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Thursday, September 1, 2011

Accountability on the Quad

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A SERIES of recent scandals involving players receiving money, cars and other improper benefits, along with violations by recruiters and sports agents, has debased the already tarnished reputation of college sports. Schools like the University of Miami, the University of North Carolina and the University of Southern California, to name just a few, have been in the news more for abusing the rules than for teaching their students. 

The National Collegiate Athletic Association is supposed to hold colleges and universities accountable, but it has been reluctant to police with any stringency the growing number of violations. The assumption that the N.C.A.A. can develop safeguards and mete out punishment for those who violate its rules is wishful thinking. The N.C.A.A. is simply not up to the task; college trustees need to take charge instead. 

In 1991, I introduced a bill in the House of Representatives aimed at reforming college athletics. My bill would have granted the N.C.A.A. an exemption from antitrust laws, which would allow it to constrain the extraordinary growth in athletic spending by schools. Under my proposal, the distribution of money from broadcast fees and other income would have been based not on winning or losing, but on the academic performance of the athletes, gender equity, and the breadth and diversity of the sports programs. The bill would have rewarded those schools promoting the values of higher education. 

My attempt at reform failed, and in the 20 years since, things have gotten worse. There is just too much money involved in the multibillion-dollar industry that is college athletics to expect the participants to police themselves. Bloated college sports budgets, with coaches who earn millions of dollars, often more than college presidents, have created a situation where the tail is wagging the dog, with the result that colleges are losing control over their own athletic programs. 

Moreover, once the N.C.A.A. does get around to punishing violations, the culprits have often moved on. To take one notorious example, the $4 million-a-year football coach at U.S.C., Pete Carroll, resigned in January 2010, just as the N.C.A.A. was investigating accusations that the former player Reggie Bush had accepted improper gifts from agents. Mr. Carroll was subsequently named head coach of the Seattle Seahawks with a five-year, $30 million-plus contract. By the time the N.C.A.A. announced sanctions against the U.S.C. football team, in June, he was safely gone. 

Universities take pride in the success of their sports teams, but their reputations suffer when things go wrong. If they truly want to prevent scandals, they need to take control. And the people who can and must make this happen are the trustees and regents of these institutions, not the presidents, who are less equipped to stand up to the economic pressure from alumni and fans. 

Currently, many boards are too cozy with athletic departments; their members forget that their job is to protect the institution — not the coaches, not the boosters and not the fans. But if they want to avoid embarrassment and scandal, they need to be much more involved in maintaining standards.
Many institutions have a laissez-faire attitude toward their athletic departments; given the profits from sports broadcasting and the fervor of alumni and fans, their reluctance to rein in athletic directors, coaches and players is understandable. But trustees and regents have both a legal and an ethical obligation to do what is right for their schools. 

If more colleges and universities would adopt the recommendations of the Association of Governing Boards of Universities and Colleges, we’d see fewer violations of N.C.A.A. rules and of the law. Among the recommendations are these: regents should approve annual athletic budgets and significant capital expenditures; athletic departments should undergo annual audits by independent auditors; each school’s board should have a committee to monitor compliance with N.C.A.A. rules and student performance; and boards should approve compensation of coaches and directors. 

Some schools are beginning to recognize the wisdom of these proposals. Regents at Kansas State University now conduct annual audits of the athletic department. Regents at the University of Michigan sign off on athletic departments’ operating and capital budgets. Both the University of Colorado and Georgetown University have panels dedicated to athletic issues. The boards at Texas A&M University and the Universities of Wisconsin and Oklahoma must approve any changes in compensation for the highest-paid athletic personnel. 

These are encouraging changes. The N.C.A.A. should be more rigorous in keeping colleges compliant with its rules, but true accountability rests with individual boards. The schools would then not need to respond to the disgrace of violations and penalties, but could prevent the scandals in the first place.

Data Show College Endowments Loss Is Worst Drop Since ’70s

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The steep declines are forcing colleges and universities across the country to contemplate wage freezes, layoffs and a halt to construction projects.
The drop found by the reports is the biggest in the value of college and university endowments since the mid-1970s, said John S. Griswold Jr., executive director of the Commonfund Institute, which manages money for educational institutions and other nonprofits.

“It’s been very sudden in some ways,” Mr. Griswold said. “There were people predicting the decline a year ago or more, but I don’t think anyone could claim to see the extent of this. These are unprecedented numbers.”

The reports, prepared for the National Association of College and University Business Officers by the financial services company TIAA-CREF and the Commonfund Institute, drew on data from 796 institutions for the 2008 fiscal year, which ended June 30, and on additional statistics gleaned from a follow-up survey with 435 for the period from July 1 to Nov. 30.

They found that while endowments gained in value by about 0.5 percent in the old fiscal year, they lost nearly a quarter of their worth in the subsequent five months, a period in which the financial markets sank.
“It’s a rolling contagion that hit us,” Mr. Griswold said.

The pain was spread among institutions large and small, private and public. When endowments were categorized by size, even the least affected — those worth more than $1 billion — were found to have lost an average of 20 percent. Those of $500 million to $1 billion saw the biggest decline, about 25 percent. Public institutions lost an average of 24 percent, private institutions 22 percent.

“Both public and private institutions are going to be very challenged, just in different directions,” said P. Brett Hammond, chief investment strategist of TIAA-CREF. “States are in trouble themselves, and the downturn in state support comes along with declines in investments. In the private sector, at the same time endowments have declined students need more help than ever.”

Cornell is facing a 10 percent budget shortfall for the current fiscal year because of a 27 percent decline in its endowment over the last six months, a drop in state financing and alumni giving, and students’ need for more financial aid, according to a report issued this week by the university’s president, David J. Skorton. To close the gap, the university plans to freeze campus construction and draw on $150 million in reserve cash and $35 million more from the endowment than was planned.

