How to Conduct an Effective Private College Board Meeting

Nicholas J Price

Board meetings can look very different depending on the type of corporation because the agenda is developed according to the needs of the business. Board meetings for private colleges tend to be more of a hybrid board meeting. Board directors are ultimately responsible to the shareholders, who expect to make a profit from student tuition. However, they also have some responsibility to protect the interests of their communities and the common good. Students ' and their parents, who are likely footing an expensive tuition bill ' expect the board of trustees to be effective, efficient and to provide a high-quality education.

Who 'Owns' Private Colleges?

The ownership of the college has a strong impact on how the board chair conducts a board meeting for a private college. Nonprofit colleges generally include community colleges, state universities and a handful of private schools. Most of them operate their schools with funding that they receive from federal and state governments.

Private colleges charge tuition, which the students or their parents pay. The college uses some of the money to cover the educational and administrative costs. Private colleges also invest a share of the tuition in stock market shares owned by shareholders, which means that the shareholders technically 'own' the college. The students expect the highest-quality education for their tuition dollars, as well as a promising career outlook. Board directors are accountable to students and shareholders equally.

Governance Structure of a Private College

The governance structure of a private college is very similar to the governance structure of a private corporation. In a corporate business, the shareholders own the company. In a private company that's publicly traded on the stock market, the shareholders also own the company.

There is much controversy over whose interests in a private college matter more ' the shareholders who invested their money or the students who paid higher tuition for a top-notch higher education. Some of the larger, well-known private colleges like Apollo Group (University of Phoenix), DeVry University and Corinthian Colleges are about 90% funded by taxpayers. These universities average about a 19.7% profit margin for their shareholders.

Private colleges must follow many of the same rules as corporations, including submitting securities filings. Board members of private colleges have a duty to make sure that the entity follows the laws of the state. Board directors risk being sued when they fail to adhere to good corporate governance principles.

Just like corporations, private colleges need to spend much time on strategic planning with the goal of balancing making strong profits while also identifying and evaluating risk. Board agenda items will include items about financial planning and portfolios, along with issues that pertain to students and academics.

Role of the Board Chair at a Private College Board Meeting

The board chair of a private college board meeting has a huge responsibility in developing a board agenda that addresses the needs of the shareholders, the college and its staff, and the students. The board chair must set a welcoming, but professional, tone. The board chair must follow parliamentary procedures with fidelity and make sure board directors do as well. It's also important that the board chair works toward establishing a solid and respectful relationship with the CEO, executive director or college president.

The board chair also must meet the challenge of handling agenda items that pertain to the financial interests of the shareholders and addressing concerns of the college, such as human resources, student activism, attendance and academics. There is much to cover in a private college board meeting, so the board chair must run the board meeting effectively and efficiently. The board performs much of its work in committees to save time.

Role of Board Directors at a Private College Board Meeting

The board must take extra care in choosing their board directors, according to good corporate governance principles. A private college board needs at least a few directors who are knowledgeable about financial regulations and shareholder interests. They also need to work to build a board that is diverse and independent, just as they would if they were a non-college corporate board.

The board must know and follow the college's bylaws, as well as uphold the applicable laws of the state.

Our society generally accepts public and nonprofit colleges as reputable institutions of higher learning. When it comes to private colleges, they are a little more skeptical because of their for-profit status. Board members must deal with issues like people who feel that private colleges take advantage of the government when enrolling students who are also veterans. The U.S. government pays the tuition for many veterans, and the college invests some of the tuition money, which some people feel is unethical. Along those lines, a 2012 U.S. Senate investigation of 30 for-profit colleges found that the schools spend 19% of their revenue on shareholder profits and only 17% on student instruction. The Senate expressed concerns about overpriced tuition and predatory and unethical marketing practices. The report also noted the extremely high rate of students who drop out of private colleges.

These are many of the difficult issues that board directors of private colleges must confront. While private colleges aren't required to consider the best interests of the public, most board directors realize that they are providing a public service in educating our next generation and do their best to serve the students, the community and the common good.

Managing Public Comments at a Private College Board Meeting

Board meetings for private colleges aren't subject to Open Meetings Acts, so directors don't have to post public notices or invite the public. As a matter of goodwill, most colleges offer a short time period on their agendas for public comments.

At the appropriate time of the agenda, the board chair opens up the floor to allow time for the public to make comments. Public commenters usually have a time limit of a few minutes. The board doesn't respond directly to comments or interact with public commenters, but directors should consider the content and impact of public comments in their board work. Despite the criticisms, a healthy number of shareholders and students believe that private colleges are a good thing. Shareholders have the option of investing or not, and students have the right to choose a private college over a public college if they wish. Unless the government restricts some of the private colleges' actions in the future, board directors will need to continue to work to balance the best interests of shareholders and students with as much integrity as they can.

Related Insights
Nicholas J. Price
Nicholas J. Price is a former Manager at Diligent. He has worked extensively in the governance space, particularly on the key governance technologies that can support leadership with the visibility, data and operating capabilities for more effective decision-making.