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Posted at 04:00 AM ET, 05/16/2011

Did FSU let billionaire buy professorships?

How much control should donors to colleges and universities over who gets hired with their money?

That’s the question at issue in a new controversy over an arrangement in which Florida State University accepted $1.5 million from the extremely conservative Charles Koch Charitable Foundation to endow two faculty chairs. Koch, one of the world’s wealthiest men, funds libertarian and conservative causes with his brother, David.

According to a story in The St. Petersburg Times, which first reported the story, the foundation gave the money to further studies into “political economy and free enterprise.” As part of the deal, an advisory committee was created, with members approved by Koch, which could decide which candidates could be considered. In the first round of hiring, the paper said, nearly 60 percent of candidates put forth by faculty were rejected though two were later approved.

Florida State University officials say they did not violate academic freedom or any other academic principle. [See below for a detailed explanation from the chairman of the department involved at FSU.] Some faculty members say otherwise, and it indeed sounds as if this arrangement gave the donor too much power.

I asked Stephen Joel Trachtenberg, former president of George Washington University, about how much control donors should get over hires. He said they shouldn’t have any -- but.

The ‘but’ involves the subtleties involved when universities raise funds and accept gifts that go beyond the specific legal rules that govern donations to non-profit organizations. Donors can, for example, specify the field in which they want their money spent, but can’t dictate who is hired.

“I once got a gift from Kuwait, and they wanted to dictate who got the [endowed] chair,” Trachtenberg said. “And I said, ‘Guys, a gift is a gift. This is not a transaction. If you give me the money I’m going to use it to hire the best person I can. I’ll be happy to give you advance notice and if you really have objections, I’ll take them under consideration. And if I think it is really offensive to Kuwait, I will respect that. But even I am not going to unilaterally hire a faculty member. This is done through a process in which faculty play a big role. And no, you cannot have veto power. Those are the terms.”

There are of course sensitivities and sensibilities that a university will take into consideration. Money that comes from an Arab country is not going to be used to hire a Zionist, and Ford Motor Co. would not agree to donate money for a faculty member who was not in favor of capitalism, he said.

Donors, he said, “don’t have an obligation to dump the money on a stump and walk away,” though “it would be nice if they did.”

“Nothing is better [for a university president] than unrestricted cash, but nothing is worse than for the university to become a holding company for someone else’s ideas and money,” he said.

Following is an account of the episode sent to me by Bruce Benson, chairman of the Department of Economics at Florida State University:

Thanks for your interest in the facts regarding the Charles G. Koch Charitable Foundation gift to Florida State University. Here are those facts:

The Charles G. Koch Charitable Foundation (CGK) did provide funds to FSU to help the university’s economics department hire two faculty members. However, the department chose who to hire, and the hiring procedure itself was the result of demands by members of the faculty. The initial proposal by the CGK was that it be allowed to participate as part of the search committee. The economics department rejected this proposal and instead demanded that the department go through its standard search process first, after which the advisory board would review the department’s shortened list and indicate which candidates CGK found attractive. The Koch Foundation did not give the Department of Economics a list of names; in fact, it was the other way around — the department gave such a list to the foundation.

Furthermore, Florida State University was well represented on the advisory board. The committee was made up of three members. One is still a faculty member in the economics department who is a widely respected scholar (both inside and outside the department and the university) and is the holder of an Eminent Scholar Chair at FSU. Another advisory board member was also a faculty member of the economics department, also highly regarded within his field, and also the holder of an Eminent Chair. (This faculty member has since left the university but remains on the committee.) The third advisory board member was an employee of the CGK who is a Ph.D. economist.

The economics department screened between 400 and 500 applications for the two positions and came up with a preliminary list of candidates who were of potential interest. This committee quickly agreed to a subset of the department’s candidates, but several more were added as the committee learned more about other candidates. (It is difficult to provide an exact number since there was continued discussion afterwards about several applicants who did not make the advisory board’s initial list but were later approved.)

A major reason for the advisory board’s decision not to approve most of the other applicants was simply that there was not sufficient information about them to make a judgment. However, if the department was able to provide additional information or convincing arguments, the board would reconsider, and it did so repeatedly.

