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1 UNCG CENTENNIAL ORAL HISTORY PROJECT COLLECTION INTERVIEWEE: Fred Drake INTERVIEWER: William Link DATE: February 15, 1990 WL: I would like to start today just by asking you a little about you background—where you were educated, where you were born, and how you came to arrive at UNCG [The University of North Carolina at Greensboro]. FD: I was born and raised in southeastern Virginia, farm background, and went into [military] service and left the service [after] four years, attended the University of Alabama [Tuscaloosa, Alabama], graduated in 1958 with a bachelor of science in business— accounting major, worked for six years with Ernst & Whinney [accounting firm], left there in 1964, went back to my alma mater in a financial management capacity as a chief accountant and held a number of positions until 1969, when I was made vice president and treasurer. And I worked in that position for five years and then, at the board’s request, I went to the system office and was the chief financial officer for the system. After four years of that—it was a new system, just formed, with three campuses—I left there and left Alabama and went to the University of Houston [Texas], central campus, with a very specific mission of restoring the financial management and fiduciary control of that campus that had been undergoing some major problems at that time in 1978 when I went there. I stayed there for two and a half years and came here in 1980. So I have been in a position of chief financial officer for about twenty-one, twenty-two years and have about twenty-eight years total experience. So that’s basically it. Most of my life has been spent in higher education and financial management, basically in this kind of position. WL: What were your first impressions when you arrived here? What sort of administrative system did you find here? What kind of situation did you discover? FD: I found a university that basically was living in the Dark Ages [period of intellectual darkness that supposedly occurred in Europe following the collapse of the Western Roman Empire], as it relates to its management and planning and its fiscal structure, but was—academically at least the reputation of the institution was very, very good, so there was a dichotomy here that I didn’t think would last very long. It was—I don’t see how you can have a good academic institution and have all of the infrastructure to be not adequate. I didn’t think that would last very long, so that’s basically my feelings about it. WL: Can you be specific, a little more specific, about what fiscal nature of the financial and administrative structure—how it was crumbling, what—? 2 FD: Well, let’s talk about the physical campus first. The physical campus was very—it was very evident there was no planning about the development of the campus in relation to academic programs. There was no indication that the needs of the students and faculty and staff had changed over twenty years. There was no indication that there was a direction that we wanted to go. Let me give you an illustration of that: the very limited recreational opportunities for the students [unclear]. The campus itself was very constricted by the city, and, therefore, the planning had been only to the extent—put the building where you can buy the acre of land that you need to put—no long-term view of zoning the campus, general functions, residential versus teaching and research and those kinds of things. There were no indications that anyone had given any long-term thought to housing, residential needs of the students or to updating the facilities with respect to the food service capabilities, and yet we had forty percent of our students living on campus. Worst of all, there was a deterioration of the academic facilities in a functional sense. That is, the buildings were dysfunctional in relation to program needs. There was no—as an example of that: the chemistry and the physics departments were operating in totally inadequate facilities. Their labs were not appropriate. The School of Human Environmental Sciences, which has become in modern times to be a science-based program, not a cookie-sheet kind of operation—there were no facilities that recognized that in place, and yet they had the heaviest doctoral commitment on campus, of any program on campus. And not only that, it had a land-grant mission, and so it was a pretty important program for the university. There was no attempt to stop the deterioration of the quality of the incoming freshman students here [unclear]. In fact, I think that all of the things I’ve mentioned gave rise to that deterioration because it did not provide the students with the kinds of environment that they needed in a college or university—the kind of environment that they could get at a [University of North Carolina] Charlotte or a [University of North Carolina at] Chapel Hill. So therefore, in all honesty, the physical deterioration caused a quality deterioration in students and a quality deterioration, I think in programming. Now the fiscal aspects of the university, budgetary aspects—the thing that impressed me most was that there was absolute line item control at the state level on all budgets, and that was to me again another dichotomy. You were asking—you were trying to bring in people that can administer the programs, but you weren’t letting those people make decisions that would allow them to utilize their resources to achieve quality programs because you tied their hands by saying—you had such tight line item control. That was number—that’s the first problem. And that was an opportunity also. That presented an opportunity for us to learn how to manage within the system, and there are ways to do that, but those ways have not been adequately explored by the financial people over here. WL: Is that still the case—absolute line item—? FD: No. We have explored about everything we can explore and are doing so every day. WL: But we’re still under that constraint? 3 FD: We are still under—it is a more limited constraint now than it was then. There has been some flexibility achieved, but the biggest flexibility is not in the line item budget but in the way this office relates to the budget of the state, and the way we do our staff work and present the needs and ask them to help us find the solutions. And that has—and also, there are ways to work the system if you are willing to get in there and really understand that your job here is to provide the resources for the university and not to worry about the reversion of resources to the state. And so you have to tackle the first of those and let the latter one take care of themselves. There is somebody else out there worrying about that one. So what we’ve done is to change our fix from not being—we don’t want to be state fiscal officers; we are university financial officers and have the responsibility first and foremost to this university, this campus of this university. And secondarily we will live within whatever rules and regulations that are required of us to accomplish that, but we are going to do everything we can to achieve financial flexibility within that set of circumstances. So, in effect, we work the judgment areas of the system. WL: Does that mean that sometimes, most of the time, you’re working in conjunction with state officers and other times you are working perhaps in a different direction? FD: In a large number of instances we will be working hand in glove with the state. In other times we are making independent decisions that we believe to be correct, and we’ve properly documented why we make those decisions and, so far, those decisions have proved to be good decisions in a large way. WL: Is this a change? Was the previous administration different in its attitude towards state financial officers? FD: Yes, I think the—not the previous administration of the state—I think the financial officers that were previously here had their background not in other campuses and how they operated but in the state of North Carolina at the state level. Therefore, they had an unusual loyalty to the state bureaucracy and considered themselves an extension of that bureaucracy. We do not consider that here to be the case. We are officers of the university functioning under the chancellor, and we are trying to assist him in reaching his goals and those of the board of governors and the board of trustees that have been set out for us. Basically, the goals we are trying to reach now are those that [Chancellor William E.] Bill Moran discussed with me in some very long conversations in 1980. We have not changed our direction. We are basically on the same track. WL: What sort of financial set up did you find here when you came? How was this office organized? FD: We had a large number of people that were functioning at inappropriate levels of management for the size and complexity of the product that they needed to produce for the faculty and students. I’ll give you an example. We had—well, accounting seems to be a simple enough place to start. But basically in a financial management situation, if you don’t have an appropriate information system that is geared to generally acceptable definitions of higher education and if you don’t understand the relationships of those 4 definitions, then how can you assist the campus in financially managing its resources? The accounting system was nonexistent in the sense that it did not serve the university’s needs. It served the state’s requirements. The state’s requirement is one of control of dollars, not of understanding how you use those dollars and whether it is appropriate to the mission of the university and feeding back that information to all levels of the administration that needed to understand it. So what we did was to bring that up to a modern accounting system that provided us with the data that we needed to assist in managing of the campus and, at the same time, to overcome some of the problems that were existent in the line item budgeting systems being promulgated by the state. When— in 1980, my estimate of the situation is that the state budget office knew more about what we were doing than we did ourselves. What I have tried to do is to turn that around and to advise the budget office that they are not close enough to make the detailed decisions that they did, in fact, make. And that was apparent in every level, and it had to do—level—I mean every area of this office. It had to do with the individuals that were here and their lack of understanding of higher education in general. They understood state government, but they didn’t understand higher education generally. And I think that if you don’t understand that and if you’re not committed to it, then I don’t see that you can function in this environment at all. Higher education is a very unique kind of management environment from a financial perspective, and it is not a business. The bottom line is very nebulous. It is the quality of the students you produce and whether or not you are producing the knowledge that—to continue the process. And it’s just different, and if you don’t recognize that and deal with that difference, you are not supporting the mission of the university. WL: Would you and your predecessors deal directly with the state? Do you—it actually goes directly to the state budget office? Is that the way the system works? FD: General Administration of the University of North Carolina [GA] has—as it respects a budget, is responsible for one thing, and they are very clear about this. They make—they formulate and present the budget requirements of the system. Once that budget is adopted or amended or whatever by the legislature and given to the governor for execution, then our dealings on the campuses is not with GA; our dealings is directly with each component of the executive branch of the state government, and we are allowed to negotiate with whatever we can do within the context of the legislative budget. And what happens is that it puts the state government and a campus one on one, which means that you’ve got sixteen of my counterparts out there operating one on one with the state government, just like the highway department, and each campus functions sort of independently. Now we’re vulnerable in one way, but it gives you a bit of flexibility in another way because it allows the individual sitting in this chair to make some judgment calls in those areas where it’s reasonable to make judgment calls at all—move back and forth and find the place that fits your needs the best. As long as you can rationalize it and defend it, you have accomplished something for the university. Nothing can be— regulations will never be written tight enough to control—to eliminate all judgmental opportunity, and what I’m doing is just finding the niches where we can utilize judgment opportunities to make the most of it for this university. That’s basically what I’m doing. 