Delivering American University's news and views since 1925. | Wednesday, December 12, 2018

U.S. Senate seeks AU input on governance reform

In a meeting with U.S. Senate Finance Committee staff and governance experts on Capitol Hill Friday, Student Government President Kyle Taylor said most of the AU board of trustees cannot be counted on to reform AU's governance because they stood by former President Benjamin Ladner after reports found he misused university money.

"The Ladner scandal is a symptom of the larger governance problem, and is one of many examples as to why this board cannot be trusted with the reform process," Taylor said, as former board chair Leslie Bains stared across the seating aisle toward current board chair Gary Abramson, Interim President Neil Kerwin, two of the board's lawyers and other AU officals.

The board, administration, faculty and students have discussed plans to improve board governance since Ladner resigned last fall after audits found he misspent university money on personal expenses.

Many faulted the board for allowing Ladner to act inappropriately, including finance committee Chairman Charles Grassley, who requested thousands of pages of documents from AU last December, saying "the AU board could be a poster child for why review and reform are necessary."

The committee is considering creating legislation that calls for greater accountability in nonprofit organizations, similar to what the Sarbanes-Oxley Act requires of for-profit businesses, after high-profile scandals at the United Way, American Red Cross and other charities.

AU, like many universities, is a nonprofit under section 501(c)3 of the tax code. The Senate called in AU officials and students to discuss issues related to nonprofit governance and inform potential legislation.

Later in the meeting, Bains said 13 trustees - who, she said, first tried to keep Ladner at AU and then gave him a generous severance package when he left - should be forced off the board, a position she has maintained since she resigned in October.

"I don't think that that is a practical answer, nor is it a productive answer," Abramson said in an interview after the meeting. "The people that are there now could easily have left and said they don't need this. And what would they need it for? They're not getting paid; all they're doing is getting beat up in the press and criticized."

Bains and three other trustees left the board last fall, but the trustees who stayed to help fix the problems that led to the Ladner controversy are dedicated to doing a good job, he said.

"Anybody can say, 'I've had it, I'm leaving,' and then criticize," Abramson said. "But the people that are there are committed and are trying to do the right thing."

The move Bains suggested would leave six members on the board - just enough to remain functional, she said, despite the fact that AU's Congressional charter calls for a minimum of 25 members. The board currently stands at 19 members after Bains and others resigned.

Congress could change or repeal AU's charter, which has been amended five times since the university was incorporated more than a century ago, to alter the composition or size of the board.

"You need something drastic to restore the credibility of American University with its constituency and the community at large. Only then will you be able to attract very strong trustees and a strong president," Bains said in an interview.

In his remarks at the meeting, Taylor emphasized the need to remove the president as a member of the board, make annual audits available to all board members and add three student and three faculty trustees, among other changes.

After the meeting, Kerwin said he hadn't made up his mind on whether students should be added to the board, saying he needed to see more research and hear about the experiences of universities who have student trustees.

About 9 percent of private schools, like AU, have voting student members on their boards, according to the Association of Governing Boards of Universities and Colleges, while about 27 percent of public schools include them.

Experts on nonprofit governance agreed on common themes at the meeting - such as improved communication, transparency, and consultation with diverse university constituencies - but differed on the specifics of board size and composition, as well as other issues.

"I thought that it was interesting to see that even among the experts, they didn't all agree," Abramson said, pointing out the need to take time to carefully consider diverse points of view instead of rushing to put reforms in place. Some, including Taylor, have said the reform process is going slower than they hoped.

Mary Gray, an AU math professor, presented a list of suggestions from faculty that included creating an ombudsman position, filled by a tenured faculty member who would "receive reports of alleged abuses of administrative authority" and have the power and resources to investigate them and report the results to the board.

At the meeting AU also released new policies, decided upon at the February board meeting, requiring the full board to see and approve the president's employment contract and review his or her performance regularly. Last fall, trustees debated whether Ladner's contract signed in 1997 was legal, because many trustees said they had never seen it and it was not properly approved.

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