Wednesday, November 26, 2008

'Tis the Season

Sometimes information causes a stir just because of bad timing. In the midst of a financial crisis, one institution of higher education after another reported significant losses and the need to shore up, buckle down, tighten in, and hold back. It would have been unseemly to do anything else, especially for the institutions that seemingly have more money than God. But here is the thing: every school lost money if it was invested. And every school relies on a complex formula of monies from its endowment (expected earnings & not ginormous losses); relatively stable demands for financial aid; tuition revenues; and predictable donations from alumni, corporations, foundations, and generous individuals--not to mention access to capital markets. So, absent all these, presidents of the most prestigious and most wealthy schools shuddered. It is not considered good practice to actually spend the endowment, although some institutions may need to do that. But others will try first some of the other tried and true methods of cost reduction such as hiring freezes and budget costs across the board.

What matters is that 1. the problem is real but different for each institution and 2. given the current climate of government bail-outs and executive privileges, the community at large is not all that sympathetic. So no one is weeping for Harvard--nor should they--which is not likely to close its doors. But some schools that took the important and expensive step of moving to a fully need-blind admissions policy are finding themselves without the cash reserves to fund it. Again, they are not closing their doors and these institutions are not tuition-dependent. Nonetheless, they have to cast about, truly, for a strategy and they have to communicate to the public that they, too, are mortal institutions and have to show their vulnerabilities.

So newspapers carry the message that prestigious institutions are paying attention and they lost money, just like you.

Into this environment comes the yearly reveal of presidents' salaries from the Chronicle of Higher Education. Usually the highest paid faculty end up being deans of medical schools and other members of the medical profession. I have to say, being a college president is largely a thankless task: it is 24/7 and the constituencies just don't stop coming at you. Faculty members, broadly characterized, don't really think they work for any institution at all so classic management of that constituency is a constant challenge and then there is the constant fundraising, students who are looking for resort-quality accommodations at Holiday Inn prices, and you haven't even scratched the surface of the issues like free speech and public safetyand privacy and diversity, not to mention accountability. My point being it is a tough job and a good president is hard to find.

That said, shame on Suffolk University, who is getting it all wrong ("Trustees' fiscal ties roil Suffolk," Boston Globe. 11/26/08). First, they overpaid their president because he had been underpaid--to the tune of $2.8 million--so far above the level of every other college president that it warrants headlines. Then they paid him more because they didn't want him to retire. Then we learn that the very people who decided on his salary are also recipients of fairly significant contracts from Suffolk. Then we are reassured that if there was any conflict of interest the parties would, of course, have stepped aside.

This is bad on so many levels.

First, appearances of impropriety can be more damaging than any actual impropriety. So even if there is no abuse of power in the relationships between the trustees and their own firms and the services they provide to Suffolk, it looks really bad. It is the not ethical behavior that is discussed in Suffolk's own law and business classes, I'd bet. The trustees argue that they are giving Suffolk a deal on services that it would otherwise be unable to purchase. Some deal: $366,0o0 for advertising.

Here's what you do if can't afford a fancy downtown advertising agency to the tune of $366,o0o per year: you don't hire one. I can count on all my fingers and toes institutions of higher ed who don't have that kind of money to spend on promotion and who, therefore, don't. If George Regan wants to offer a real deal to his alma mater there is tried and true way to do this: it is called pro bono.

Second, it is absolutely incomprehensible for the Board of Suffolk to argue that David Sargent is the only man alive who can be president of Suffolk. Suffolk seemingly can afford to hire a good president and the Boston area is a pretty good location for an ambitious academic who wants to run a university. I'm not talking about there having been a failed search and asking Sargent to stick around while they look for another guy. I'm talking about a Board so in cahoots with the President that they can't imagine another leader. What does this man do that some of our greatest presidents didn't do? Does he have special powers we should all know about?

Third, all the Trustees had to do was create an Emeritus position for the guy and feed him money and they would have avoided the whole mess. But because they weren't smart and weren't paying attention to the macroenvironment--to the fact that institutions of higher education are being scrutinized-- they got caught. Caught with cronyism and caught with not acting in the interest of the public good and caught with not acting any better than common corporate lowlifes.

And they are defending their behavior in the press instead of saying: if we were wrong, we apologize and we will look to reform our policies immediately. Which is really my only point.