The Chairman of the Board Speaks

The winds of change have blown through the University of North Carolina System’s Board of Governors in recent years. In a state historically dominated by the Democratic Party, the board is now solely composed of members appointed by a Republican legislative majority. The board diminished in size in the last year—dropping from 32 to 28 members—and that number is set to further decrease to 24 members in the near future. And the state legislature has passed laws that will require new committees and new reporting requirements.

And now there is a new board chairman, Harry Smith. As a businessman and entrepreneur from east North Carolina, Smith brings valuable financial and project management skills to the board. From 2007 to 2015, Smith was chairman and CEO of an air filtration company called Flanders Corp. He was also chair of the Board of Trustees at The Oakwood School, a college preparatory school in Greenville, North Carolina.

Smith is a graduate from East Carolina University where he received a Bachelor of Science degree in business administration. He joined the UNC Board of Governors in 2013 and was reappointed last year.

In the UNC system’s form of governance, the Board of Governors chairman has a great deal of power, including the ability to appoint committee heads and to serve as the go-between for the board and the system administration. In recent years, some board chairs have found themselves at the center of controversies.

Smith’s appointment as chairman will officially begin on July 1st. The Martin Center sat down with him to discuss his vision and goals for the UNC system.

What are your highest priorities for the board going forward?

I think we will take a hard look at what we can do to position the UNC system for long-term sustainability. We can take a look at the overall landscape of higher education, including the $1.2 to $1.3 trillion in student debt. And then what does it cost to get one of our citizens through the public schools system, which is what we are.

I’m also an advocate of always running our business effectively. We will take a look at efficiency, effectiveness, affordability, and how we can be quicker, smarter, faster, and better in the entire system. Part of that will be developing 17 distinct strategies. Each one of our schools has a geographic area they serve to some degree. They serve a purpose in helping us battle a lot of the rural challenges we have in a lot of those areas. What strategies can we develop to help all 17 be successful? Right now, we have a one-size-fits-all strategy, and so we will be developing strategies that will be more focused toward individual campus success. So, really a holistic approach on what I would say, “running the business,” and a focus on sustainability.

Are those 17 goals defined yet?

No, one of the things we’re doing that I think everybody likes is that we are putting the data analytics on financial performance on the schools together, so you can actually quantify how a school is performing. We’re going to quantify the actual performance in key and critical areas at all of our institutions and then bench mark them against 20 years of history so that we can develop trend lines. What we’re looking for there is opportunities for us to implement policy that would solve a particular problem at a school. Or, to be proactive at a school that may be facing challenges instead of being “reactive.” A great example of that is: how did we let Elizabeth City get bankrupt over 20 years? All of the indicators were there; we just didn’t map it out.

We’re going to put financial and numerical quantification of performance together for all 17 of our schools, in a public document: retention rates, graduation rates, acceptance rates, overhead counts, auxiliary accounts. How are you running your business, parking, housing, and dining? How’s your endowment doing, not only how they are only performing, but how are you ­­­raising money? How are your athletics doing? Those are quantifiable areas where you can actually show how a school is truly performing. I think you will see where we will have schools with challenges, I think you will also see schools that are swimming upstream, that are just doing a great job—it’s probably effective leadership.

We’ll be quantifying actual performance and then working towards how we can be quicker smarter, faster, and better for the citizens of North Carolina, where the mean income is less than $50,000. I think a lot of people lose sight of the fact that we pay for a large portion of this on the backs of just incredibly hardworking North Carolinians who are trusting that we’re going to get it right. It will be a real focus on a lot of key and critical areas just to help us to find where we can be better.

How do you see the university changing in the next few years? 

There will also be a focus on transparency, because this is a public school system. We’re going to be incredibly transparent, we’re going to call it straight and solve problems. We’re going to take on a couple of new platforms; we’re going to have a focus on the HBCUs and HBMIs. I’ve been on this board for five years and we haven’t had a five-minute conversation about an HBCU yet. It’s one third of our assets, they’re struggling all across the country, so we should take and develop some strategy and make sure they get some advocacy and are strategically positioned to be successful. And we’re going to do the same thing with our HBMI, down at Pembroke; it’s one of the best institutions we have and we’re going to focus on how we can be even better, and advocate for them.

