TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, June 18, 2018

University Boardrooms Need Reform

Following up on my previous posts (links below):  Wall Street Journal op-ed:  University Boardrooms Need Reform, by Paul S. Levy:

I recently resigned as a trustee of the University of Pennsylvania and an overseer of its law school to protest the shameful treatment of law professor Amy Wax. Her career-threatening offense was to state that in her experience with black students over 17 years at Penn, few had performed in the top half of their class. Penn Law’s dean, Ted Ruger, declared her in error but refused to provide evidence. For dissenting from politically correct orthodoxy, Mr. Ruger forbade Ms. Wax to teach her much-admired first-year course in civil procedure—for which the university gave her an award in 2015.

Since I quit, I have received an education in why universities can trample free expression with impunity. ... Other than me, not a single Penn trustee, overseer or professor wrote publicly about Ms. Wax’s treatment or resigned in protest. Nobody in the university community has an incentive to speak out, and everyone seems afraid to do so. Professors fear retaliation; students worry about social ostracism.

Trustees and donors candidly admit in private that they do not want to jeopardize their children’s chances for admission. Many serve out of genuine interest and affection for their alma mater, although they also enjoy the prestige, influence and perks, like access to the university’s medical system, that go with the positions. There’s no incentive to rock the boat, and universities make sure they don’t get much opportunity. At the trustee level, the board is large and its formal meetings are entirely show and tell, with discussion severely limited and vote outcomes never in doubt. Penn Law overseers do not vote on anything. One Penn medical school board member told me he was dropped because he had asked too many questions.

The corporate world offers a parallel to trustees’ abdication of their fiduciary duties. Reformers of the 1980s argued correctly that the interests of shareholders were too often subjugated to personal interest and small-group social dynamics on boards that compel unanimity. Just as the resulting realignment of interests between corporate boards and shareholders unleashed spectacular value for American investors, an activist response by the governing bodies of America’s universities is now essential.

The punishment of Ms. Wax coincides with the launch of the university’s latest fundraising campaigns, which seek $4.1 billion in all and $100 million for the law school alone. These philanthropic funds will maintain the massive bureaucracy that coddles hypersensitive students while issuing hollow claims to uphold academic freedom and dissent. When universities violate their values, trustees and overseers should resign, and donors should close their wallets. Until that happens, nothing will change.

Prior TaxProf Blog coverage:

https://taxprof.typepad.com/taxprof_blog/2018/06/university-boardrooms-need-reform.html

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