Ultimately, the economics department set up 18 candidate interviews at a conference of the American Economic Association, all chosen by the department’s search committee and approved by the department’s elected executive committee. (This is the standard process used whenever the economics department is conducting a candidate search.) Some of these candidates had been approved by the advisory board before the conference (although the department did not choose to interview everyone the board recommended), but the department also interviewed other candidates that it thought highly of but that the advisory committee was still examining.

After the American Economic Association meetings, the economics department’s first two choices for the open faculty positions were invited to campus. After departmental approval, job offers were made. The department actually was going to try to hire one of them two years before, but he decided to accept a two-year postdoctoral position at Stanford University. (Regrettably, he ultimately did not accept FSU’s offer, accepting one instead from Cornell University).

The department’s other choice had not been approved by the advisory board before the American Economic Association meetings, but the committee signed off on him at departmental urging. In fact, after further consideration the candidate was enthusiastically approved by the committee, invited to campus, was overwhelmingly approved by the faculty, and given an offer, which he accepted.

The second person hired was not even interviewed for a Koch Foundation-funded faculty position at the American Economic Association conference, nor was she considered by the advisory board until after she visited campus while seeking an entirely different faculty position. The department was also searching for a University-funded Pathways-to-Excellence candidate in experimental economics.

An offer was given to the faculty’s first choice for this position. However, after her campus visit the advisory committee was asked to consider her for a CGK-funded position even though she was not on the department’s initial list. The committee agreed so she was shifted to the second CGK-supported position and another excellent candidate was hired in experimental-economics.

The department was going to hire her, however, even if the committee did not support her. Furthermore, it was not a situation wherein the Koch Foundation interfered with the economics department’s decision. In fact, the department would not have had a decision to make if the Koch Foundation had not offered to fund these two positions. The department only hired candidates who went through its screening process first and who the department was very happy to get. If it had not found such candidates, the department likely would have tried again the next year. However, if it had failed again, it was probable that the university would have decided to turn down the Koch Foundation’s offer.

The Times article also states that “faculty only retain the illusion of control.” The contract specifies that an advisory committee appointed by Koch decides which candidates should be considered.” The argument made above should address this, since the economics department actually did the first screening and because faculty convinced the advisory board to approve both of the people who were hired, one of whom clearly would have been hired anyway.

Again, it must be made perfectly clear that the two positions the Koch Foundation offered to fund were not positions the economics department would have been hiring on because it had no other funding source. The Koch Foundation provided the department with the opportunity to add to its faculty, but it was not held hostage. The department was not forced to hire anyone. It could have opted out anytime it wanted to if faculty felt that the Koch Foundation’s demands were going to harm the department.

The Times article states that “Koch rejected nearly 60 percent of the faculty’s suggestions but ultimately agreed on two candidates.” Again, this is incorrect. Once the advisory board “agreed” a candidate, its agreement could not be withdrawn. The economics department was free to pursue the candidate, even if the advisory board had second thoughts.

The board ultimately agreed that many more than two candidates would be suitable for the two new faculty positions. The Times’ statement that the Koch Foundation “ultimately agreed to two candidates” is simply false, and if it were the case it would have violated the memorandum of understanding. This was one reason for the advisory board’s tight initial screening, of course. At the economics department’s urging, the board ultimately approved several more candidates after its first cut — two of whom were hired.

The article claims that “The foundation can also withdraw its funding if it’s not happy with the faculty’s choice or if the hires don’t meet “objectives” set by Koch during annual evaluations.” In fact, as the Memorandum of Understanding with FSU states, if CGK is not satisfied they can cancel the agreement [just as the university can] but with a contingency: CGK must make “continued payments for any position for which FSU has already made contractual commitment,” again in sharp contrast to the article’s claim.

I could go on, but hopefully it is clear that a careful reading of the facts will show that Florida State University was not and is not being dictated to by the Charles G. Koch Charitable Foundation, and that the university’s academic integrity was never compromised.

What do you think of all of this? Did FSU cross a line?

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