Does it make sense to talk about each of our nation's major research universities as a single institution whose individual colleges are working in harmony to pursue a set of universitywide objectives? Twenty-five years ago Michael Cohen and James March articulated the view that universities are "organized anarchies" with all of the colleges (and departments within colleges and faculty within departments) pursuing independent objectives.
When I served as vice president for academic programs, planning and budgeting at Cornell, I learned that major contributors to this organized anarchy and to the "disintegration" of "the" university are the way universities organize themselves, the incentives they provide their colleges to raise their own funds, and the way they select and evaluate the deans who lead their colleges.
To see this, consider the institutional structure of a typical university. The central administrative offices of the university include the president, provost and all the administrative and support services: admissions, registrar, bursar, athletics, housing, dining, utilities, student services, grant administration, the campus store, information technology, telecommunications, libraries and so on. Some of these services may be enterprises, which charge prices for their services and must at least break even.
The financial relations between the center and the individual colleges go a long way towards determining if there is any hope of achieving substantial cooperation from the colleges in the pursuit of universitywide objectives. Revenue comes into the university from sources such as tuition, government appropriations, endowment income, annual giving, enterprise income, research funding, continuing and executive education programs and distance learning.
At one extreme, all revenue flows to the center, which covers all of the central costs and then allocates the remaining revenue out to the colleges. At the other extreme, the university operates as a set of "tubs," with each college keeping all the revenue it produces and remitting to the center only a sum sufficient to cover its share of the costs of the central administrative and support services. Sometimes under the latter approach, the colleges remit to the center more than the funds necessary to cover their share of the administrative costs. The subsidy, or "franchise fee," that they send to the center can then be reallocated by the central administration across the colleges on a one-time or continuing basis to further institution-wide objectives.
Fund raising for current operating funds, building support and endowment is often an activity that each college pursues, although access to major donors may be rationed by the center which tries both to match the donors' interests with the colleges' needs and stress institutional priorities.
In some universities, there is a "tax" placed on external gifts that come into the university, either in the form of a share of the gift, a share of the first year income that it provides or a share of its endowment return. Development officers hate such taxes, which they believe discourage donors from giving. Central administrators find them useful to further the objectives of the university, which may differ with the objectives of the donors, and to cover costs that gifts impose on the university as a whole.
While the above paragraphs cannot do justice to the complexity of university budget making, they should make clear that central administrators have the most leverage over the colleges to encourage cooperative behavior in situations in which the central university controls all of the revenue, or at least obtains a "franchise fee" from all of the tubs, and/or "captures" some fraction of the extra income/wealth that comes to the colleges from external donations.
At Cornell, the provost directly controls the budgets of only the three "general purpose" colleges on the Ithaca campus (Arts and Sciences, Architecture, Art and Planning, and Engineering. The other seven colleges are tubs, either by statute (Agriculture and Life Sciences, Human Ecology, Industrial and Labor Relations and Veterinary Medicine) or by trustee designation (Law, Management and Hotel Administration). Through a complicated cost-accounting scheme, the tubs are billed only for the average costs of the central and support services provided to them, as well as for the "net" credit hours that their students take in the three general purpose colleges that the provost directly funds (net of the credit hours that the students from the general purpose colleges take in each of the tubs).
There is no "franchise fee" and the center also does not "tax" the annual giving and endowments that the tub-like colleges obtain. Hence, it is not surprising, given these rules, that Cornell has operated historically like a system of fiefdoms, rather than one university. This problem is exacerbated by the method by which deans are selected.
At Cornell, and many other universities, searches for college deans are conducted by committees that consist primarily of the faculty, and sometimes students and alumni, from the college in question. Although typically a few faculty and administrators from outside the college in question are on the committee and the president or provost nominally pick the dean from a small group of finalists recommended by the committee, in the main it is the views of the search committee members that carry the day because the president and provost know from discussions of each candidate's strengths and weaknesses who the committee really strongly favors.
Once in office, a primary role of many deans is external relations, including fund raising, and they build up strong external constituent support. Hence, it is unlikely that a dean would be censured or fired for focusing on the goals of his or her particular college and not worrying about the overall goals of the institution.
Indeed, in many cases, once a dean is appointed, in the absence of discontent from the faculty and/or alumni of a college, the president and provost substantially lose the ability to influence a dean's behavior. For example, during the summer of 1997, the president of Columbia University bowed to strong criticism from alumni and reappointed a college dean only a few days after dismissing him. Similarly, in April 1998 the president of Georgetown bowed to alumni criticism, which included resignations from advisory boards and the threat of withholding large contributions, and reversed a decision not to reappoint a popular law school dean. It is believed that the dean's unwillingness to share the law school's revenue with the university precipitated the initial decision, although this was never confirmed by the university.
Former Secretary of Labor Robert Reich described his reaction to attending a Cabinet meeting in a passage in his 1997 book Locked in the Cabinet:
"... Cabinet officers have nothing in common except the first word in our titles. ... even the formal titles belie reality. Each of us has a special responsibility for one slice of America. ... No wonder we rarely meet."
If one substitutes the word "dean" for Reich's Cabinet officers and a college name for a Cabinet department, my sense is that his description also often applies to Cornell and to many other large universities. Conversations that I have had with senior central administrators at numerous private and public universities confirm this view. Hence, the notion that we can treat these institutions as if they are seeking to pursue university-wide objectives seems far-fetched in many cases.
Will universities continue to become more fragmented and will, for all practical purposes, "the" university cease to exist in the future?
I think not if central administrators insist upon establishing budget structures at their institutions that permit them some control over resources. To do this, and to regain more control over deans' behavior, will require central administrators to do a better job explaining to trustees and key alumni supporters of each of their colleges, both the importance of pursuing universitywide objectives and that what is "best" in the short-run for the college to which the supporters are "attached" may not necessarily be best for the university as a whole.
Ehrenberg is the Irving M. Ives Professor of Industrial and Labor Relations and Economics and director of the Cornell Higher Education Research Institute. A longer version of this article, with citations, appears in the January/February 1999 issue of Change magazine.
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