5 WL: Putting the budget together originally—the budget that was submitted to the general assembly. What’s the nature of that process? Your office is obviously involved in that as well. FD: I think before I arrived here the process was basically this—that GA sets a set of policy parameters. Those parameters may be general, in the sense that you can develop the numbers, or they may be number specific. They may give you a number that you can request in a category. In any event, they give you the policy guidelines. Those policy guidelines are discussed and debated at the board of governors’ level. Then we request against that policy. Those—and internally the chancellor can allocate within those policy guidelines for the areas of the university. He would say to [Provost Donald] Don DeRosa, “Let’s worry about—of the amount that I can allocate from, I’m going to give sixty-five percent to the instructional units.” And the department heads to determine, within these general guidelines, where do you want to put that? What do you want to spend it for? So Don goes off and works with the deans and comes back with an approach to that. And basically then, that is just combined and sent back to GA. It is the details that support the policy decisions that were relayed to us from general administration. That’s all it is. We have gotten a little bit more sophisticated internally in that we look at more things than just the state budget. We look at the state budget, and then we look at discretionary budgets, and we don’t make decisions on one without having some understanding of how the other one is going to be affected. That way we can cover problems from more than one source, and this office simply acts as staff for the chancellor, and the chancellor’s cabinet debates issues along with the university budget committee. From that standpoint, we are probably much more democratic in the debate of the budget process than was prevalent in 1980. In fact, I know that we didn’t have a budget committee in 1980—very little discussion or information flow really from either this office or the chancellor into the faculty governance structure, but now we make the— we listen to the budget committee; we listen to everybody else, and we come up with a budget, and then we feed back the results of that decision back into the budget committee and to the university community. It’s discussed in cabinet—academic cabinet and also made available to the general faculty and anybody that wants to come in here and go over it with me, I would be happy to do so. I don’t think those kinds of communication devices were there. Now there’s a lot of pluses that go with that, but there are also some minuses. And budgets are things that have become very emotional, and so you tend not to have all of the right answers or the answers that people want to hear, but you have the institutional posture—at least what you can do. WL: How have relations with general administration changed, if at all? FD: I think we are much more involved with general administration now than we were ten years ago, and it has come about as much from asking advice—I frequently, for example, go down and ask advice—I’ve got a unique problem or a problem I’m not sure which way to go. I utilize those people that have spent years down there, and I think you don’t do that though once a year. You’ve got to have a reason to be there and interface with them more than—. You’ve got to do it once a month. They’ve got to see you very frequently. So my posture is that I visit with the officers of general administration about 6 monthly, and then when I go down with particular problems or information that they need to understand, it’s not foreign to them. They don’t raise the question of why are you going to do. It also helps me in understanding how to approach state government itself. There’s a political linkage there that I like to keep clear and fresh because I don’t want to do anything that hurts GAs chances of getting something done during the budget process. Neither do I want them to do anything that will hurt me, prevent me from getting something approved at the executive level that is very important to me. So I kind of keep them informed of major decisions for the students. The other thing we do is make sure as a campus that when we develop long-range plans that they are briefed totally on it. An example of that: We spent three different visits with them in letting them understand the implications of our long-range fiscal plan that we developed in 1984, I guess it was, and once the board of trustees approved it, we made a formal presentation to them. Now when we send materials down for action on the board of governors, everything is related to the context of that plan, and it makes it so much simpler. We don’t surprise them— they don’t surprise us—and especially important in land acquisition and capital project matters. It really is helpful to us. WL: Has more force and seems more rational—plan—? FD: That’s right. What it does, it gives them a basis for relying on our staff work. It’s just a fundamental basis for their reliance on our effort. They buy into the concept in the front end rather than buying into a particular later without understanding what the long-range application is. WL: As—a long-standing complaint of this campus, which I’ve heard during these interviews, is that UNCG’s share of the state financial pie is small from the beginning, and it’s continued to be small, and it—. In fact, thirty years ago was the poor sister—I suppose the poor brother and sister now—is that—how true do you think that is? FD: Well, I’m going to talk generally—and it’s not the argument necessarily that I would make with a GA, but it is a fact that I would have to admit in making it. Greensboro has, in my opinion, one thing that is extremely significant to its ability to deliver up a quality educational program financially—that is its faculty/student ratio. I don’t know what the perfect ratio is in this type of institution, but nationally, if you look at our peers, Greensboro probably has one of the very best student/faculty ratios. Now the average faculty salary on which that is based has become somewhat deteriorated from ten years ago, but it’s still right about the average nationally. WL: It used to be a little better than average here? FD: It used to be a little better, and we used to rank a little better with Chapel Hill and NC State [North Carolina State University, Raleigh, North Carolina]. There’s been a general deterioration in the state, but then there’s been a little bit of deterioration of Greensboro in relation to the other two doctoral-granting institutions. I think that can be overcome to some extent, but that factor—that is, the student/faculty ratio is—gives us a faculty base 7 that is almost unheard of today in our education, and that’s the most important thing I think we’ve got going for us. WL: What sets that? Why is that? FD: Well, it was set many years ago at the time that the sixteen campuses were brought under the board of governors, back in the early ’70s. That’s my understanding of it, and that formula was based on the doctoral mission and the debate over the doctoral mission of the three campuses, so our ratio is very much like that of Chapel Hill and NC State, maybe even a little better than NC State. When you leave that particular segment of the budget, and that represents today about forty percent—maybe a little more than forty percent of our total budget. The faculty salary lines—when you leave that point, then we are in trouble. We believe that, measured against our peers with like missions and generally-like campuses, that we are very short in the non-salary component of the budget in the academic units. It is a fairly significant amount, but in the eyes of the state it shouldn’t be a very large amount because relative to salaries, it’s nothing—it’s about two million, three million, four million dollars, in that category. Now I think if we had that taken care of, then the instructional function would probably be in pretty good condition. Now, if you move away from the academic units, you get into much the same problem overall that you have in the academic units for non-salary. We talked about that. It is my own belief that you cannot long have a good university without all the components being reasonably good that are necessary to that university. I’ll even go so far as to say that if you have a bad accounting office, eventually it will tear down the rest of it because if you can’t justify that accounting office in terms of its fiduciary and informational and transactional processing to meet state requirements and to meet your own internal requirements, it shouldn’t be there anyway. And so if we get into trouble in a fiduciary capacity with the state auditors, it will so tarnish the image of this university that it will affect all sixteen, not just us. Look at A&T [North Carolina Agricultural & Technical State University, Greensboro, North Carolina]. A&T had a problem when I came here, in a fiduciary sense, and that affected everybody else. It affected the campuses with the state budget office. WL: With the legislature too? FD: With the legislature. “We wouldn’t give you that money; you don’t know how to use it once we give it to you.” Okay. I mean, it’s the old political clichés that come out in large groups of people without saying or admitting that ninety-nine percent or ninety-seven percent of the world is reasonable. It’s only that one or two or three percent that you have to worry about. So I think that the areas of general support for the university are short— major dollars in this university. I think it’s easier to find solutions to those kinds of problems that don’t require dollars than it is to find it in the teaching and research functions. And I think that’s why you see so much of—if you measure it against the good universities—I went out there and picked—let’s pick on [College of] William and Mary [Williamsburg, Virginia]. If I measured my capability to manage financially against William and Mary’s capability on paper, they are far superior. In actuality, we’re better. 