Here are some of the benefits that PASSHE students would receive if the PASSHE Board of Governors (BOG) were to initiate and maintain a fiduciary relationship with the students, meaning that the BOG would accept and comply with the following three fiduciary duties¹ of governance board responsibility:
The Duty of Care
“The duty of care requires the full attention to one’s duties as a board member, setting aside competing personal or professional interests to protect the assets of the institution. This includes financial assets to be sure, but it also includes the institution’s reputational, personnel, and tangible assets as well. The expectation is that a board member acts reasonably, competently, and prudently when making decisions as a steward of the institution.” (Emphasis added.)
Because PASSHE governance board members currently take an oath of office that does not specify to whom they owe their fidelity, those very same governance board members can legally meet the requirements of their oath—even when ignoring the best interests of the PASSHE students, and even while being loyal instead to the elected officials who appointed or confirmed them to their positions.
And because they are exempt from the duty of care, PASSHE governance board members don’t have to set aside any “competing or professional interests.” They don’t have to be concerned about protecting the assets of the institution. Nor do they have to act “reasonably, competently, and prudently when making decisions as a steward of the institution”—because their current oath doesn’t require them to accept the responsibilities associated with being a “steward of the institution.”
If elected officials cared, however, students could expect their PASSHE governance board members to make decisions based—not on any competing personal or professional interests—but solely on the best interests of the PASSHE students and the PASSHE institutions themselves. That would represent a huge change from the status quo, however, in which PASSHE governance board members have occasionally acted to put their personal interests above those of PASSHE students by, for example, securing multi-million dollar contracts with the PASSHE universities while “serving” on the Board of Governors.²
The Duty of Loyalty
The duty of loyalty requires board members to put the interests of the institution before all others. It prohibits a board member from acting out of self-interest. The board’s conflict of interest policy provides guidance on how a conflicted board member can avoid putting personal interests first.”(Emphasis added.)
The duty of loyalty contains a provision for ensuring that a conflicted governance board member can avoid putting their personal interests first. The operative provision in question, however, relies on guidance provided by the board’s conflict of interest policy. (Emphasis added.)
We will now address the two key issues from the previous paragraph as they apply to PASSHE: 1) what constitutes a “conflicted” PASSHE governance board member; and 2) what guidance is provided to PASSHE governance board members by “the board’s conflict of interest policy?”
Conflict of Interest
Merriam-Webster defines “conflict of interest” as “a conflict between the private interests and the official duties of a person in a position of trust.”
Columbia University has provided additional insight into whether a person is in a “conflicted” position: ³
“It is important to note that a conflict of interest exists whether or not decisions are affected by a personal interest; a conflict of interest implies only the potential for bias, not a likelihood.”
The fact that in the past PASSHE governance board members have secured multi-million dollar contracts from PASSHE universities while serving on the PASSHE Board of Governors² suggests that there may be insufficient sensitivity regarding the issue of conflict of interest by PASSHE governance board members.
PASSHE Board of Governors’ Policy 2012-01: Conflict of Interest
The PASSHE Board of Governors adopted the above-cited conflict of interest policy⁴ on January 19, 2012.
The verbal presentation touting PASSHE’s new conflict of interest policy was so effusive prior to being moved, seconded and unanimously approved, that many of those in attendance at the public meeting—including members of the media—were convinced that the conflict of interest policy just passed actually applied to the members of the Board of Governors who had just approved it so enthusiastically. But:
PASSHE’s Conflict of Interest policy does not apply to PASSHE’s governance board members!
That is, PASSHE’s conflict of interest policy doesn’t apply to either the 20 members of the Board of Governors, or to the 154 members of the 11-member Councils of Trustees at the 14 PASSHE campuses.
If you are surprised at the contradiction between the hoopla of January 19, 2012 on the one hand, and the fact that PASSHE’s conflict of interest policy doesn’t apply to PASSHE governance board members on the other, you are not alone.
Interestingly, and no doubt helping to create the false impression that the policy actually applied to PASSHE governance board members, the Definitions section of the policy prominently displays the following entry: “Public official” is a person appointed by a governmental body or an appointed official of the government of the Commonwealth.
Although the above definition of “public official” certainly sounds exactly like the political appointees who end up with seats on the Board of Governors and the 14 Councils of Trustees—Surprise! PASSHE’s conflict of interest policy applies only to some appointed officials—but not others.
In the Procedure section of the policy, only three types of persons “appointed by a governmental body or an appointed official of the government” are actually covered by PASSHE’s Conflict of Interest policy: The PASSHE “chancellor,” the 14 PASSHE “presidents” and PASSHE’s “other employees.”
The bottom line: PASSHE governance board members can't get any guidance from the "board's conflict of interest policy" because in PASSHE's case, that policy doesn't apply to them!
To be continued.