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Trustees, trustees...
Topic Started: Jan 13 2018, 08:35 AM (153 Views)
Quasimodo

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http://www.dartblog.com

Where Are the Trustees?
JANUARY 12, 2018

In a NYT piece entitled No College Kid Needs a Water Park to Study, the former president of the University of Montana and Old Dominion University, James V. Koch, spends most of his time lamenting the ineptitude of Trustees, and the ease with which Presidents manipulate them. The most frequent question that I receive, when alumni write in about yet another wrongheaded decision of the administration, is “Where are the Trustees in all this?” Here is President Koch’s answer:


In my career as the president of two state universities and a consultant to nearly 50 higher-education institutions, I’ve observed dozens of college presidents skillfully co-opt their governing boards into approving costly projects that make schools look more attractive. (Of course, every college president has to increase costs sometimes. But the goal is to make sure it is necessary, while keeping expenses as low as possible for students.)

Trustees, who typically meet four to eight times each year, are entertained as if they are visiting heads of state, flattered for their service and financial contributions to the institution. College presidents sweeten requests for new buildings and research centers, as well as additional student affairs programming, with cleverly branded words like “promise” and “excellence.” What board would want to withhold promise and excellence from its beloved student body?

College presidents also tranquilize trustees into agreement with impossibly large volumes of reading material. Trustees get binders full of documentation about institutional successes that are padded with expensive plans for increasing growth and reputation. Most come away impressed by their president’s expertise and vision and assured that — thanks to their efforts — the university is on the right track.


The unfortunate truth is that while most college presidents care deeply about their institution’s success, an important part of their job is to shake free more resources. They seldom initiate serious campaigns to contain costs.

(snip)



Addendum: The above piece is a journalistic treatment of a seminal work by Judge José Cabranes on the general ineffectiveness of university Trustees: Myth and Reality of University Trusteeship in the Post-Enron Era (2007). A sitting judge on the Second Circuit Court of Appeals and a member of the three-judge United States Foreign Intelligence Surveillance Court of Review, Cabranes was a trustee at Fordham (1974-77), Colgate (1987-90), Yale (1987-99), and Columbia (2000-2002); in addition, his wife Kate Stith-Cabranes ‘73 was on Dartmouth’s Board from 1989-2000. His sons Alejo ‘08 and Ben ‘14 attended the College. Cabranes knows of what he speaks.


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Quasimodo

from the book, Broken Trust:

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Trustee Conflict of Interest in a lawsuit

1 ) The trustees of a charitable, tax-exempt trust may be required to personally repay the trust if they fail to prevail in a lawsuit. This sets up a conflict of interest for the trustees; as they may personally be liable for millions in defense costs, depending on the outcome of a suit. Hence, their personal interest (as opposed to the interest of the trust) may be to prolong a case as long as possible, in hopes of outwaiting and outlasting the plaintiffs; and, should that fail, to then agree upon a huge settlement, the terms of which will clear them of any wrongdoing.

However, their own interest is not under these circumstances the same as the interest of the trust.

Under these conditions, it is not unreasonable that the persons deciding whether or not a college will prolong its defense and/or agree to large settlement terms should not be the same as those who have a personal financial stake in the outcome.

It would not be unreasonable for the court to be asked to replace such persons with interim trustees, who will oversee the conduct of the defense and the authorization of such expenditures as may be in the interest of the trust.

As well, a prolonged (and ultimately unsuccessful) defense, followed by a huge settlement, will also likely raise the insurance premiums a college will have to pay in the future; which likewise is not considered to be in the interests of the beneficiaries of the trust (whose interest the trustees are supposed to protect).
Edited by Quasimodo, Jan 13 2018, 08:10 PM.
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Quasimodo

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The Trustees have no attorney-client privilege

When a charitable, tax-exempt trust hires legal counsel, that counsel works for the trust; and his/her sole loyalty must be to the client, which is the trust and ultimately the beneficiary of the trust (in this case, the college's students). Hence, an outside attorney hired by a college is legally not working for the interest of the trustees, but of the students.

Nothing which is the work product of the trust's attorneys can be withheld from any other trustee, nor from the beneficiaries; because the trustees are not the client and they are not paying for the legal counsel.

The attorney-client privilege exists to protect confidentiality; but there is no need for confidentiality between the attorneys who are representing the interests of the beneficiaries, and those beneficiaries themselves.

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