8 And I think we’re better because we have to do things with more ingenuity, and I think we’ve got a better and more mature management record, more experienced management so— WL: They have a more flexible system, perhaps? FD: Well, they have a more flexible system, but also, they have more dollars, and more dollars creates a lack of resolution of problems. Chapel Hill—let me just use those as an example—in a $500 million budget, a $5 million problem can be resolved. Also you can buy talent to solve any problem or cover up any problem that you want to cover up. You know, you can pay somebody to come in to prevent a problem from being solved. And from the outside looking in, it appears as if you don’t have a problem. but, in fact, you have a problem. The problem didn’t go away—it’s just the sense of the problem has been pushed down away from the surface, and you’re keeping it under control. And it’s—I am not being so critical as I am—it’s general in the public sector—if you have no need to define a bottom line in a support—for a support purpose, then you tend to spend everything you can get. And you tend not to let problems be raised because problems that are raised in support sections are normally tied to our—or you try to solve them in the same way that you try to solve a research or a teaching problem, and that’s not the way that you do it. You’re not searching for truth over here; we are trying to manage. You are doing something entirely different on the faculty side, but I’m trying to manage with the least possible resource and the least possible deterrent to the main purpose of the university. WL: So if you are resource poor, you have to be ingenious? FD: You have to be a bit ingenious, and you have to rely on talking with people one on one, those kinds of things. Now we have a problem on this campus in that the depth of the management is not there. So five years from now, somebody is going to have to recognize that. If you don’t give me the resources to build the right attitudes down at the detail level, you’ll never solve the problem of the faculty’s perception of our willingness to support their needs. WL: Because the faculty comes in contact with the detail? FD: Right. And I can’t sit down with six hundred faculty. If I could, I could convince them and solve their problems, but I can’t do that. So I guess what I am saying is there’s more to the problems that had existed in 1980 than were apparent to anyone except those of us that walked in and tried to get some things turned around. And I think what we are trying to do is to leave it just a little better than it was when we got here. WL: You’ve got to have—of course, recently been affected by the budget crisis. In my memory, an equally serious budget crisis hit in 1982, do I have my year—? FD: In 1983, right. 9 WL: A similar set of conditions, a recession—a worse recession really—but a budget shortfall. How was that situation different? And that was fairly early in your—three years after you arrived here. Perhaps the—your management system that you just described wasn’t fully in place. You were working on getting it in place. FD: That one fact alone was a major problem in 1983; that is, our lack of understanding and our lack of a capability to deal with the understanding—with getting the information to understand it quicker. I think the difference between 1983—the substance of the problem in 1983 was different in one major respect: I think in 1983 there was a major political motivation. I don’t think it was primarily economical. WL: To what purpose was the—? FD: Well, he was looking—at that time, as I recall, the governor had just been elected for another term. He was trying to build a—he was trying to utilize his executive power to get the legislature to approve his program from a political standpoint. And one way you do that is to show that there are resources available in the general fund from tax revenues to support all these worthy programs—education, prisons, healthcare, Medicare [American health insurance program for those with disabilities or over age sixty-five], Medicaid [American health program for people with low incomes and resources], whatever it is. You know, he had a program starting in his second term in office. I think the difference between that and the current situation is that in this year, I believe there is more focus factually on an economic downturn, and I think there is less—in fact, the motive is not to build a reserve. The motive is what the executive budget act says the governor’s responsibility is, and that is, “Let’s get the expenditures to equal the revenue.” That’s what he’s trying to achieve, so that political motive that was there is not there. I think this is a pure constitutional question of balancing revenues and—with expenses. WL: In 1983, perhaps, they were trying to squeeze more out than they would, even in this situation. FD: No. They were trying to build reserves. There was no lack of revenue, and that—. Let me tell you why that was important—because when I reacted, when the campus reacted, to their cash allocation reduction, we reacted as though it was indeed a shortage of revenue, and we said, “Nothing is going to cure that shortage.” This year we’re acting differently, we’re reacting the same this year because we believe it is an economic problem, and the facts seem to bear that out. But if you go back to ’83, in the fourth quarter—. Let me tell you what we did in the second and third quarter. In the second and third quarter, we had a faculty meeting—I don’t know whether you remember or not—in which the chancellor stood up and said, “These are the cuts we’re going to take.” And we did the same thing that came out in the paper that happened at NC State. We cut temporary appointments, maybe even reduced the number of [class] sections in some cases. We took some major, major cuts all across the university, even down to taking library books, which are almost sacred, out of the library budget. This year we didn’t rush out and do that. If you’ll notice, we were very calm, and we simply went in and understood the problem first, and then we began to build a case of if it’s this, 10 this is what we could do. If it’s this, this is what we could do. We looked at our options; we simply protected our options, and we began to draw up a plan. And, if you notice, we gave flexibility in the way the plan was put into effect. We didn’t say, “You must cut this and you must that.” We said we believe the problem measures out to this many dollars. The chancellor allocated that problem to the vice chancellors. The vice chancellors, then, had great latitude in how they corrected or how they changed their budgets that meet that requirement. The time before, we told them what to do. We didn’t say, “You decide.” We told the deans, we told the vice chancellors exactly where to go—bad approach. Part of that is experience; part of it is a change in substance. I think I understand the state better and how to work through these problems, and I think I understand how to, from a timeline standpoint, not take the action all at once, but take the action as you get the facts. And that’s a little maturity in there too. It’s a maturity within the context of the state of North Carolina because if I were somewhere else—if I were in Tennessee, I’d probably work it differently [laughter]. So— WL: You’re working with a—you have a different sort of relationship with the state as well? FD: Right. WL: In terms of? FD: Much, much better, much more—my credibility is probably triple just from working with them over a long period of time. WL: Did they—? In 1983, were they very specific in what they told you to do? Was it—did you have less flexibility that year? FD: Yes, we had somewhat less flexibility because we were in a no-grow situation. When you don’t have faculty salaries, unfilled faculty positions, we are in a real detrimental position, so that was another fact. WL: Yes. FD: That’s a very good point. The other thing is that certain lines in the budget have represented large non-salary components, one of them being utilities. We’re under budgeted on purpose at the state level, and they allowed us to use salary reserves to cover utilities. Now our utilities are budgeted reasonably, and, not only that, we are in a period of temperature that is unbelievable, and the difference in what we spend for utilities in a sixty-degree January and a thirty-degree January is a quarter of a million to three hundred thousand dollars. That’s thirty percent of your problem right here. WL: That really helps. FD: It does. And all I need is two more weeks, and I have just—I think I am on the verge of seeing something that will bring the money back to the budget. I don’t know. I’m betting that if the state doesn’t change the rules on me and we continue to have warm weather, 11 then I see one way that we can cut our losses in the fourth quarter. But I’ve got to get the state to give me the case before I could do it, and that’s the problem too. So it is a very complicated set of circumstances that we’re working with in a very complicated political environment which already has a governor versus legislature component. [laughter] So that means that the budget office—. It’s clear where their posture’s going to be—it’s got to be over here—whatever the governor wants. If the governor said, “Cut that cash allocation another five percent next quarter, that’s what’s going to happen because the governor has the constitutional authority to determine how much money can be received in tax revenues and make judgments on that basis. WL: The governor has the—actual executive control of the budget? FD: That’s right. Under the executive budget act. It says in that act that the governor shall determine how many dollars of tax revenues will be collected— [End Side A—Begin side B] WL: We have a revenue crisis—we’ve had a crisis of a different kind. In both cases the governor’s office had virtually absolute control, I guess, over determining what the budget was and what your revenue situation was. 1990, you’re dealing with a different political situation, perhaps, that might be more advantageous in the sense that you’ve got two parties, two different parties, controlling— FD: Let me say that 1990 is better for us than 1983 because we are better capable of managing the situation. We know more about our budgets; we understand how you can manipulate certain things in the system legitimately in order to achieve the more important things that you are trying to achieve, and we also have, I think, a knowledge that the budget office is dealing with us in a way that is indeed reflective of the economic situation, rather than a political situation. And those are easier facts to deal with than a political situation because then I can play the hand out for six months, rather than what I did. The other mistake I made was I literally took what they told me in the budget office, and I acted on it. They then changed the rules in the fourth quarter by giving me all the cash I wanted, but we had already so gotten the campus used to not doing anything that it was hard to get them geared back up to spend the money, even though they needed the money. That’s a very strange thing, but it’s a process. Once you stop the process from the day-to-day transaction base—. When you say “Go,” it takes a certain length of time to start it back up and to fill the pipeline, and that’s what happened to us too. This year, we’re saying we’re going to plan for that. We are right now planning what happens if we get money in the fourth quarter that we don’t now believe that we can get. WL: Still have certain ways of spending it? FD: That’s right. We already have started talking about the strategies we’re going to to use and how we fill the pipeline and get it done and it’s—it was one of the things that we 12 thought through from the front end, rather than waiting for it to happen. So, it’s a more— it’s better understanding of the system, better working relationships with the state government and probably a better factual base than we had in 1983. That is why I don’t like to look at other campuses and how they handle their own situations. I would rather make those judgments ourselves and not worry about what they’re doing. We’re better off to do it our way. WL: Do you operate pretty much deliberately in isolation from the other campuses? FD: Not in isolation, but I don’t base my judgments on what somebody else does. WL: Yes, for example, North Carolina State? FD: That’s right. I just think I want to never operate in that mode; that is, an arm-waving mode that can do nothing for this office with the state budget office but get us in very deep, and it will—just makes people mad for no reason. What you’re doing is fighting with the budget office when you don’t need to fight; what you need to do is to look for the solution. If you start fighting with them, then they begin to take sides, and I’m telling you, Greensboro is not the place they want to take sides. They’re looking for ways to gear up with the politically strong campuses—NC State and Chapel Hill—and that’s exactly what I would be doing. So I’m looking for ways to stay with the only political environment that we have—state budget office. WL: Is Greensboro not a politically-strong campus? FD: I don’t think it’s a politically strong because I don’t think the delegation in Greensboro is a strong delegation and it’s divided—it presents a divided front. There are other problems associated with it also, but there