Sunday, November 27, 2011

Mutually Assured Destruction

The Governor’s recent press release supporting the State Board of Education’s decision to fire UO President Richard Lariviere leaves the university in a very dark place. The standing hope over the last few days was that mounting opposition to the firing would provide political cover for the Governor to encourage the board to reverse its decision. The Governor has now gone so far in his statements that it would be a major embarrassment for him to reverse course. On the other side, the UO constituency is truly up in arms about the firing, not only because President Lariviere has been doing a good job, but mainly because this is such a clear affirmation that the state has no clue how to build excellence in the face of its ongoing disinvestment in higher education. The state currently provides less than 8% of the funding to the University but demands 100% of the control. It instead should be paying closer attention to what is going on with the other 92%.

In his statement, the Governor belies a serious misunderstanding of the situation on several counts:

1. That current UO efforts are somehow coordinated by the President’s office.
In his release, the Governor refers to an “orchestrated media blitz”, perhaps implying that efforts on the President’s behalf are being organized by the President’s office. They are not. Other than issuing two statements regarding his firing and his decision not to resign, the President has not been directly involved in any retention efforts. These all spontaneously erupted on Wednesday morning following the announcement of the firing. Faculty in leadership roles acted quickly to condemn this action and to plan rallies in support of the President. Phil Knight immediately provided a strong response, which undoubtedly matches the concerns of many major donors (who contribute 50% more to the UO each year than does the state). Largely due to the Board’s cynical use of the Thanksgiving holiday as a means of suppressing dissent, we have yet to hear strongly from the students, although it is clear that they will have mixed opinions because of their concerns about rising tuition costs. Ironically, it is continuing state cuts and not any small university actions, such as increasing faculty salaries (which are paid for via increases in enrollment), that are the ultimate source of all tuition issues.

The bottom line is that the University of Oregon community is very angry and it is difficult to see them backing down any time soon. This creates a dangerous situation that is sure to ultimately erode the strength of the UO.

2. That the University is run like a business.
The Governor relies on the oft-used maxim that the university should be run like a business, with its employee (the President) completely beholden to its CEO (the Chancellor). A major source of the state’s ongoing issues with higher education is the lack of recognition that this is a horrible analogy for how a university actually functions. Instead of a monolithic corporation, a university is much more like a collective of 1000 small businesses, each run by an individual faculty member. The majority of these “businesses” have essentially no capital and are therefore completely dependent on the central organization for generating their “products” (research and education). However, some of these are multimillion-dollar operations manned by staffs that number in the dozens. These small business operations work for the benefit of the university, but they are also surprisingly mobile and can be moved to other universities with little difficulty. Indeed, this kind of poaching occurs all the time, and every year and the university must work very hard to retain its top faculty. Any deviation from a commitment to excellence will inevitably lead to a loss of the university’s best faculty.

Currently the top 30 researchers at the UO bring in as much money to the university as the contribution provided by the other 3.8 million citizens of Oregon. This is amounts to the in-state tuition of 18,000 undergraduates. Losing the UO’s top 2-3 faculty would be equivalent to a 10-20% cut in state funding. It is appropriate for faculty to be the ones who work the hardest to improve the university. To dismiss them as simply “whiny employees” is a major mistake, however. Under the current and future fiscal reality of the state, a misstep here could result in a multi-billion dollar impact on the state economy. The stakes are not small and do not only involve the delivery of education to undergraduates.

3.  That the State Board is qualified to manage higher education.
The Governor is attempting to portray the current situation as a dispute between employer and employee. Again, this is a false model. Instead the state should be seen as an important stakeholder in the success of the university, but not its sole provider. What company allows a shareholder with a 8% interest to control 100% of strategic decision making? There is an old saying in the charitable giving world: winners invest in winners. So it goes with donors, with faculty retention and recruiting, and with attracting the best students to the university. (It is no accident that the athletic departments have been a strong supporters of President Lariviere). We should be paying our closest attention to those 92% (and that fraction grows by 1-3% a year). Why a minority shareholder would be allowed to poison an institution that is on such a strong upward trajectory is completely puzzling. It is not business; it is politics. One would hope that the perceived political cost of pursuing such an obviously wrong path would be sufficient to dissuade one from going that route. Unfortunately, it appears that this is simply to be the politics of destruction, with the major players long gone by the time the real impacts are keenly felt.

Curiously, the current State Board of Higher Education, which seems so intent on bringing the University of Oregon into line, has no representation from the UO. The Board is also likely to be eliminated in June with the implementation of Senate Bill 909 (unless they have cut a new deal with the Governor). With the exception of a faculty member from Oregon State, the board has absolutely no experience with the operations of a major university. Looking at the resumes of the board, it is clear that these are very accomplished individuals who are strongly committed to improving Oregon’s communities through their work with a wide variety of groups and service organizations. One can only assume that they mean well. But why are they in a position to make such decisions? The Chancellor’s office itself does not contain any individuals with strong academic backgrounds; they are largely financial managers.