We’re going to focus on the health care space, utilizing more of a systematic approach to medical schools, nursing programs, hospitals, and how can we take those assets and help solve problems across the great state of North Carolina; particularly in rural health care, we need more of a system approach there.

One of the most paramount things that I think is going to be exciting is a strong relationship with the community college system, instead of competing with them. I think it’s one of the most underutilized assets that we have in the state. And I’m terribly excited about Peter Hans’ leadership over there, he’s a great guy, he loves his state, he gets education. I think you’re going to see great things happening over there under Peter’s leadership and we want to work very closely with him. I tell everybody all the time, you can go to any community college we have and you can still graduate from any of our colleges. We want to help them be more successful and partner with them more, because we have the same goal in mind—we’re educating the citizens of the state.

Do you have plans for any sort of major reorganization? 

No, I think that if anything, there will be more reforming type of approach. This is the public school system; we’re supposed to be affordable, efficient, and effective. You better look around, we’re getting beat up pretty good by the privates and the for-profits—and look at the funding we get from the legislature. You can look at some of the institutions that are nearby here that have had explosive growth right underneath us. So, we also have to compete; the competition landscape in higher education is only escalating.

The applicant pool has immense options now—when it comes to where they go to school and get their education. Not only do we have to be quick, smart, and fast in the UNC system, we have to be affordable, we have to be effective, we have to focus on quality, and we have to compete. We have to develop a platform so that applicants want to be in our institution and we also have to do it with a focus on affordability and efficiency, so that we meet the creed of the state, which is: “as free as practicable.” You will see us take all that into consideration. We will operate on the facts, we’re not going to go create some landslide—everything we do will be fact and data driven as we look at not only where we’re at, but where are the trend lines in this industry and we’ll develop policy based on really good fact, data, and detail.

How do you see the relationship between the board and the university system and between the board and the individual institutions? 

The UNC board of governors is a policy machine, and we have to know our role. And we also provide the oversight and the governance structure according to that. I think there will be a step-up in overall accountability—and that will come to the quantification of performance that I’m talking about putting together in a public document that we’re going to have at every single meeting. We want to call it straight, the board of governors is here to help, it’s not here to hurt. The board of governors is not trying to create some “gotcha” environment. The people in the room, all 27 of my other members truly want to help, and sometimes that may mean having difficult conversations as we work in areas that we truly have issues in. But, you can’t fix anything by hiding it.

We just want to get the fact, data, and detail and develop policy that truly moves the UNC system forward. That should be done with grace, humility, and dignity. And it should be pretty easy if we get the data and we know we have an issue, the goal should be just to fix it. I think it will be an awakening of accountability and actual quantification of how they really are performing. We’re not going to make the UNC system a business, but it has a tremendous amount of business elements: you still have to do everything you can to manage the financial aspect, performance, and platform of the system. We’ll walk down that road very carefully, but the goal will be to do a lot of good work in those areas.

Do you see value in the board having its own staff member whose exclusive job is to serve the board? 

That conversation has been going on for a while. I think you have to be careful not to create an “us vs. them” approach, and I think if you can create that balance then I think it works for everybody. I think if you don’t create that balance, then you just create dynamics that are all around unhealthy. I serve at the will of the board, so I’m going to be very inclusive. I will constantly seek the feedback and advice and viewpoints of the board and operate accordingly. That’s one of the great things having the group of people that we have now because we have an incredible varied amount of skill sets and approaches, that I think if you harness all of that you get an incredible result—you get the results that you’re looking for.

So, it will be a conversation that we will have with the board. This shouldn’t be an “us vs. us.” If we create an “us vs. us,” then we’ve all lost. This whole process of the board of governors and the UNC system administration and schools, everyone has the exact same goals—which is to be quicker, smarter, faster, better in how we go about leveraging higher education for the state and for the folks who come outside the state and who stay here and help us grow our economy. From that perspective, if we can get the detail that we are looking for, and that’s done in a manner that helps us to drive policy, then all that works. If we get to the point that the board feels like it needs staff, I would say that would be because we had a failure in being able to get the data that we’re looking for or the advice that we need—and I haven’t seen that yet.