is no leadership at the state level that comes out of the Greensboro delegation. And as soon as we get somebody to a point that they’re ready to assume leadership, they leave. And I think that’s where East Carolina [University, Greenville, North Carolina] and the western part of the state and Charlotte all have it over us. WL: They’re in there a long time? FD: The leadership in those areas have been running the state for many, many years. Chapel Hill and NC State, because of their status as campuses and not the least of which is NC State’s ability to use their agricultural program, which is all over the state—it’s like having a little political office in every county. They are able to carry lots of weight. WL: Do you think the sixteen-campus system is going to survive? Is it? Established in 1973, it seems to have taken on a certain degree of strength. But now, of course, you are hearing a lot of discussion of deconsolidation. FD: It will probably survive. It might not survive in the same form, I don’t know. But I would think without a system in this state, I don’t know how one controls the political infighting 13 and the pork barreling of a very important thing. There is a certain amount of that that goes on right now. I mean, if you took away the board of governors from the leadership of the president, you take away all the holds on every campus being represented in the state legislature. And being down there, we would have to do the same thing. We would have to go down and say, “A&T doesn’t need it; let me show you why A&T doesn’t need that money. We need it more than they do.” And then you put your legislators in a position of getting all kinds of social issues and other political issues involved in the education process. And so this kind of gives us a focus—a professional focus, I think. It also kind of gives us a program focus that—to my way of thinking, the purpose of a system is to do long-term planning for the education, anyway, of its citizens, not to manage the campuses. I think that one of the problems that we have is that there are too many people trying to have hands-on management of everything right there in the state of North Carolina. The concept, however, of one focus for higher education is right. I didn’t used to think I would ever say that, but I think the focus ought to be on program mission, that kind of thing, not on how you manage or how many dollars you give faculty. That’s not the issues that can be decided in Raleigh [state capital] or in Chapel Hill. It ought to be decided in Greensboro, and so I would opt for a different kind of system. Although, if you look at our neighbor—Georgia has had a system in place that has been very visible for fifty, sixty years, 1931. And they somehow have managed to not get involved in the management of the campuses, but they stay on a mission level, and they stay on a focused—. They do the politicking in the state, and they keep the legislature out of the campuses, so it’s served a very useful purpose. And it’s very much organized like ours, so it’s just a difference in the nature of—the legislature here has great power in relation to the executive branch. In Georgia, it has less power in relation to the executive branch. I think it’s a lot to be said for the other. WL: Let me ask you about the facilities and capital improvements. This seems—the 1980s seem to have been a big decade of construction and capital planning and capital improvement projects on this campus. [Did] most of this come out of post-1980 era? FD: Basically, Chancellor Moran had an agenda for me when he came here. As I understood it, his agenda was, “Give me good financial management. Let’s work the system with the state and get all the flexibility we can logically, legally, and reasonably get out of the system. Let’s improve the facilities and the conditions on the campus, so that you have a different environment for students and faculty. And let’s make sure that that achieves bringing in the right quality of students and providing those students with what they can get at any quality university.” Now starting with that as a framework, everything we’ve done from—everything we did from 1981 until 1984 was to set the parameters. From 1984 to now, it’s getting money for those prioritized projects and trying to solve those that we can solve internally. Do it ourselves as a focus. And I’m going to say it this way—I think we’ve done things that if we had done them quicker, you could see, but we’ve done them over a long period of time, probably with less money, and you can’t see them. Landscaping on this campus—if we remember what it looked like as you came on Spring Garden Street in 1980—I remember it clearly. I was ashamed that this campus was in that condition. And if you look at it now—if you 14 can just visualize those two points and forget all the things that happened in between— there is a major difference. It’s not nearly where we want it to be, but we’re a lot closer to getting there than we were five or six years ago. It’s a very methodical way of doing it. I guess what I’m saying—we’re doing it within the context of the available resources. Nothing we’ve done has drained or taken away from the educational programs. Everything we’ve done has been out of our hides. If you look at physical plant staffing, the staffing—up to the point that we put the last three major facilities into [unclear] staffing and physical plant was two more than it was in 1985, except for the new PAC [Physical Activities Complex] building, new art building. That’s how many increases we had in physical plant. Now, I defy you to look at any place, any college or university or school on the campus, and tell me that. So, what I am saying is that we’ve done it as we could, but with a plan. We have done less in the academic facilities for the simple reason we’ve had more difficulty getting state appropriations then we have managing our own affairs with student fees and revenues. We have put—right now, I just the other day scheduled out for the next five years the projects that are going to be coming up for funding that are non-state-appropriated projects. There’s going to be $28 million worth where construction will either begin or be completed during that time. WL: Where does the money come from? FD: It comes from student fees, and it comes from revenues that are generated from all sources, whether it be housing or whatever. And the state has not had to give us anything, but they’ve give it to A&T, and they’ve give it to Fayetteville State [University, Fayetteville, North Carolina]. They appropriate money for residence halls. Now conceptually I think that’s wrong. I really disagree with that approach, but anyway that’s their business. The problem that we’re having is trying to put some kind of order to the priority process for the academic facilities. We are standing—we cannot seem to get our biggest renovation project off of dead center—that’s the McIver Building. We can’t seem to get the next big new structure that we need, the music building. And until I get those two, I can’t solve the problem that we are beginning to see now of additional students causing a little bit of cramping in our general classroom area and faculty office space. I want to see us build a new classroom building for a couple—for departments so what you relieve is some of the pressure of the McIver Building, but I can’t seem to get that log jam broken at the state level. WL: That’s in the legislature? FD: Right. And we’ve got right now—on the next biennium we’ll put forth the music building for the second time, third time, and we’ll put forth McIver for the second time—well-defined projects—well thought through. The dollars are reasonable in light of what we’re trying to do for them. And then when you can get those kinds of dollars, then think of all of the hidden things—the utilities, the asbestos removal, those kinds of problems—floor coverings on this campus—you know, just carpet replacements and tile replacements— it’s astronomical. We’ve spent $175,000 last year—got two and a half million square feet of floor space to take care of. We’re not getting any money for minor renovations— 15 removing a door, reconfiguring an office to meet the needs of the program. We just don’t do it. There’s no way to get it all done. We need $40 million very badly in the academic side of the house, but if I had it all next week, we couldn’t run program and do the renovation. As a matter of fact, it scares me to think what we are going to do if we have to close down McIver Building. WL: That’s what I was wondering. I teach in McIver—have trailers or something. [laughs] Where would you put everybody? FD: I think we’d have to do it in phases, and I think we’d have to utilize some space that we are doing right now for human environmental sciences to take care of faculty offices. We’re going to renovate the Park Gym. We’re going to put sixty office spaces in there. It’s going to be quality; it’s not going to be makeshift—it’s going to be very good-quality spaces and the dean’s suite—so that that building now can be used in future years in future projects for other transitional space. WL: That would be converted more into office—more office spaces? FD: Right. What we do is—see, that human environmental sciences project will last eighteen months, so we move the faculty back into that building and try the next building—try to renovate the next building. The only problem is we can’t get the money from the legislature. We’ve done our planning; we understand the problem; we’ve set some priorities and parameters. And if we go to a science-based program, heavily involved in graduate work in chemistry and biology, that’s another project, that’s a $20 million project, and I think we have to build a new science building rather than renovate Petty [Science Building]. I think we can renovate Petty for general classroom use, as a matter of fact. So that’s the kind of thing we’re dealing with with facilities—made a tremendous stride—we’ve inconvenienced a lot of people; we’ve caused a lot of trauma on campus, but nevertheless, I don’t know how you can do it otherwise on campus. WL: But all of it’s been done with very little state support—what you’re saying—essentially only two buildings that have received— FD: It’s kind of been out of our hide, as a matter of fact. And you know we’ve got the student recreation building coming on line, coming up for construction here in the next eighteen months. We’re going to have the soccer stadium. Those are things that the students really do get excited about [unclear]. Just talking this morning presents major operational problems for us. It’s been fun; it’s been exciting for the ten years I’ve been here. And I’m telling you the things that were outlined in 1980 in June in Bill Moran’s office for me is still what I’m working on. And I’ve probably still got sixty percent left to do. I think we have a good management structure; we’re not deep as we need to be. We have an excellent, I think, relationship with faculty, considering where we started. We have excellent external relationships with the state government and other agencies. We are highly respected in the state as financial manager, business managers. We have changed the nature of the physical campus. We’ve worked out some major problems with the religious centers. We have self-examined more than probably the campus has been 16 self-examined in years, probably twenty or thirty years, and we’re looking every day for new ways to do things and that kind of thing, just like the faculty are looking for the new areas that they want to move into. And that’s what I think is so vital about the support functions. If you don’t move on the same way that the faculty are moving, forget it. The faculty can’t get there. I’m sorry—you can’t do it without us, and we can’t be here without you. So it’s the whole philosophy—the whole attitude that we take is: provide quality for as many people as we can provide it for and do it well—everything done well. And that’s Bill Moran’s approach—if we’re going to do it, we’re going to do it well. And that’s what I want to do. He and I could not be any closer together on the things that are important, that I deal with on this campus. I have really enjoyed working with that man. Fantastic person—fantastic. [End of Interview]
