Running a business can necessitate top-down control. Leaders have authority over operations, employees and finances. Power is consolidated and the business owner, the CEO or the board of directors, has the prerogative to make sweeping moves that affect the business as a whole.
But not all organizations should be run like a business. A university is one of them.
The UW board of trustees would do well to remember that following their recent $140 million misstep.
Board members made a top-down decision last year when they swept the impressive sum of money out of about 1,000 different accounts across campus and moved it into a handful of accounts under their purview. The accounts that the board scraped belonged to a variety of groups, from student organizations to various academic departments. None had been up to that point under the board’s control.
The university has decentralized money across campus, so that each department and group can oversee its own accounts. Each group relies on this money – the Veterinary Science Department, who lost hundreds of thousands of dollars in the sweep, uses the money to run the state diagnostic lab and to send faculty to conferences. The student government lost over $600,000 out of a savings account which helped fund recycling and student media programs.
Another unintended impact of the sweep may have caused the Legislature to reel back funding for the university’s Science Initiative. The Legislature originally planned to give the university $100 million for the project – until they realized the university had $140 million in reserve accounts. In the end, lawmakers cut the funding back to $85 million.
The board says the decision was made with good intentions and we believe them. It worried that all that money in all those accounts was too difficult to manage prudently. And we understand that they thought centralizing the money into a handful of accounts under their direct control seemed like the right idea.
But it wasn’t. And they might have known that if they’d asked.
The board never sought to understand the gravity of the move and its impact on the groups and departments that would be affected. They made a heavy-handed decision about what was best for the university, its staff and its students. And they didn’t listen to the campus officials who voiced reservations about the move, including university president Laurie Nichols.
The move was a significant overreach by the board of trustees, whose purpose is to set policy, not to balance the checkbook.
The board has since acknowledged its mistake. But we urge them not to take it lightly; this should serve as a lesson about how the board can best serve the university, as well as a reminder that running the university like you would your personal business won’t work.