Excellent report from Saul Hubbard in the RG on the prospects for Lariviere’s toned down New Partnership proposal in the Legislature:
Some key state lawmakers remain lukewarm about a proposal that would create independent governing boards at the University of Oregon, Portland State University and Oregon State University, partially freeing those institutions from state control.
But whispered pledges that passing the policy this year would trigger a windfall in private donations to those institutions — and especially to the UO — could ramp up pressure on a state Legislature that, in recent years, has cut its spending on Oregon’s public universities.
Several legislators say they have been told recently that creating an independent board at the UO this session would result in “game-changing” private donations to the UO’s $477 million academic endowment.
Sen. Mark Hass, a Beaverton Democrat and chairman of the Senate Education and Workforce Development Committee, says an alumni group led by Nike co-founder Phil Knight has told him that, if an independent board with real authority is created at the UO, donors would pour in new money that would push the university’s endowment into the top 25 among universities nationally. …
A $2 billion endowment would pay out about $70 million a year. Counting current state construction bonds, that would be about as much as current state funding – which presumably would then shrink but not totally disappear. So this is not exactly a game-changer, but it’s certainly significant. We’ll trade the bureaucratic putzes at OUS for a bunch of athletic booster control freaks. I’m for it, but it’s going to bring a host of new problems along with the money.
Join the union so you get a vote, and support Rob Kyr and Margie Paris in the Senate. These institutions are going to be increasingly important to making sure us faculty retain a modicum of control over UO’s fate.
Follow the Senate bill here, House bill here, and keep an eye on Gottfredson’s efforts to subvert faculty power during the union negotiations, here. 2/28/2013.
Dog Says
I have never understood how University Endowments
work – maybe there are laws or other restrictions but serious, if the UO really got 2B of KnightBucks then why not take 1B out and just spend it on a bunch of new facilities – that leaves us with 1B in the endowment and 35M a year
in new operating revenue.
If 2B really translates into just 70M per year
of available money, that is not the game changer
that we need.
What we can do with it will all depend on the strings the donors attach in the “gift letters”, which are contracts between the foundation and the donor.
Expect lots of strings from Knight.
dog says
yes agreed, this is why endowments are complicated and I understand the Susan Gary argument. But if your endowment is meant to support the university for the rest of time, but
the University is in dire straits in the short term, it seems counter productive to not be able to “raid” your endowment to rescue your University.
If the “string” is to hold the gift as an “endowment” then there are legal rules that apply. The UO Foundation (or the UO if the gift is made directly to the UO) will be able to spend from the endowment an amount that will maintain the value of the fund over time while taking into consideration the needs of the UO. Basically, the idea is that the donee (the recipient of the endowment) can spend the “income” while preserving the “principal.” The law no longer uses those terms because of the way investments are made these days. It makes more sense to set spending rates as a % of the value of the fund rather than to base spending on “income” defined as interest, dividends and rents. Many charities these days have endowment spending rates around 4%, although spending rates have been dropping due to concerns about preserving the value of the funds. The donor’s intent controls, as a legal matter, and if the donor intends an endowment, then the donee must follow that intent (or face action by the Attorney General).
Donors can restrict gifts in a variety of ways. Purpose restrictions are the ones we often thing about (this is a gift to establish a scholarship for music students) but a time restriction (this is an endowment – you can’t spend it all this year) is also a valid restriction.
The rules on endowment spending depend in part on how the charity is organized (as a trust or a nonprofit corporation) but in all cases a gift to an endowment is restricted as an endowment.
Thanks!
Those of us who rely on UO Foundation endowment income budget against an expected return of 4.1% per year. If actual returns are higher, margin goes back into growing the endowment.
Do ‘shared services’ include OUS collective bargaining with SEIU?
Most important part of the article is not the $2B wow factor but this:
“Plus, big donors might feel they could have more sway with a local governing board that is focused on the wellbeing of a single university, as compared to the current state Board of Higher Education, which seeks to address the needs of all seven of the state’s public universities.”
I can’t wait until big money is deciding what programs we should cut and which new ones we should offer.
Dog says
If BIG money determines programs cut, that would be evil. My belief is that BIG money is intended to open up new programs.