There is a clear dispute here on how the future of state higher education should be structured. The Governor asserts that President Lariviere has been a poor employee and should do as he is told. The other side of this coin is that these “employers” are not competent to make proper decisions, and so the only option that a true leader has under these circumstances is to do what is right for the future of the state. Presdient Lariviere is likely to be fired, but that there is no way that this can be portrayed as anything other than martyrdom at the hands of political operatives.

4. That it will be business as usual after this “blows over”.
No matter what happens, the university will go on. This is not the last controversy to face the UO, nor will it be the last. No doubt the Governor feels that he can simply weather this storm and install a new, more compliant president at the helm. It may work this way, but there are important warning signs that say otherwise. First, these actions are seen as a clear deviation from the path of excellence that the UO is currently on. Unlike past years, the UO is almost completely dependent upon “reputation money” (grants, donor contributions, out of state tuition), and state contributions will play no role in stabilizing university finances if this situation becomes unbalanced (as it can by the decisions of just a handful of faculty and donors). Second, any new administration that is installed by the Governor will be viewed as illegitimate by the UO community. How many current faculty and administrators will be willing to serve such a person? It is not about quitting per se, but service to the university takes much more effort than simply carrying out one's own teaching and research. Even a known entity, such as past-president Dave Frohnmayer, would not be supported in such a role. Someone from the OUS will lead to outright rebellion. The saddest aspect of all possible outcomes, other than the continued presidency of Richard Lariviere, is that actions perpetrated by an outraged community will mostly harm the UO itself and have little impact on the Governor. Perhaps a court intervention precipitated by the Board's questionable adherence to open meeting laws will provide a cooling off period.

Overall, though, the Governor and the university are locked in a pact of mutually assured destruction. The Governor’s actions ensure that the faculty and donors of the university will be forced to react, and the nature of their reactions will lead to long-term damage of the university.  Given that the State of Oregon has essentially no resources to back its controlling interest, the worst-case scenario is that this is a decision that will forever label Governor Kitzhaber as the destroyer of higher education in the state.


  1. A fantastic post that should be circulated more widely.

  2. Outstanding piece of work. I have shared it. I hope others do the same.
    Still standing with the Hat.

  3. My only criticism of this good analysis is that the conclusion seems to be that we should not fight back as an outraged community. We will almost inevitably lose this battle, but resisting the governor and the board on Lariviere's firing sharpens the issues we are confronting. Our loud, angry response potentially alters the landscape in ways we can't yet see. We might motivate allies around the state (donors, alums, others) while forcing the state to respond our framing of the crisis. Most of all, I think this event underscores the case for faculty unionization as one of the few avenues we have to put pressure on Salem.

  4. Point #1 seems to be a stretch. There's no denying there was "an orchestrated media blitz" to support the President (It's well-documented in my e-mail inbox). An orchestrated media blitz doesn't mean anything nefarious happened, but it's ridiculous to claim or pretend there was not a coordinated effort to condemn the action of the Board.
    As for attributing that coordinated effort to the President's office... the governor did not say that. Based on the context of where the statement was in the governor's letter, I could see how one COULD POSSIBLY conclude that, but as I said, it is a stretch, at best. The author's own words reflect this. "Perhaps implying..." is quite a bit different than "That current UO efforts are somehow coordinated by the President's office." That seems like spin doctor writing to me.
    More than the attribution, however, is the larger point that the "media blitz" did not win over anybody who was already resistant to the President. That's all the governor was saying, and to twist it into the governor "misunderstanding the situation" is disingenuous, in my opinion, and detracts from real legitimate points that have been made.
    I'll "stand with the hat," but to use a mixed metaphor... "we'll attract more bees with honey than with piss and vinegar."

  5. This is a very good response. To elaborate further on misunderstanding #2, "That the University is run like a business:"
    The Governor's news release supporting the Board states that:
    "...Any private sector CEO, faced with a division manager who was totally dedicated to his or her specific department but willfully and repeatedly undermined the needs and goals of the overall company would, I expect, fire the manager ...."
    This analogy is flawed. The president of a research university is nothing like a division manager or department head in any organization, public or private. All university presidents are CEOs who lead complex institutions with distinct histories, missions, and identities. The OUS System is more like a holding company that produces nothing itself, but benefits entirely from the value that resides in its wholly owned subsidiaries, in this case the seven OUS institutions.
    A better private sector analogy would run along these lines:
    "...What would Warren Buffet do with the CEO of Berkshire Hathaway's best-performing subsidiary -- someone who kept the corporation running in the black through the worst part of the recession, who grew demand from new customers, increased loyalty from existing customers, opened new global markets, contributed to the local community, and got staff morale to an all time high?"

  6. Great post. Maybe if everyone donated 5.8% of their time and energy to the efforts of education, the state funding could be respectfully refused altogether. I realize this is not realistic, but if our university can't fight the greed of a select few, then our country as a whole has little hope.
    Oh well, Pawn Stars just start started on the History Channel, gotta go!