequate institutional response to the need for fundamental reform.
Although it is very difficult to objectively quantify and prove, I sense that among the major actors in universities beneath the trustees, there has been probably some decline in authority typically across the country for one group—the faculty. Although the picture varies widely across institutions, on average faculty clout in institutional decision-making has declined, that of students remains very modest to nonexistent, and that of the president and administrative staff has increased (the trustees remain theoretically powerful but realistically usually fairly clueless and under the thrall of the administration, although there are important exceptions, and some presidents annually lose their jobs because they lose the confidence of the trustees). The decline in faculty clout is, in my judgment, a reflection of the decline in the bargaining position of faculty members as the supply of qualified professors and adjuncts has risen relative to the demand, weakening not only their economic power, but their ability to effect change.
A close friend of mine, a trustee at a major American public university, recently echoed what other trustees have told me privately: University trustees cannot at the present be expected to be the agents for change within universities. Internal reform—change from within—is likely to be modest in magnitude at best. For public universities, the political process, which initially created them, with all their intendant weaknesses, may have to force needed reforms on the academy. Federal reforms potentially could positively (or negatively) impact private institutions as well.
My guess is that it will take a crisis to fix the incentives in higher education. In such an event, entrepreneurs ready with solutions in hand will likely capture significant market share from established players. I believe that discourse platforms like Substack and new models like Network Based Universities will grow in stature, popularity and effectiveness due to their lower-cost offerings and better incentives —especially direct payment between professor and student.
The feedback mechanisms in higher education are currently too dysfunctional and broken to 1) realize cost reductions and 2) direct focus back on quality of teaching. Eventually a crisis will emerge, causing intense competition for public funds (e.g., pension, medical and defense).
In the coming weeks, I’ll be sharing more excerpts from Restoring the Promise: Higher Education in America, in which Vedder provides a comprehensive look at higher education and makes clear, in my opinion, that change is inevitable. Whether you’re a student getting ready to invest years of your life; a parent troubled by the high cost and political bias; an entrepreneur getting ready to start a higher education venture; or a university administrator frustrated by gridlock; my excerpts from Vedder’s book in the coming weeks will help you understand the depths of universities’ dysfunctions, and I hope guide you to better decision making and a better future.
Pointer to Restoring the Promise comes from Phillip Magness through the Independent Institute.
If you’re not interested in buying Vedder’s book, but still want to read him directly, know that he has written hundreds of articles on higher education. Many of them have interesting titles.
By title alone, I’ve selected a few dozen of his articles and placed them below. If you happen to read and like any, please let us know in the comments. I have not read any these but I plan to eventually.
The Decline in American Universities, 2011-2024
The Department of Education Needs to Die
Collegiate Fiscal Insanity in Texas
The Need for Adult Supervision of Universities
Free Speech? Not on College Campuses. It isn't getting any better.
Michael Bloomberg Has Become the Advocate that Higher Education Needs the Most
Collegiate Complicity in the Erosion ofAmerican Identity
One of Our Few Great College Presidents Retires
University of California Suicide Watch: It seems determined to end the university's preeminence.
Diversity, Equity, Inclusion: New Criticisms and Challenges
Learning by Doing: Earn A Degree While Working A Job
Repurposing Deserted Academic Villages—Sell Student Housing?
Is Bigger Better in Higher Ed? Or Even Cheaper?
The Culture of Arrogance Breeds Decline: Why Colleges Are Dying
For-Profit Higher Ed's Renaissance: The Case of Coursera
Will the Exploitation of College Athletes Decline Soon?
A Star Is Born!!! The AcademicFreedom Alliance
Is Santa Clara U. Better than Princeton? Earnings Data Say 'Yes'
Should College Application Be Required for a High School Diploma?
The Higher Education Origins of the Biden Administration
Migrants Flee States with Highly Educated People: Why?
The Flight to Quality in Colleges Grows: Harvard Applications Up 57%
College Excellence Does Not Bring Happiness
Like Free Speech? Don't Send Your Kid to DePauw, Texas or LSU
The Academic Taliban Are Winning! Can They Be Stopped?
Why Do Republicans Send Their Kids to College?
A New 'Georgia Tech' Arrives Tomorrow: It Looks Promising
2025: Google U. Vs. Microsoft U.?
Want Income Equality? More for Vocational Ed, Less for Colleges
Harvard, Yale and Princeton Embarrass, but Cornell Shines
Is a Law School Meltdown Coming?
The Flight to Quality in College Admissions
For Many, a College Degree Is a Bad Investment
Has Great Higher Education Reached Middle America?
Should States Subsidize Universities?
Why Do We Have Business or Education Schools in Universities?
Who Needs Harvard? Amazon University and Other Options
Universities as Rip-Offs: The Costly and Inefficient Edifice Complex
Decline of the M.B.A., Fall of the Humanities: What's Left?
Harvard Is an Embarrassment to American Higher Education
Memo to George Soros and Charles Koch: Fund Campus Debates
Does Attending Elite Colleges Make You Happy? Lessons from the Admissions Scandal