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Title | Oral history interview with Fred Drake, 1990 [text/print transcript] |
Date | 1990-02-15 |
Creator | Drake, Fred |
Contributors | Link, William A. |
Subject headings | University of North Carolina at Greensboro |
Place | Greensboro (N.C.) |
Description | Fred L. Drake (1931-96) was vice chancellor for business affairs at The University of North Carolina at Greensboro (UNCG) from 1980 until his retirement in 1994. Drake discusses his business and academic background, the agenda given him and his working relationship with Chancellor William E. Moran and the building and renovation of the physical campus to meet academic needs. He describes the management improvements and changes he implemented in his area, the budgeting process, the constraints of working within the state system and how his office functions within that framework. Drake talks about long-range fiscal planning to fulfill the purpose of the university, the 1983 and 1990 budget cuts and his philosophy of providing quality support to the most people. |
Type | Text |
Original format | Interviews |
Original publisher | Greensboro, N.C. : The University of North Carolina at Greensboro. University Libraries |
Contributing institution | Martha Blakeney Hodges Special Collections and University Archives, UNCG University Libraries |
Source collection | OH003 UNCG Centennial Oral History Project |
Rights statement | http://rightsstatements.org/vocab/NoC-US/1.0/ |
Additional rights information | NO COPYRIGHT - UNITED STATES. This item has been determined to be free of copyright restrictions in the United States. The user is responsible for determining actual copyright status for any reuse of the material. |
Object ID | OH003.055 |
Digital publisher | The University of North Carolina at Greensboro, University Libraries, PO Box 26170, Greensboro NC 27402-6170, 336.334.5304 |
Full Text | 1 UNCG CENTENNIAL ORAL HISTORY PROJECT COLLECTION INTERVIEWEE: Fred Drake INTERVIEWER: William Link DATE: February 15, 1990 WL: I would like to start today just by asking you a little about you background—where you were educated, where you were born, and how you came to arrive at UNCG [The University of North Carolina at Greensboro]. FD: I was born and raised in southeastern Virginia, farm background, and went into [military] service and left the service [after] four years, attended the University of Alabama [Tuscaloosa, Alabama], graduated in 1958 with a bachelor of science in business— accounting major, worked for six years with Ernst & Whinney [accounting firm], left there in 1964, went back to my alma mater in a financial management capacity as a chief accountant and held a number of positions until 1969, when I was made vice president and treasurer. And I worked in that position for five years and then, at the board’s request, I went to the system office and was the chief financial officer for the system. After four years of that—it was a new system, just formed, with three campuses—I left there and left Alabama and went to the University of Houston [Texas], central campus, with a very specific mission of restoring the financial management and fiduciary control of that campus that had been undergoing some major problems at that time in 1978 when I went there. I stayed there for two and a half years and came here in 1980. So I have been in a position of chief financial officer for about twenty-one, twenty-two years and have about twenty-eight years total experience. So that’s basically it. Most of my life has been spent in higher education and financial management, basically in this kind of position. WL: What were your first impressions when you arrived here? What sort of administrative system did you find here? What kind of situation did you discover? FD: I found a university that basically was living in the Dark Ages [period of intellectual darkness that supposedly occurred in Europe following the collapse of the Western Roman Empire], as it relates to its management and planning and its fiscal structure, but was—academically at least the reputation of the institution was very, very good, so there was a dichotomy here that I didn’t think would last very long. It was—I don’t see how you can have a good academic institution and have all of the infrastructure to be not adequate. I didn’t think that would last very long, so that’s basically my feelings about it. WL: Can you be specific, a little more specific, about what fiscal nature of the financial and administrative structure—how it was crumbling, what—? 2 FD: Well, let’s talk about the physical campus first. The physical campus was very—it was very evident there was no planning about the development of the campus in relation to academic programs. There was no indication that the needs of the students and faculty and staff had changed over twenty years. There was no indication that there was a direction that we wanted to go. Let me give you an illustration of that: the very limited recreational opportunities for the students [unclear]. The campus itself was very constricted by the city, and, therefore, the planning had been only to the extent—put the building where you can buy the acre of land that you need to put—no long-term view of zoning the campus, general functions, residential versus teaching and research and those kinds of things. There were no indications that anyone had given any long-term thought to housing, residential needs of the students or to updating the facilities with respect to the food service capabilities, and yet we had forty percent of our students living on campus. Worst of all, there was a deterioration of the academic facilities in a functional sense. That is, the buildings were dysfunctional in relation to program needs. There was no—as an example of that: the chemistry and the physics departments were operating in totally inadequate facilities. Their labs were not appropriate. The School of Human Environmental Sciences, which has become in modern times to be a science-based program, not a cookie-sheet kind of operation—there were no facilities that recognized that in place, and yet they had the heaviest doctoral commitment on campus, of any program on campus. And not only that, it had a land-grant mission, and so it was a pretty important program for the university. There was no attempt to stop the deterioration of the quality of the incoming freshman students here [unclear]. In fact, I think that all of the things I’ve mentioned gave rise to that deterioration because it did not provide the students with the kinds of environment that they needed in a college or university—the kind of environment that they could get at a [University of North Carolina] Charlotte or a [University of North Carolina at] Chapel Hill. So therefore, in all honesty, the physical deterioration caused a quality deterioration in students and a quality deterioration, I think in programming. Now the fiscal aspects of the university, budgetary aspects—the thing that impressed me most was that there was absolute line item control at the state level on all budgets, and that was to me again another dichotomy. You were asking—you were trying to bring in people that can administer the programs, but you weren’t letting those people make decisions that would allow them to utilize their resources to achieve quality programs because you tied their hands by saying—you had such tight line item control. That was number—that’s the first problem. And that was an opportunity also. That presented an opportunity for us to learn how to manage within the system, and there are ways to do that, but those ways have not been adequately explored by the financial people over here. WL: Is that still the case—absolute line item—? FD: No. We have explored about everything we can explore and are doing so every day. WL: But we’re still under that constraint? 3 FD: We are still under—it is a more limited constraint now than it was then. There has been some flexibility achieved, but the biggest flexibility is not in the line item budget but in the way this office relates to the budget of the state, and the way we do our staff work and present the needs and ask them to help us find the solutions. And that has—and also, there are ways to work the system if you are willing to get in there and really understand that your job here is to provide the resources for the university and not to worry about the reversion of resources to the state. And so you have to tackle the first of those and let the latter one take care of themselves. There is somebody else out there worrying about that one. So what we’ve done is to change our fix from not being—we don’t want to be state fiscal officers; we are university financial officers and have the responsibility first and foremost to this university, this campus of this university. And secondarily we will live within whatever rules and regulations that are required of us to accomplish that, but we are going to do everything we can to achieve financial flexibility within that set of circumstances. So, in effect, we work the judgment areas of the system. WL: Does that mean that sometimes, most of the time, you’re working in conjunction with state officers and other times you are working perhaps in a different direction? FD: In a large number of instances we will be working hand in glove with the state. In other times we are making independent decisions that we believe to be correct, and we’ve properly documented why we make those decisions and, so far, those decisions have proved to be good decisions in a large way. WL: Is this a change? Was the previous administration different in its attitude towards state financial officers? FD: Yes, I think the—not the previous administration of the state—I think the financial officers that were previously here had their background not in other campuses and how they operated but in the state of North Carolina at the state level. Therefore, they had an unusual loyalty to the state bureaucracy and considered themselves an extension of that bureaucracy. We do not consider that here to be the case. We are officers of the university functioning under the chancellor, and we are trying to assist him in reaching his goals and those of the board of governors and the board of trustees that have been set out for us. Basically, the goals we are trying to reach now are those that [Chancellor William E.] Bill Moran discussed with me in some very long conversations in 1980. We have not changed our direction. We are basically on the same track. WL: What sort of financial set up did you find here when you came? How was this office organized? FD: We had a large number of people that were functioning at inappropriate levels of management for the size and complexity of the product that they needed to produce for the faculty and students. I’ll give you an example. We had—well, accounting seems to be a simple enough place to start. But basically in a financial management situation, if you don’t have an appropriate information system that is geared to generally acceptable definitions of higher education and if you don’t understand the relationships of those 4 definitions, then how can you assist the campus in financially managing its resources? The accounting system was nonexistent in the sense that it did not serve the university’s needs. It served the state’s requirements. The state’s requirement is one of control of dollars, not of understanding how you use those dollars and whether it is appropriate to the mission of the university and feeding back that information to all levels of the administration that needed to understand it. So what we did was to bring that up to a modern accounting system that provided us with the data that we needed to assist in managing of the campus and, at the same time, to overcome some of the problems that were existent in the line item budgeting systems being promulgated by the state. When— in 1980, my estimate of the situation is that the state budget office knew more about what we were doing than we did ourselves. What