Assembly Higher Education Committee Hearing: Opening Remarks

Richard L. McCormick, President
February 25, 2008

Mr. Chairman and committee members: Good morning. I am Rutgers President Dick McCormick, and I am joined today by the chair of our Board of Governors, Bill Howard. We appreciate this opportunity to address the Assembly Higher Education Committee because you have a major role to play in achieving our state’s most ambitious educational and economic goals. More than ever, our nation needs its colleges and universities to train leaders, expand the economy, and address the challenges facing our communities and our society. These goals can be fulfilled only if our institutions are governed well and independently and are held fully accountable to the citizens they serve.

The recent report of the SCI has focused attention on the business practices and governance of New Jersey’s colleges and universities, and Rutgers takes the report very seriously. Throughout the commission’s two-and-a-half-year investigation, and long before that, Rutgers worked to improve its management practices—including, as the report observes, “strengthening internal budgeting, accounting and governance procedures…implementation of a number of Sarbanes-Oxley-style accountability controls…an updated charter for [the] Board of Governors’ Audit Committee, establishment of a ‘hotline’ for confidential reporting of financial concerns, expanded conflicts-of-interest disclosure rules and greater review of business-related travel and entertainment expenses.” Rutgers also revised its policies on purchasing, charitable contributions, and political activities. All that happened, including the Sarbanes-Oxley controls, before the issuance of the SCI report.

This work of establishing and ensuring sound business practices continues. As recommended by the SCI, our Board of Governors must now approve the hiring and compensation for all members of the president’s cabinet. Rutgers agrees that we need to modernize our financial management systems, and we are making that commitment. Along with other colleges and universities, Rutgers is working with the commission on Higher Education to take the steps that the commission recommended in December, and I believe you will hear more about that later this morning when commission chair Larry Downes appears before you. These actions notwithstanding, financial reviews and ratings by independent agencies clearly affirm that, year after year, Rutgers carefully manages both the public and private resources that are entrusted to us.

We disagree with the suggestion that Rutgers was insufficiently cooperative with the SCI investigation. You have not heard that this morning, but it’s in the report. The university and its employees displayed the utmost professionalism throughout this very long and arduous ordeal. Staff members throughout the university went way out of their way to accommodate the SCI at every turn, including responding to demands that were sometimes vague or open-ended and that, in many cases, interfered significantly with the ongoing work of the university for two and a half years.

Turning to the subject of institutional governance, on which the SCI has much to say, we concur with the recommendations to preserve Rutgers’ autonomy and to position Rutgers “as a leader in higher education governance and accountability.” Our governance structure ensures that the university conducts its business openly and without political influence. In keeping with the recommendation regarding certain Sarbanes-Oxley principles of relevance to higher education, which we support, our board has a vigorous, probing Audit Committee composed of individuals who are highly experienced in this work and who examine rigorously and regularly the university’s financial management and financial transactions.

Rutgers also concurs with the SCI report on the need for accountability at the highest levels. Universities like ours answer to many entities, including federal agencies, private donors, external auditors, and dozens of accrediting bodies—not to mention the tens of thousands of students (and their families) who vote with their feet, and their dollars, every year. That said, accountability to the state of New Jersey is especially critical, and Rutgers is open to further discussions of how better to achieve this important goal.

Today I am submitting to your committee both a copy of this statement and a more detailed written response to the SCI report, as well as a column of mine that appeared in New Jersey’s newspapers following the release of this report.

Members of the committee: Universities have a unique mission, vital for democracy to flourish and the economy to prosper, and they must remain intellectually independent. Our universities must be able to pursue and convey knowledge free from political interference or corporate control. At the same time, we must constantly strive to ensure accountability and transparency in serving the state. We owe that to you and to the people of New Jersey.

Thank you for this opportunity to address the committee.