Understanding Fiduciary Duties in Higher Education Governance

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Explore the concept of fiduciary duties in higher education governance as discussed at the Illinois Public University Trustees Conference. Learn about consequential boards, risks and recommendations for institutions, and the importance of reconfiguring to address challenges. Consider questions on board operations, definitions of fiduciaries, and the assets and stakeholders involved in college/university trusteeship.

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Illinois Public University Trustees Conference Illinois Board of Higher Education October 27, 2016 Dr. Kevin Reilly AGB Senior Fellow

2 Fiduciary Principles and Creating Consequential Boards Two recent reports from AGB: Consequential Boards: Adding Value Where It Matters Most (AGB, 2014) AGB Board of Directors Statement on the Fiduciary Duties of Governing Board Members (AGB, 2015) Consequential Boards sees RISKS for boards and institutions, and recommends that boards help their institutions RECONFIGURE to move those risks toward opportunities

3 At risk are: Accessibility and degree attainment for current and future students Institutional fiscal sustainability Educational quality Economic development and social equity Service to communities Knowledge creation

4 Reconfigure to recognize: New student populations Altered educational delivery methods Basic changes in financing Rising expectations from the public

5 Consequential Boards Offers seven good practice recommendations for boards taking on the challenge of confronting those risks and reconfiguring to move beyond them Boards will be most effective in doing that if they are grounded in a clear, fundamental understanding of their fiduciary duties So let s go to a look at those fiduciary duties first

6 Questions To Be Thinking About Does your board operate in these ways? If so, how does it work? If not, how does it work?

7 Ever present: Fiduciary Duties of Directors and Officers What is a Fiduciary? Someone with special responsibilities in connection with the administration, investment, monitoring, and distribution of property.

8 College/University Trusteeship The Assets The college/university you govern, including mission and identity, property, human resources, educational product, endowment, and reputation. For Whom The institution: students and their families (current and future), faculty, donors, alumni. Others? The community? The public? The taxpayers? Fiduciary Duties of Governing Board Members- AGB Board July 24, 2015

9 Fiduciary Duties Duty of Care Act in good faith for best interests of institution With that degree of diligence, care and skill which ordinarily prudent persons would reasonably exercise under similar circumstances in like positions. Duty of Loyalty Put interests of institution before personal interest Do not act from self interest; no self-dealing Conflicts of interest

10 Fiduciary Duties Duty of Obedience Obligation to act consistently with mission Obligation to cause the institution to act in compliance with law

11 Consequential Boards Recommendations 1. Improve value in their institution and lead a restoration of public trust in higher education.

12 Consequential Boards Recommendations 2. Add value to institutional leadership and decision making by focusing on their role as fiduciaries.

13 Consequential Boards Recommendations 3. Ensure the long-term sustainability of their institutions by addressing the imperative to deliver high-quality education at a lower cost.

14 Consequential Boards Recommendations 4. Improve shared governance and relations with faculty, and attend to leadership development for presidents and faculty.

15 Consequential Boards Recommendations 5. Improve board capacity and functionality with a focus on qualification of board members, orientation, composition, and removal of members for cause.

16 Consequential Boards Recommendations 6. Focus time on issues of greatest consequence, reducing time spent reviewing routine reports and redirecting attention to strategic issues. (How do your board committees function to do that?)

17 Consequential Boards Recommendations 7. Hold themselves accountable for their own performance, upholding the same behaviors and performance they expect from others in their institution.