Unless they are the “wrong” new programs. New does not always equal good. The point is that the decisions may be made by those that have different goals/agendas than faculty might.
Dog says
that’s where competent oversite comes in – if there is no oversite with donor money then yes, its a disaster.
That is my point – the money people are the oversight. Fox and henhouses and such…
Don’t you suppose the CnC offerings, and the results, were just such an example of how donors with interests will get involved?
CNC is an example of how this can go wrong. It ran smack into a wall of faculty oversight. That model doesn’t seem good for anybody — not for the donor’s goals (whatever they were), not for students involved in the program, not for the adjuncts who were trying hard to make it work.
But I have to believe that many donors will genuinely want to give in ways that help the university’s academic mission. They will approach UO with ideas about what they’d like to accomplish. If faculty are involved from the very beginning with helping the good ideas take concrete form, and with redirecting ones that need redirecting, then the CnC does not have to be a model for how this will go in the future.
“If faculty are involved..”
Isn’t that the first question, really? Does the tone between hired admin lawyers and faculty union reps give you any pause?
From what I’ve read, the makeup of the oversight board hasn’t been completely determined. And next question, WHO will decide upon the initial board composition and how influenced will it be by political action groups?
Third question: the article mentioned the whispered need to settle the question THIS year. This can be read as typical Nike/Knight pressure to get what they want when they want it. Seriously? Donors with deep pockets aren’t going to be interested if they ‘have to’ wait until next year while details are ironed out?
Dude, seriously? Who’s allowed to edit except the admin? What happened to the ‘I’m and alum full disclosure’ clause, long para and so forth etc, etc.? Lame.
Ciao.
What would a best case scenario look like?
It looks like this: http://www.huffingtonpost.com/2013/02/20/stanford-college-fundraising_n_2724592.html
What about Michigan?
Michigan does very well in terms of the size of its endowment and its fundraising. I can’t speak to how Michigan balances its governance with donor preferences. Stanford fundraising this year was highly skewed toward research and capital projects. How does one institution with a very, very small student body manage to top the nation in fundraising, garner Nobel prizes like nobody’s business and win the Director’s Cup? I suppose it has something to do with priorities that respect donors in a way that doesn’t allow them to become dictators. Full disclosure: You all probably guessed that I’m an alum. And you won’t be at all surprised that I’m disgusted by OU admin’s treatment of faculty and staff while simultaneously smooching donor ham. Robust faculty participation in governance only enhances scholarly excellence, which, in turn, enhances donor participation. Where I come from, Nobel trumps NFL by a long shot.
I’ve been thinking about the interactions amongst the factors of academic quality, large endowments from big donors, and institutional boards. I guess there have been cases where big donors have captured university boards and turned them towards dastardly purposes (such as champion football teams or silly programs), but I bet this is extremely rare. I just looked over university rankings for some correlations (which I hope even MIchael Raymer and I can agree on.)
Of the 25 highest-ranked US universities, 19 are also in the top 25 for endowment size. And of these 25 universities, only two are governed by a state board of regents (Berkeley and UCLA). The other 23 are private universities, governed by institutional boards. (And only four of these universities have football teams ranked in the top 25.) I don’t have time to research how all these boards are constituted, but I know there are some arrangements that would worry us here – such as having the alumni elect a board, or having a small, self-perpetuating board – but these two systems have worked pretty well for Harvard, so maybe we shouldn’t dismiss them.
If having an institutional board taken over by the donors creates such a risk of having the academic mission skewed, why don’t we see it happening at these schools? Why do they seem to have so many donors who must support their mission? Why don’t they have better football teams?
There may not be a perfect governing board structure, but there is going to be a board – I don’t think the Governor is going to turn the UO over to the University Senate. And if we accept that there will be a board, I can’t see any way in which a state board is better for the UO that having our own board – look at how well that has worked out for us so far. I’m sure that many of you have terrifying anecdotes from other places, but when I look at these numbers, I think I’m willing to risk having a larger endowment and an institutional board.