The free speech legislation passed last summer requires that the Committee on Free Expression reports and comments on any violations of institutional neutrality and on any barriers to free speech. The committee must issue its report to Governor Cooper, the General Assembly, and to the public. How high are you prioritizing the work of the Free speech committee? What do you see as its role?

I haven’t really been involved in that at all. I’ll tell you how I view all of that: the law is the law. We don’t make it law at the board of governors. You can inject all the emotions you want into it, but the law is the law. We’re going to follow the law, and that’s no different with Silent Sam: there’s a law in place. So, we don’t get to make that decision at the board of governors, despite any emotions that want to go along with it. That’s the same with free speech, there’s a law in place—we’re going to follow the law. We’re not a legislative body; we’re a policy body. When the legislature votes and passes a law, we’re going to follow it, pretty simple. We’re not going to go trying to change laws at the board of governors, that’s not our job. The folks in Raleigh and the local officials across the state, when they make decisions at the state or federal level, we’re going to respect that process entirely.

Silent Sam continues to be a controversial issue—but it appears to be driven by a small vocal minority. Does it seem there is some way to resolve these kinds of controversies? 

I always tell everybody, don’t let the vocal minority outweigh the silent majority—and that happens a lot. It’s been no different when we have protests here [at meetings of the Board of Governors]: we have 230,000 students and we have six protestors from time to time. At the end of the day, people have their rights to have their views and opinions and that’s what makes America great—but there’s a law in place there, too. It’s a very clear law: I don’t even know how you can interpret it any differently than it’s written. So, at the end of the day, there’s a law in place that’s passed by the legislature that we’re going to respect. If you want to move Silent Sam, you don’t need to be coming to the UNC administration or the board of governors; you need to go down and talk to the legislature—because there’s a law in place. We’re going to follow the law when it comes to the board of governors. And by the way, we’ve got plenty to do without getting into the writing the law business.

In your fellow board member Joe Knott’s op-ed in the News and Observer, he said that universities are really politically lopsided. And there is empirical data to back that claim—is this a problem the board can solve? 

I’ll answer that in a couple of different ways. One, Joe Knott doesn’t speak for the board of governors; he’s an individual member that chose to go out and take his voice into a public format, and, quite frankly, he shouldn’t have done that. He disrespected the 27 other people, because the board should work in unison. If we have everybody out there creating ideology, you’ll have some difficult governance challenges there. I’ve had that conversation with Joe; I think his intent is well. But, we’ve got to respect the process, the governance, and the entire board of governors when we take on issues because if we allow individuals to go out and take on policy discussions, the board of governors doesn’t have a chance to create policy that’s effective and we also disrespect the process of other people’s views and opinions and how they feel.

Having said that, I think that might be a discussion that the board might be willing to take on. I think it’s a robust debate, I certainly understand it. We’ve got to figure out what policy we can accomplish and be effective in the process. I work at the will of the board, so if the board of governors decides this is something that they want to take on as a group—not as an individual—then we’ll certainly take a look at it. We’ll take a look at that with fact, data, and detail, and take the emotions out of it—because that’s where we get in trouble, when we inject our emotions and we ignore the fact, data, and detail.

It’s not the board of governor’s position to invoke their personas or their personal views and opinions into the policy; that’s why you have 28 smart people in the room. We’ve got to utilize the strengths of the board. I would tell any member that if you have something you want to look at, bring it to the board. Respect the board, respect the process, and see if we can get traction with the board. I’ve encouraged Joe to do that, and if the board decides that it’s an area they want to take a look at, then I would certainly support that—but not until the board speaks. Going forward, it’s my hope that we do not operate on the individual level, but work as a group. We’ll be much more effective in that platform. This group of people wants to do really good things and leave it better than they found it, so as we find areas where there’s a true need for reform, I think you’ve got a group of people who will take it on.

