How Elected Officials and their Political Supporters Compete Against PASSHE Students - Part 3

A Competition for Money

 As we saw last time, one critical way in which Elected Officials and their Political Supporters compete against PASSHE Students involves a Competition for Money.

 
The “playing fields” on which that competition takes place are the 15 PASSHE governance boards on which all decisions affecting PASSHE stakeholders are made.  Those playing fields include a 20-member Board of Governors (BOG) and fourteen individual Councils of Trustees (COT) with 11 members each.
 
Currently, the membership of the BOG includes five Elected Officials and 15 political appointees, a.k.a., Political Supporters.  The membership of each of the 14 COTs includes eleven Political Supporters.

Politicians vs. Students

 
Elected Officials, a.k.a., Politicians, need money to wage political campaigns and to pay their campaign staffs in order to get elected and reelected; they employ Political Patronage to help secure that money.
 
PASSHE Students need money—in the form of scholarships—in order to be able to pay for a PASSHE education which has gotten increasingly expensive due to massive cutbacks in State Appropriation.
 

The Essence of the Competition

At private universities, individuals get on the governance boards by making donations to the universities!

At PASSHE universities, individuals get on the governance boards by making donations to politicians!

“Money is the mother's milk of politics.”

Jesse M. Unruh, Speaker of the California State Assembly (1961-1969)

·         It is a fact of our system of government that Money plays an inordinate role in American politics.

 ·        That has always been so, and is likely to continue to be so for the indefinite future.
 ·        But money for politics should not be dictating the future of “public” higher education!

This last bullet is an understatement when one realizes that the quotation marks around the word “public” are absolutely necessary because the so-called public higher education institutions in Pennsylvania are already 75% private in terms of funding.

Seventy-five percent of PASSHE’s annual revenue—some $1.1 billion out of PASSHE”s $1.5 billion in annual operating revenue—comes from the private checkbooks of PASSHE’s Majority Stakeholders, i.e., the students, parents and private donors, primarily PASSHE alumni.

Money for politics should be the last thing dictating the future of the PASSHE quasi-public institutions of higher education that are, financially speaking, already seventy-five percent private.

The Governance Imperative

Fortunately, correcting that totally outrageous situation—money for politics dictating the future of increasingly privatized “public” higher education—would not require changing the nature of American politics.  For that would be tantamount to changing human nature, with its many well-known and serious character flaws and other terrible weaknesses.

Correcting that totally dreadful situation only requires changing the governance shares of the Majority and Minority Financial Stakeholders to largely reflect their respective Funding Shares.

It is both common sense and a bedrock American fairness principle that PASSHE’s Majority Financial Stakeholders should be controlling a majority of PASSHE’s governance seats, and PASSHE’s Minority Financial Stakeholders should be controlling a minority of PASSHE’s governance seats.

Currently the Commonwealth of Pennsylvania, in the person of its elected and appointed officials, controls 100% of PASSHE’s governance seats despite providing only 25% of PASSHE’s annual revenue.

At the same time, the Majority Stakeholders, in the person of the PASSHE students, parents and alumni donors, control zero percent of PASSHE’s governance seats despite providing 75% of PASSHE’s revenue.

The Political Appointment Process

During my 20 years as a PASSHE president I came to learn some details of the political appointment process as it applied, e.g., to the PASSHE Board of Governors and the University Councils of Trustees.

My interest in the workings of the appointment process grew out of my frustration with the fact that so many members of the Council of Trustees at my institution—all fine people—seemed to have no real affinity for the university on which they sat as Trustees, as manifested for example by any inclination for or history of donating to the University to fund student scholarships—by far our most critical need. 

PASSHE Presidents and the Raising of Private Funds

Prior to the passage of Act 188 of 1982, the presidents of the 14 institutions that would eventually become known as the PASSHE or “state-owned” universities were forbidden to raise private funds.  In that era, the presidents were political appointees, nominated by the Governor, confirmed by the State Senate, and reporting directly to the Secretary of Education who was a member of the Governor’s Cabinet.  The 14 institutions were considered part of the Executive Branch of State Government.

The directive banning presidents from raising or receiving private funds came in the form of a memo from the Secretary of Education stating that if an institution received a private gift of any amount, a like amount would be deducted from that institution’s State Appropriation—a most effective deterrent.

But that all changed with Act 188, §2003-A (b)(3).2 which reads as follows:  “Nothing herein shall empower the Board of Governors or the chancellor to take or receive any moneys, goods or other property, real or personal, which is given or granted to specific institutions.”

 
That sentence from Act 188 effectively revoked the earlier memo from the Secretary of Education forbidding the raising of private funds by institution presidents.  It set a totally new policy direction.
 
It gave permission for private fund raising by including a promise that private gifts would not be taken by the chancellor or Board of Governors, very important assurances for both donors and presidents. 
 
The Board of Governors followed up on this “permission to raise private funds” with BOG Policy 1985-04-A: University External Financial Support, which directed university presidents to raise private funds!

I was hired in 1992 with the expectation that, as a PASSHE president, I would raise private funds.  After reading the policy directive in BOG Policy 1985-04-A, I set about creating a team to do just that.

And in the 20-year period between 1992 and 2012, some $55 million in private gifts were raised.¹

To be continued.  

¹ http://www.amazon.com/Privatization-Without-Plan-Leadership-Pennsylvania/dp/1491295244/ref=sr_1_1?ie=UTF8&qid=1408368767&sr=8-1&keywords=angelo+armenti.  See Chart 12, page 43.