Syracuse University has already announced layoffs, and Dartmouth, whose endowment lost 18 percent of its value from July 1 to Dec. 31, has said they are inevitable.

“We continue to fund approximately 35 percent of the college-only operating budget through endowment distributions, and we do not have additional revenue sources that can replace this level of support,” Barry P. Scherr, Dartmouth’s provost, and Adam Keller, executive vice president, said in a statement issued last week.

“We anticipate that some of our endowment investments will continue to show losses,” they added, “and that many of our generous donors will be unable to give at the same levels for some time to come.”
Charles L. Schearer, president of the private Transylvania University in Lexington, Ky., said the endowment there, which finances about a quarter of the operating budget, had lost 28 percent of its value since June 2007. Transylvania has cut back on staff travel, declined to fill job vacancies, frozen overtime and halted all construction projects. The university is planning a major fund-raising push in the next year to help make up for the endowment losses.

“We’re going to have to capture some of that money back,” Dr. Schearer said in an interview. “We’re not looking at this as if there will be a rapid recovery. We’re anticipating a slow and gradual recovery.”
Sixty percent of the institutions responding to the follow-up survey said they did not expect to change the amount they draw from their endowments in the current fiscal year.
Mr. Griswold thinks that wise.

“People aren’t making snap decisions, decisions that seem based on a panic reaction,” he said. “That’s terrific. They should keep a steady hand on the helm.”

State Colleges Also Face Cuts in Ambitions

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Ross D. Franklin/Associated Press
Great things were promised for Arizona State University in Tempe seven years ago, but that was before recession struck.

TEMPE, Ariz. — When Michael Crow became president of Arizona State University seven years ago, he promised to make it “The New American University,” with 100,000 students by 2020. It would break down the musty old boundaries between disciplines, encourage advanced research and entrepreneurship to drive the new economy, and draw in students from underserved sectors of the state.

He quickly made a name for himself, increasing enrollment by nearly a third to 67,000 students, luring big-name professors and starting interdisciplinary schools in areas like sustainability, projects with partners like the Mayo Clinic and Sichuan University in China, and dozens of new degree programs

But this year, Mr. Crow’s plans have crashed into new budget realities, raising questions about how many public research universities the nation needs and whether universities like Arizona State, in their drive to become prominent research institutions, have lost focus on their public mission to provide solid undergraduate education for state residents.
These days, the headlines about Arizona State describe its enormous cuts.
The university has eliminated more than 500 jobs, including deans, department chairmen and hundreds of teaching assistants. Last month, Mr. Crow announced that the university would close 48 programs, cap enrollment and move up the freshman application deadline by five months. Every employee, from Mr. Crow down, will have 10 to 15 unpaid furlough days this spring.
“The New American University has died; welcome to the Neutered American University,” the student newspaper editorialized last month the morning after the latest cuts were announced. 

While Arizona State’s economic problems have been particularly dramatic, layoffs and salary freezes are becoming common at public universities across the nation; the University of Florida recently eliminated 430 faculty and staff positions, the University of Nevada, Las Vegas, laid off about 100 employees, and the University of Vermont froze some administrative staff salaries, left open 22 faculty positions and laid off 16 workers. 

“What’s happening, everywhere, is what’s happening to Michael Crow,” said Jane Wellman, executive director of the Delta Project on Postsecondary Costs, Productivity and Accountability, an organization that studies spending by colleges and universities. “The trend line is states disinvesting in higher education.”
The picture varies by state. Dozens of states, hit hard by the recession, made midyear cuts in their financing for higher education. And yet, budgets are largely intact at some leading research universities, like the University of Michigan. 

Public universities everywhere are bracing for deep cuts in next year’s budgets, but the federal stimulus package, providing billions for education and billions more for research, should ease the problem somewhat.
Despite the cuts, Mr. Crow said he was sticking to his priorities, protecting his new programs and his tenured and tenure-track faculty members. And he is hoping to expand research, with, for example, renewable-energy money from the stimulus package. 

“I don’t retreat very easily,” he said. “The economy is shifting faster than the university can adjust, but we’re trying to protect students from the hurricane. We’re protecting the core of the core.”
But not everyone is convinced that the Arizona State model makes sense. 

“It may be that the idea of a 100,000-student research university was never very sustainable,” said Patrick M. Callan, president of the National Center for Public Policy and Higher Education, which promotes access to higher education. “In this economy, the places that have been trying to claw their way up the ladder, the ones whose aspirations have exceeded their financial vision, are going to have the toughest time. They can’t be all things to all people.”

But Mr. Crow thinks he can simultaneously broaden access for Arizonans, improve academic quality and increase research.

His university, he said, is an inclusive institution where there are 7,000 students with no family income at all and a growing population of American Indian students. Tuition in most programs is under $6,000 a year for state residents, in part because of a State Constitution provision that it be as “nearly free” as possible, which courts have interpreted to mean that its tuition must be in the bottom third of public universities nationwide.
Mr. Crow’s record for improving quality is impressive, too. He has hired more than 600 tenured or tenure-track faculty members, and last year, for the first time, won a spot on the National Science Foundation’s list of the top 20 research universities without a medical school, along with powerhouses like M.I.T. and the University of California, Berkeley. 

But not every university can be in the top 20. And in a time of shrinking state budgets, undergraduates at public universities will most likely pay the price in higher tuition, larger classes and less interaction with tenured professors. So it is a real question how many public research universities the nation can afford, and what share of resources should go to less expensive forms of education, like community colleges.