I have tried to do is to turn that around and to advise the budget office that they are not close enough to make the detailed decisions that they did, in fact, make. And that was apparent in every level, and it had to do—level—I mean every area of this office. It had to do with the individuals that were here and their lack of understanding of higher education in general. They understood state government, but they didn’t understand higher education generally. And I think that if you don’t understand that and if you’re not committed to it, then I don’t see that you can function in this environment at all. Higher education is a very unique kind of management environment from a financial perspective, and it is not a business. The bottom line is very nebulous. It is the quality of the students you produce and whether or not you are producing the knowledge that—to continue the process. And it’s just different, and if you don’t recognize that and deal with that difference, you are not supporting the mission of the university. WL: Would you and your predecessors deal directly with the state? Do you—it actually goes directly to the state budget office? Is that the way the system works? FD: General Administration of the University of North Carolina [GA] has—as it respects a budget, is responsible for one thing, and they are very clear about this. They make—they formulate and present the budget requirements of the system. Once that budget is adopted or amended or whatever by the legislature and given to the governor for execution, then our dealings on the campuses is not with GA; our dealings is directly with each component of the executive branch of the state government, and we are allowed to negotiate with whatever we can do within the context of the legislative budget. And what happens is that it puts the state government and a campus one on one, which means that you’ve got sixteen of my counterparts out there operating one on one with the state government, just like the highway department, and each campus functions sort of independently. Now we’re vulnerable in one way, but it gives you a bit of flexibility in another way because it allows the individual sitting in this chair to make some judgment calls in those areas where it’s reasonable to make judgment calls at all—move back and forth and find the place that fits your needs the best. As long as you can rationalize it and defend it, you have accomplished something for the university. Nothing can be— regulations will never be written tight enough to control—to eliminate all judgmental opportunity, and what I’m doing is just finding the niches where we can utilize judgment opportunities to make the most of it for this university. That’s basically what I’m doing. 5 WL: Putting the budget together originally—the budget that was submitted to the general assembly. What’s the nature of that process? Your office is obviously involved in that as well. FD: I think before I arrived here the process was basically this—that GA sets a set of policy parameters. Those parameters may be general, in the sense that you can develop the numbers, or they may be number specific. They may give you a number that you can request in a category. In any event, they give you the policy guidelines. Those policy guidelines are discussed and debated at the board of governors’ level. Then we request against that policy. Those—and internally the chancellor can allocate within those policy guidelines for the areas of the university. He would say to [Provost Donald] Don DeRosa, “Let’s worry about—of the amount that I can allocate from, I’m going to give sixty-five percent to the instructional units.” And the department heads to determine, within these general guidelines, where do you want to put that? What do you want to spend it for? So Don goes off and works with the deans and comes back with an approach to that. And basically then, that is just combined and sent back to GA. It is the details that support the policy decisions that were relayed to us from general administration. That’s all it is. We have gotten a little bit more sophisticated internally in that we look at more things than just the state budget. We look at the state budget, and then we look at discretionary budgets, and we don’t make decisions on one without having some understanding of how the other one is going to be affected. That way we can cover problems from more than one source, and this office simply acts as staff for the chancellor, and the chancellor’s cabinet debates issues along with the university budget committee. From that standpoint, we are probably much more democratic in the debate of the budget process than was prevalent in 1980. In fact, I know that we didn’t have a budget committee in 1980—very little discussion or information flow really from either this office or the chancellor into the faculty governance structure, but now we make the— we listen to the budget committee; we listen to everybody else, and we come up with a budget, and then we feed back the results of that decision back into the budget committee and to the university community. It’s discussed in cabinet—academic cabinet and also made available to the general faculty and anybody that wants to come in here and go over it with me, I would be happy to do so. I don’t think those kinds of communication devices were there. Now there’s a lot of pluses that go with that, but there are also some minuses. And budgets are things that have become very emotional, and so you tend not to have all of the right answers or the answers that people want to hear, but you have the institutional posture—at least what you can do. WL: How have relations with general administration changed, if at all? FD: I think we are much more involved with general administration now than we were ten years ago, and it has come about as much from asking advice—I frequently, for example, go down and ask advice—I’ve got a unique problem or a problem I’m not sure which way to go. I utilize those people that have spent years down there, and I think you don’t do that though once a year. You’ve got to have a reason to be there and interface with them more than—. You’ve got to do it once a month. They’ve got to see you very frequently. So my posture is that I visit with the officers of general administration about 6 monthly, and then when I go down with particular problems or information that they need to understand, it’s not foreign to them. They don’t raise the question of why are you going to do. It also helps me in understanding how to approach state government itself. There’s a political linkage there that I like to keep clear and fresh because I don’t want to do anything that hurts GAs chances of getting something done during the budget process. Neither do I want them to do anything that will hurt me, prevent me from getting something approved at the executive level that is very important to me. So I kind of keep them informed of major decisions for the students. The other thing we do is make sure as a campus that when we develop long-range plans that they are briefed totally on it. An example of that: We spent three different visits with them in letting them understand the implications of our long-range fiscal plan that we developed in 1984, I guess it was, and once the board of trustees approved it, we made a formal presentation to them. Now when we send materials down for action on the board of governors, everything is related to the context of that plan, and it makes it so much simpler. We don’t surprise them— they don’t surprise us—and especially important in land acquisition and capital project matters. It really is helpful to us. WL: Has more force and seems more rational—plan—? FD: That’s right. What it does, it gives them a basis for relying on our staff work. It’s just a fundamental basis for their reliance on our effort. They buy into the concept in the front end rather than buying into a particular later without understanding what the long-range application is. WL: As—a long-standing complaint of this campus, which I’ve heard during these interviews, is that UNCG’s share of the state financial pie is small from the beginning, and it’s continued to be small, and it—. In fact, thirty years ago was the poor sister—I suppose the poor brother and sister now—is that—how true do you think that is? FD: Well, I’m going to talk generally—and it’s not the argument necessarily that I would make with a GA, but it is a fact that I would have to admit in making it. Greensboro has, in my opinion, one thing that is extremely significant to its ability to deliver up a quality educational program financially—that is its faculty/student ratio. I don’t know what the perfect ratio is in this type of institution, but nationally, if you look at our peers, Greensboro probably has one of the very best student/faculty ratios. Now the average faculty salary on which that is based has become somewhat deteriorated from ten years ago, but it’s still right about the average nationally. WL: It used to be a little better than average here? FD: It used to be a little better, and we used to rank a little better with Chapel Hill and NC State [North Carolina State University, Raleigh, North Carolina]. There’s been a general deterioration in the state, but then there’s been a little bit of deterioration of Greensboro in relation to the other two doctoral-granting institutions. I think that can be overcome to some extent, but that factor—that is, the student/faculty ratio is—gives us a faculty base 7 that is almost unheard of today in our education, and that’s the most important thing I think we’ve got going for us. WL: What sets that? Why is that? FD: Well, it was set many years ago at the time that the sixteen campuses were brought under the board of governors, back in the early ’70s. That’s my understanding of it, and that formula was based on the doctoral mission and the debate over the doctoral mission of the three campuses, so our ratio is very much like that of Chapel Hill and NC State, maybe even a little better than NC State. When you leave that particular segment of the budget, and that represents today about forty percent—maybe a little more than forty percent of our total budget. The faculty salary lines—when you leave that point, then we are in trouble. We believe that, measured against our peers with like missions and generally-like campuses, that we are very short in the non-salary component of the budget in the academic units. It is a fairly significant amount, but in the eyes of the state it shouldn’t be a very large amount because relative to salaries, it’s nothing—it’s about two million, three million, four million dollars, in that category. Now I think if we had that taken care of, then the instructional function would probably be in pretty good condition. Now, if you move away from the academic units, you get into much the same problem overall that you have in the academic units for non-salary. We talked about that. It is my own belief that you cannot long have a good university without all the components being reasonably good that are necessary to that university. I’ll even go so far as to say that if you have a bad accounting office, eventually it will tear down the rest of it because if you can’t justify that accounting office in terms of its fiduciary and informational and transactional processing to meet state requirements and to meet your own internal requirements, it shouldn’t be there anyway. And so if we get into trouble in a fiduciary capacity with the state auditors, it will so tarnish the image of this university that it will affect all sixteen, not just us. Look at A&T [North Carolina Agricultural & Technical State University, Greensboro, North Carolina]. A&T had a problem when I came here, in a fiduciary sense, and that affected everybody else. It affected the campuses with the state budget office. WL: With the legislature too? FD: With the legislature. “We wouldn’t give you that money; you don’t know how to use it once we give it to you.” Okay. I mean, it’s the old political clichés that come out in large groups of people without saying or admitting that ninety-nine percent or ninety-seven percent of the world is reasonable. It’s only that one or two or three percent that you have to worry about. So I think that the areas of general support for the university are short— major dollars in this university. I think it’s easier to find solutions to those kinds of problems that don’t require dollars than it is to find it in the teaching and research functions. And I think that’s why you see so much of—if you measure it against the good universities—I went out there and picked—let’s pick on [College of] William and Mary [Williamsburg, Virginia]. If I measured my capability to manage financially against William and Mary’s capability on paper, they are far superior. In actuality, we’re better. 