America is experiencing organizational catastrophes causing much of our public distrust of them and one another. This crisis is not exclusively owned by congress, political parties or government. Among those organizations are boards of directors charged with running public universities, school districts, corporations of all kinds and pension trust funds for public employees. Look at the make up of most of them. Middle aged and old white men. Clearly representative of one very narrow demographic.Let's examine some of their problems and some solutions to restore public confidence in institutions in America.
Problems?
School boards are elected by a very narrow cohort of the population. Candidates are often put forward by interest groups around board activity, policy and business. These elections are often held at obscure times with candidates who are even more obscure even to a tiny share of the electorate who are motivated to vote in these elections. 25 of 46 states have cut their public education state funding from -24% to -.05 %.
Public university boards are mainly political appointments made by state executive administrations and governors. These appointments are often rewards for campaign contributions and support. Student loan debt in 2017 stands at around $1.4 billion with 44 million borrowers.
Corporations boards are nominated by incumbent boards, founders and large investors and venture capitalists. In 2016 American corporations were hoarding $1.9 trillion in cash and no one can explain why. Corporations historically have been borrowers, but apparently the model has reversed.
Pension boards are most often appointed by elected officials such as governors and mayors in the case of public institutions. Moodys reports that state and local pension funds in 2016 are shortfalling by $7 trillion.
All of these institutions are is crisis. School boards are rife with political factions causing divisive disagreements, education system ideological disputes, re-segregation and major funding crises. University boards malfeasance has caused massive cost inflation, off the charts tuition and fee increases, massive student debt and obscene spending on stadiums and amenity facilities which have put research and faculty on the back burner. Example, look at the new football stadiums. Public corporations boards engage in self dealing, neglect of ethical oversight and massive ignoring of societal damage caused by their decisions. Just look at the record of commercial banking during the '08-'09 collapse of the financial sector and the more recent example of abuse by Wells Fargo. Pension funds at all levels are in crisis with terrible overestimation of investment returns and underestimation of future funding requirements and allowance of raiding of their trust funds by associated government entities. Just look at the state of Illinois and cities like Detroit and Dallas.
Solutions? Certainly I am a layman when it comes to organizational finance. But I've served on a couple of small corporate boards and several non profit boards and have at least a sense of potential solutions. School boards need representation from teachers, students and parents they serve and a closer match to the community demographics.
Public university boards need student and faculty representation and less influence from alumni with respect to athletics and physical facilities and more with respect to academics and cost management to emphasize affordability.
Corporate boards need major regulatory reworking to increase representation of women, minorities and workers. They also need greatly increased board responsibility and accountability regarding the impact the organization has on the community, including environmental and economic impact on their decisions and that of their management team.
Pension fund boards, particularly those serving public sector employees need much more fiscal and actuarial expertise. They also need a balance of this expertise and employee/pensioner advocacy to assure sustainability and financial stability.
All these boards have some 'splainin to do. Public schools are spending way less to educate way more kids; this makes little sense. Public universities are driving many of these kids into a life time of financial struggle rather than financial improvement by being better educated. Corporate boards are hoarding trillions of cash with record earnings while complaining about paying too many taxes and doing little to expand employment opportunities for the aforementioned kids. Pension funds seem to offer a very unstable and potentially bleak future for those who work harder and longer than any other western nation citizen.
From the beginning to the end of life, these boards simply are failing America. It is time to rethink them.