What do you think is the university’s role on economic development? 

I think it’s phenomenal. When the universities are run correctly, they are economic engines. I believe they have to be run correctly. I don’t know how much quantifiable data we have done on the return investment on the research side of the dollar versus the return, but I think that is something we should be putting together. What are we actually getting out of the dollars going in, and how does that impact the state? There’s no doubt that when they’re run correctly they are absolute economic engines: hotels, motels, restaurants, gas, fuel, and jobs.

They also create sustainability with the skill sets and create the jobs we need: nursing, teaching, doctors, and all those areas of sustainability—especially in rural areas. One of our biggest hopes in rural, west, and eastern North Carolina is our colleges: creating the graduates to sustain the economy for the people that will stay, because with urbanization everybody is packing to the center. We’ve got to create some kind of hub to keep the east and the west alive—and I think our universities are a great shot with helping them with that, as well as our community colleges because they also create a product for job creation. I absolutely believe in the economic engine part of the university system. I don’t know if I ever bought into the over quantification of how they put the numbers out, but I do believe they can drive the economy—if they are ran correctly.

A lot of the schools in the UNC system have graduation rates less than 50 percent, how do you plan on getting them up without lowering standards? 

I think that’s a great question. What you’re going to see also is this board taking on subject matter like that that hasn’t been taken on because it’s not very popular, since the numbers don’t look very good. This will go with our data dashboards. When you look at a data dashboard that will come out in July, it’s going to have the 24 month trend line, and the current trend line on retention, graduation, acceptance rate, quality of students, overhead and auxiliary accounts performance, how’s housing, parking, dining, and performing. How are you running them? What’s your profit? It’s going to look at your endowments: how are you doing on your endowments? And in your athletics, how are you doing? We’re going to quantify all of that.

And another thing we have to look at is best practices. Some of our schools have phenomenal practices on retention and graduation rates, but we don’t work as a system. How can we focus on that? I would argue that we’ve had little improvement over twenty years on our retention rate, which is one of the biggest cost factors in the state. There will be a focus on all of that stuff and a spotlight on developing action plans to improve. And I also think that our close working relationship with the community colleges can help us to be successful in that venue as well. There are a lot of students who I think should start in the community colleges—in their best interest. They can still come to any university we have. These students are still maturing, there are financial challenges; a lot of people don’t realize how many students we lose in the UNC system because of finances. You can get numb to the numbers, and it’s my hope that we don’t do that, because every dollar matters.

The growth of administrative staff has slowed, but there are almost twice as many professional staff on campus than there are faculty. Do you plan to address that? 

Absolutely. It goes back to getting the fact, data, and detail so we can understand our landscape. The heartbeat of this whole thing is the faculty: we’re here to teach. When I look at what makes the UNC system great, I think it’s the faculty and staff. We should never forget, with all due respect to the administration, nothing happens if we can’t teach students. Keeping our faculty and staff motivated, engaged, excited, proud to teach in the UNC system should be paramount for us. In my personal opinion, I think they’ve been forgotten a little bit along the way. We need to give them a tremendous amount of respect and, it’s their due. And I think you’ll see 27 other people being a tireless advocate for them, because the other governors I’ve talked to understand the greatness of our faculty and staff. The fact is, we have one of the best systems in the world, and it all comes down to our students being taught in the classroom.

Starting in July, we’re going to give the faculty the opportunity to speak at every Board of Governors meeting, so we can hear them; we want to understand what their challenges are, and we want them to have a voice. Going forward, they will have a voice. You’ll see a Board of Governors that’s willing to take on the challenges once we get the fact, data, and detail and understand we have an issue. I think this is a group of people who are willing to take on the challenges to get it right.

Editor’s note: In the following sentence: “It’s been no different when we have protests here: we have 230,000 students and we have six protesters from time to time,” Governor Smith was referring to occasional protests that have taken place at the Center for School Leadership Development, where the Board of Governors meetings take place; he was not referring to Silent Sam protesters on UNC-Chapel Hill campus. We added context to clarify this point.