8 And I think we’re better because we have to do things with more ingenuity, and I think we’ve got a better and more mature management record, more experienced management so— WL: They have a more flexible system, perhaps? FD: Well, they have a more flexible system, but also, they have more dollars, and more dollars creates a lack of resolution of problems. Chapel Hill—let me just use those as an example—in a $500 million budget, a $5 million problem can be resolved. Also you can buy talent to solve any problem or cover up any problem that you want to cover up. You know, you can pay somebody to come in to prevent a problem from being solved. And from the outside looking in, it appears as if you don’t have a problem. but, in fact, you have a problem. The problem didn’t go away—it’s just the sense of the problem has been pushed down away from the surface, and you’re keeping it under control. And it’s—I am not being so critical as I am—it’s general in the public sector—if you have no need to define a bottom line in a support—for a support purpose, then you tend to spend everything you can get. And you tend not to let problems be raised because problems that are raised in support sections are normally tied to our—or you try to solve them in the same way that you try to solve a research or a teaching problem, and that’s not the way that you do it. You’re not searching for truth over here; we are trying to manage. You are doing something entirely different on the faculty side, but I’m trying to manage with the least possible resource and the least possible deterrent to the main purpose of the university. WL: So if you are resource poor, you have to be ingenious? FD: You have to be a bit ingenious, and you have to rely on talking with people one on one, those kinds of things. Now we have a problem on this campus in that the depth of the management is not there. So five years from now, somebody is going to have to recognize that. If you don’t give me the resources to build the right attitudes down at the detail level, you’ll never solve the problem of the faculty’s perception of our willingness to support their needs. WL: Because the faculty comes in contact with the detail? FD: Right. And I can’t sit down with six hundred faculty. If I could, I could convince them and solve their problems, but I can’t do that. So I guess what I am saying is there’s more to the problems that had existed in 1980 than were apparent to anyone except those of us that walked in and tried to get some things turned around. And I think what we are trying to do is to leave it just a little better than it was when we got here. WL: You’ve got to have—of course, recently been affected by the budget crisis. In my memory, an equally serious budget crisis hit in 1982, do I have my year—? FD: In 1983, right. 9 WL: A similar set of conditions, a recession—a worse recession really—but a budget shortfall. How was that situation different? And that was fairly early in your—three years after you arrived here. Perhaps the—your management system that you just described wasn’t fully in place. You were working on getting it in place. FD: That one fact alone was a major problem in 1983; that is, our lack of understanding and our lack of a capability to deal with the understanding—with getting the information to understand it quicker. I think the difference between 1983—the substance of the problem in 1983 was different in one major respect: I think in 1983 there was a major political motivation. I don’t think it was primarily economical. WL: To what purpose was the—? FD: Well, he was looking—at that time, as I recall, the governor had just been elected for another term. He was trying to build a—he was trying to utilize his executive power to get the legislature to approve his program from a political standpoint. And one way you do that is to show that there are resources available in the general fund from tax revenues to support all these worthy programs—education, prisons, healthcare, Medicare [American health insurance program for those with disabilities or over age sixty-five], Medicaid [American health program for people with low incomes and resources], whatever it is. You know, he had a program starting in his second term in office. I think the difference between that and the current situation is that in this year, I believe there is more focus factually on an economic downturn, and I think there is less—in fact, the motive is not to build a reserve. The motive is what the executive budget act says the governor’s responsibility is, and that is, “Let’s get the expenditures to equal the revenue.” That’s what he’s trying to achieve, so that political motive that was there is not there. I think this is a pure constitutional question of balancing revenues and—with expenses. WL: In 1983, perhaps, they were trying to squeeze more out than they would, even in this situation. FD: No. They were trying to build reserves. There was no lack of revenue, and that—. Let me tell you why that was important—because when I reacted, when the campus reacted, to their cash allocation reduction, we reacted as though it was indeed a shortage of revenue, and we said, “Nothing is going to cure that shortage.” This year we’re acting differently, we’re reacting the same this year because we believe it is an economic problem, and the facts seem to bear that out. But if you go back to ’83, in the fourth quarter—. Let me tell you what we did in the second and third quarter. In the second and third quarter, we had a faculty meeting—I don’t know whether you remember or not—in which the chancellor stood up and said, “These are the cuts we’re going to take.” And we did the same thing that came out in the paper that happened at NC State. We cut temporary appointments, maybe even reduced the number of [class] sections in some cases. We took some major, major cuts all across the university, even down to taking library books, which are almost sacred, out of the library budget. This year we didn’t rush out and do that. If you’ll notice, we were very calm, and we simply went in and understood the problem first, and then we began to build a case of if it’s this, 10 this is what we could do. If it’s this, this is what we could do. We looked at our options; we simply protected our options, and we began to draw up a plan. And, if you notice, we gave flexibility in the way the plan was put into effect. We didn’t say, “You must cut this and you must that.” We said we believe the problem measures out to this many dollars. The chancellor allocated that problem to the vice chancellors. The vice chancellors, then, had great latitude in how they corrected or how they changed their budgets that meet that requirement. The time before, we told them what to do. We didn’t say, “You decide.” We told the deans, we told the vice chancellors exactly where to go—bad approach. Part of that is experience; part of it is a change in substance. I think I understand the state better and how to work through these problems, and I think I understand how to, from a timeline standpoint, not take the action all at once, but take the action as you get the facts. And that’s a little maturity in there too. It’s a maturity within the context of the state of North Carolina because if I were somewhere else—if I were in Tennessee, I’d probably work it differently [laughter]. So— WL: You’re working with a—you have a different sort of relationship with the state as well? FD: Right. WL: In terms of? FD: Much, much better, much more—my credibility is probably triple just from working with them over a long period of time. WL: Did they—? In 1983, were they very specific in what they told you to do? Was it—did you have less flexibility that year? FD: Yes, we had somewhat less flexibility because we were in a no-grow situation. When you don’t have faculty salaries, unfilled faculty positions, we are in a real detrimental position, so that was another fact. WL: Yes. FD: That’s a very good point. The other thing is that certain lines in the budget have represented large non-salary components, one of them being utilities. We’re under budgeted on purpose at the state level, and they allowed us to use salary reserves to cover utilities. Now our utilities are budgeted reasonably, and, not only that, we are in a period of temperature that is unbelievable, and the difference in what we spend for utilities in a sixty-degree January and a thirty-degree January is a quarter of a million to three hundred thousand dollars. That’s thirty percent of your problem right here. WL: That really helps. FD: It does. And all I need is two more weeks, and I have just—I think I am on the verge of seeing something that will bring the money back to the budget. I don’t know. I’m betting that if the state doesn’t change the rules on me and we continue to have warm weather, 11 then I see one way that we can cut our losses in the fourth quarter. But I’ve got to get the state to give me the case before I could do it, and that’s the problem too. So it is a very complicated set of circumstances that we’re working with in a very complicated political environment which already has a governor versus legislature component. [laughter] So that means that the budget office—. It’s clear where their posture’s going to be—it’s got to be over here—whatever the governor wants. If the governor said, “Cut that cash allocation another five percent next quarter, that’s what’s going to happen because the governor has the constitutional authority to determine how much money can be received in tax revenues and make judgments on that basis. WL: The governor has the—actual executive control of the budget? FD: That’s right. Under the executive budget act. It says in that act that the governor shall determine how many dollars of tax revenues will be collected— [End Side A—Begin side B] WL: We have a revenue crisis—we’ve had a crisis of a different kind. In both cases the governor’s office had virtually absolute control, I guess, over determining what the budget was and what your revenue situation was. 1990, you’re dealing with a different political situation, perhaps, that might be more advantageous in the sense that you’ve got two parties, two different parties, controlling— FD: Let me say that 1990 is better for us than 1983 because we are better capable of managing the situation. We know more about our budgets; we understand how you can manipulate certain things in the system legitimately in order to achieve the more important things that you are trying to achieve, and we also have, I think, a knowledge that the budget office is dealing with us in a way that is indeed reflective of the economic situation, rather than a political situation. And those are easier facts to deal with than a political situation because then I can play the hand out for six months, rather than what I did. The other mistake I made was I literally took what they told me in the budget office, and I acted on it. They then changed the rules in the fourth quarter by giving me all the cash I wanted, but we had already so gotten the campus used to not doing anything that it was hard to get them geared back up to spend the money, even though they needed the money. That’s a very strange thing, but it’s a process. Once you stop the process from the day-to-day transaction base—. When you say “Go,” it takes a certain length of time to start it back up and to fill the pipeline, and that’s what happened to us too. This year, we’re saying we’re going to plan for that. We are right now