wait, you are saying that Stanford, Harvard, Princeton, and Colombia are what you get when you have a local board? No, that is what you get when you have a principled private school founded long ago with a lot of rich connected Alum. When you have a well run State system you get UC schools. Notice also that the UC system holds quite a large endowment. Adding the System Endowment and the schools endowment give you one of the largest total endowments. Public schools give you more grads, run more research funds, have more students, more access. It would be interesting to see the faculty start governing like they are suppose to where part of that governance means not letting politics and overhead get in the way of the academic mission. To require that funds are spend research and education first, and then if there is time and capital to go participate in EXTRA curricular activities. If Wikipedia is right Pickens has donated more to Oklahoma State University than Uncle Phil but has not tried to pay $65,000 to buy OSU from the State. http://www.wweek.com/portland/blog-28677-phil_knight_also_contributes_to_higher_ed_pac.html
http://www.nacubo.org/Documents/research/2012NCSEPublicTablesEndowmentMarketValuesRevisedFebruary42013.pdf
UT System is first public entity at 3rd and the UC System is 14 but it looks like Regents plus all schools would be 10.2 billion. UW is at 31 with 2.1 Billion WSU has 737 million. UO is 154 with $477 million. Why doesn’t the UO have a 2 billion dollar foundation? In the PAC-12 only OSU has less and and I think they are catching up.
I’m not saying that the example of elite private universities shows that institutional boards always lead to academic excellence, but just that most of the highest-ranked universities have them, so there must be a way they can contribute to excellence and not it’s opposite.
Although I am strongly in favor of a local board, I am concerned with the composition of a possible board at the UO, and the likely process for determining its members. Obviously, as a public university, it can’t be a self-perpetuating board, or one elected by the alumni, but it would be interesting to imagine a system for nomination or appointment that was more extended (and led to candidates being vetted and tested) than one of simple political appointment. The continuing problems at UVA highlight what can happen when a few hotshot entrepreneurs think they know more about how to run a university that those with deep experience in academia, and we should learn from this lesson.
Although we can’t follow the example of the privates, perhaps a hybrid process could be used. Harvard has a three-tier governing system – candidates run for election to the alumni association board. After years of service at this level, candidates for the Board of Overseers are proposed from their ranks (along with open nominations from outside). The Overseers are also elected by the alumni. The highest authority, the “corporation”, is self-perpetuating, but usually draws from this lower tier, or invites others of equal eminence. By my count, 5 of the 10 fellows on the corporation are academics (from other universities), 1 is from the nonprofit world, and 4 are from business. So there is an expectation that those who serve will have demonstrated loyalty to the institution, dedication to its principles, and understanding of its operations. Harvard doesn’t seem to get real estate developers and hedge fund managers making snap judgments that the university needs to move more nimbly into online education, as does UVA.
Could we set up a system whereby Board members would be primarily nominated from the ranks of other boards on campus (UO Foundation Board, Alumni Association, local boards such as the AAA Board of Visitors, etc.) where they have already shown their dedication to and understanding of the university, and with representation of campus constituencies (faculty, students and staff) who actually experience how the university functions? (I spent a year as the faculty rep on the Alumni Association Board, whose members always showed a keen interest in an insider’s view of what was happening at the UO; wouldn’t an institutional board want at least this much direct knowledge?) Could we have a structure where board membership would be allocated according to background and expertise – this many donors, this many businesspeople, this many academics from other institutions, this many politicians? I agree with the commenter below that we need to watch the details as the legislation moves forward, and thinking seriously about the board’s composition may be the best way to safeguard that the board’s decisions will be in the best overall interest of the UO.
“…few hotshot entrepreneurs think they know more about how to run a university that those with deep experience in academia.”
Could be a root of current, and decades old, problem with education in Oregon. I to think academic institutional governance is the right thing to have and that the UO has all the tools to accomplish this. I think that many of the recent UOM posts are highlighting a lot of this local governance. Unfortunately, as posted in UOM the legislation seems to be about bonding authority and turning the common wealth of the institution and therefore Oregon, over to the ones you describe above.
http://apps.leg.state.or.us/MeasureInfo/Measure#measureNumber=270
A pause to say, don’t you think this is the most brilliantly succinct description of the change?
“We’ll trade the bureaucratic putzes at OUS for a bunch of athletic booster control freaks”.
If you wonder about the effectiveness of the later, remember recently when Nike called the Legislature into session.
It would be good to closely follow the legislation because the “deals” often happen at the last minute.