How Universities Work

CHAPTER 14 Regulation and Governance

155 Chapter 14 Regulation and Governance Competition and choices continue to define the American university in the twenty-first century. Universities compete for every resource of significance from quality students to superior faculty, from state tax dollars to federal grants and contracts, and from corporate support to private funds and endowment. Universities make choices about the use of these funds to enhance the institution’s ability to improve and compete more effectively. Productivity and quality provide the twin engines of university competition. • Productivity matters because it multiplies the value of every dollar spent and because it creates value for the university ’s customers and supporters. • Quality matters because investors in university activities seek a quality as well as a low-cost product. Even though much rhetoric focuses on inexpensive education, the consumer , the best students, the faculty, the state, the granting agencies, and the donors all seek association with quality. 156 HOW UNIVERSITIES WORK Regulation The competition among universities is fierce, and to restrain that competition as much as possible, the state and the guilds create a wide range of regulatory agencies. Public universities cope with much more regulation than private institutions, but all universities have some variety of regulatory oversight. All universities suffer from accreditation. Accreditation, originally invented to identify fraudulent institutions and programs , has become the defender of education fads and the regulator of guild privileges. At the university level, regional associations generally review institutions on a ten-year cycle with five-year updates in accord with a host of criteria of often questionable utility. Frequently these associations propagate the education orthodoxy of the moment and encourage member universities to embrace the current principles as the price of a favorable accreditation report. Institutions conform, for to do otherwise is to risk a negative report that will bring major difficulties from the federal and state authorities that require accreditation. Other associations focused on particular faculty guilds use accreditation to distort university funding priorities by demanding more equipment and space, more extensive support services, and lower student-to-faculty ratios than may actually be necessary for a quality product. Again, because accreditation is often required for governmental recognition, institutions distort their allocation structures to respond to the association’s blackmail on behalf of its membership guilds. While universities often resist the arbitrary standards of accreditation , they also use the accreditation process to leverage added resources from reluctant legislators or other program supporters. This restrains the push of many legislatures to reduce the cost of instruction because the university makes it clear that accreditation will be lost if funding falls too low. The regulatory dance between universities, accreditation associa- Regulation and Governance 157 tions, funding agencies, legislatures, and federal agencies constitutes one of the more expensive and labor-intensive bureaucratic activities of the institution. States almost always have complex regulatory systems for public universities and some oversight over private institutions. No matter how the state institutions are organized, the state will limit opportunities, divide academic missions, and otherwise attempt to regulate competition and reduce duplication. All this they do in pursuit of economy and access, but instead they often achieve programmatic monopolies, extra-cost bureaucratic manipulation, and politicized systems. No public university lives in a free-market economy, but the range of market responsiveness varies. In some systems, the institution controls tuition and the legislature controls appropriations ; in others, the legislature or the executive branch and governor control all aspects of funding and expenditure. Most quality and productivity advances come when the university can be held accountable and is then left to compete, but many state institutions prefer the safety, political manipulation, and inefficiency of regulated environments to the competition and risk of an open market economy. The federal government also regulates many aspects of university operations, from laws affecting affirmative action and financial aid to rules about athletics and research funding. The national research agenda exercises a powerful influence over the operation of university research environments, and federal rules determine much about the funding and management of university-based research. Universities maintain substantial lobbying enterprises at federal and state levels to influence this regulatory environment . In addition, from time to time, various agencies of the federal government from the executive branch through the Congress generate studies, commissions, hearings, and other activities designed to promote a particular educational or political agenda. 158 HOW UNIVERSITIES WORK Governance All universities have governance. Governance appears in many forms, some useful, some benign...