planning what happens if we get money in the fourth quarter that we don’t now believe that we can get. WL: Still have certain ways of spending it? FD: That’s right. We already have started talking about the strategies we’re going to to use and how we fill the pipeline and get it done and it’s—it was one of the things that we 12 thought through from the front end, rather than waiting for it to happen. So, it’s a more— it’s better understanding of the system, better working relationships with the state government and probably a better factual base than we had in 1983. That is why I don’t like to look at other campuses and how they handle their own situations. I would rather make those judgments ourselves and not worry about what they’re doing. We’re better off to do it our way. WL: Do you operate pretty much deliberately in isolation from the other campuses? FD: Not in isolation, but I don’t base my judgments on what somebody else does. WL: Yes, for example, North Carolina State? FD: That’s right. I just think I want to never operate in that mode; that is, an arm-waving mode that can do nothing for this office with the state budget office but get us in very deep, and it will—just makes people mad for no reason. What you’re doing is fighting with the budget office when you don’t need to fight; what you need to do is to look for the solution. If you start fighting with them, then they begin to take sides, and I’m telling you, Greensboro is not the place they want to take sides. They’re looking for ways to gear up with the politically strong campuses—NC State and Chapel Hill—and that’s exactly what I would be doing. So I’m looking for ways to stay with the only political environment that we have—state budget office. WL: Is Greensboro not a politically-strong campus? FD: I don’t think it’s a politically strong because I don’t think the delegation in Greensboro is a strong delegation and it’s divided—it presents a divided front. There are other problems associated with it also, but there is no leadership at the state level that comes out of the Greensboro delegation. And as soon as we get somebody to a point that they’re ready to assume leadership, they leave. And I think that’s where East Carolina [University, Greenville, North Carolina] and the western part of the state and Charlotte all have it over us. WL: They’re in there a long time? FD: The leadership in those areas have been running the state for many, many years. Chapel Hill and NC State, because of their status as campuses and not the least of which is NC State’s ability to use their agricultural program, which is all over the state—it’s like having a little political office in every county. They are able to carry lots of weight. WL: Do you think the sixteen-campus system is going to survive? Is it? Established in 1973, it seems to have taken on a certain degree of strength. But now, of course, you are hearing a lot of discussion of deconsolidation. FD: It will probably survive. It might not survive in the same form, I don’t know. But I would think without a system in this state, I don’t know how one controls the political infighting 13 and the pork barreling of a very important thing. There is a certain amount of that that goes on right now. I mean, if you took away the board of governors from the leadership of the president, you take away all the holds on every campus being represented in the state legislature. And being down there, we would have to do the same thing. We would have to go down and say, “A&T doesn’t need it; let me show you why A&T doesn’t need that money. We need it more than they do.” And then you put your legislators in a position of getting all kinds of social issues and other political issues involved in the education process. And so this kind of gives us a focus—a professional focus, I think. It also kind of gives us a program focus that—to my way of thinking, the purpose of a system is to do long-term planning for the education, anyway, of its citizens, not to manage the campuses. I think that one of the problems that we have is that there are too many people trying to have hands-on management of everything right there in the state of North Carolina. The concept, however, of one focus for higher education is right. I didn’t used to think I would ever say that, but I think the focus ought to be on program mission, that kind of thing, not on how you manage or how many dollars you give faculty. That’s not the issues that can be decided in Raleigh [state capital] or in Chapel Hill. It ought to be decided in Greensboro, and so I would opt for a different kind of system. Although, if you look at our neighbor—Georgia has had a system in place that has been very visible for fifty, sixty years, 1931. And they somehow have managed to not get involved in the management of the campuses, but they stay on a mission level, and they stay on a focused—. They do the politicking in the state, and they keep the legislature out of the campuses, so it’s served a very useful purpose. And it’s very much organized like ours, so it’s just a difference in the nature of—the legislature here has great power in relation to the executive branch. In Georgia, it has less power in relation to the executive branch. I think it’s a lot to be said for the other. WL: Let me ask you about the facilities and capital improvements. This seems—the 1980s seem to have been a big decade of construction and capital planning and capital improvement projects on this campus. [Did] most of this come out of post-1980 era? FD: Basically, Chancellor Moran had an agenda for me when he came here. As I understood it, his agenda was, “Give me good financial management. Let’s work the system with the state and get all the flexibility we can logically, legally, and reasonably get out of the system. Let’s improve the facilities and the conditions on the campus, so that you have a different environment for students and faculty. And let’s make sure that that achieves bringing in the right quality of students and providing those students with what they can get at any quality university.” Now starting with that as a framework, everything we’ve done from—everything we did from 1981 until 1984 was to set the parameters. From 1984 to now, it’s getting money for those prioritized projects and trying to solve those that we can solve internally. Do it ourselves as a focus. And I’m going to say it this way—I think we’ve done things that if we had done them quicker, you could see, but we’ve done them over a long period of time, probably with less money, and you can’t see them. Landscaping on this campus—if we remember what it looked like as you came on Spring Garden Street in 1980—I remember it clearly. I was ashamed that this campus was in that condition. And if you look at it now—if you 14 can just visualize those two points and forget all the things that happened in between— there is a major difference. It’s not nearly where we want it to be, but we’re a lot closer to getting there than we were five or six years ago. It’s a very methodical way of doing it. I guess what I’m saying—we’re doing it within the context of the available resources. Nothing we’ve done has drained or taken away from the educational programs. Everything we’ve done has been out of our hides. If you look at physical plant staffing, the staffing—up to the point that we put the last three major facilities into [unclear] staffing and physical plant was two more than it was in 1985, except for the new PAC [Physical Activities Complex] building, new art building. That’s how many increases we had in physical plant. Now, I defy you to look at any place, any college or university or school on the campus, and tell me that. So, what I am saying is that we’ve done it as we could, but with a plan. We have done less in the academic facilities for the simple reason we’ve had more difficulty getting state appropriations then we have managing our own affairs with student fees and revenues. We have put—right now, I just the other day scheduled out for the next five years the projects that are going to be coming up for funding that are non-state-appropriated projects. There’s going to be $28 million worth where construction will either begin or be completed during that time. WL: Where does the money come from? FD: It comes from student fees, and it comes from revenues that are generated from all sources, whether it be housing or whatever. And the state has not had to give us anything, but they’ve give it to A&T, and they’ve give it to Fayetteville State [University, Fayetteville, North Carolina]. They appropriate money for residence halls. Now conceptually I think that’s wrong. I really disagree with that approach, but anyway that’s their business. The problem that we’re having is trying to put some kind of order to the priority process for the academic facilities. We are standing—we cannot seem to get our biggest renovation project off of dead center—that’s the McIver Building. We can’t seem to get the next big new structure that we need, the music building. And until I get those two, I can’t solve the problem that we are beginning to see now of additional students causing a little bit of cramping in our general classroom area and faculty office space. I want to see us build a new classroom building for a couple—for departments so what you relieve is some of the pressure of the McIver Building, but I can’t seem to get that log jam broken at the state level. WL: That’s in the legislature? FD: Right. And we’ve got right now—on the next biennium we’ll put forth the music building for the second time, third time, and we’ll put forth McIver for the second time—well-defined projects—well thought through. The dollars are reasonable in light of what we’re trying to do for them. And then when you can get those kinds of dollars, then think of all of the hidden things—the utilities, the asbestos removal, those kinds of problems—floor coverings on this campus—you know, just carpet replacements and tile replacements— it’s astronomical. We’ve spent $175,000 last year—got two and a half million square feet of floor space to take care of. We’re not getting any money for minor renovations— 15 removing a door, reconfiguring an office to meet the needs of the program. We just don’t do it. There’s no way to get it all done. We need $40 million very badly in the academic side of the house, but if I had it all next week, we couldn’t run program and do the renovation. As a matter of fact, it scares me to think what we are going to do if we have to close down McIver Building. WL: That’s what I was wondering. I teach in McIver—have trailers or something. [laughs] Where would you put everybody? FD: I think we’d have to do it in phases, and I think we’d have to utilize some space that we are doing right now for human environmental sciences to take care of faculty offices. We’re going to renovate the Park Gym. We’re going to put sixty office spaces in there. It’s going to be quality; it’s not going to be makeshift—it’s going to be very good-quality spaces and the dean’s suite—so that that building now can be used in future years in future projects for other transitional space. WL: That would be converted more into office—more office spaces? FD: Right. What we do is—see, that human environmental sciences project will last eighteen months, so we move the faculty back into that building and try the next building—try to renovate the next building. The only problem is we can’t get the money from the legislature. We’ve done our planning; we understand the problem; we’ve set some priorities and parameters. And if we go to a science-based program, heavily involved in graduate work in chemistry and biology, that’s another project, that’s a $20 million project, and I think we have to build a new science building rather than renovate Petty [Science Building]. I think we can renovate Petty for general classroom use, as a matter of fact. So that’s the kind of thing we’re dealing with with facilities—made a tremendous stride—we’ve inconvenienced a lot of people; we’ve caused a lot of trauma on campus, but nevertheless, I don’t know how you can do it otherwise on campus. WL: But all of it’s been done with very little state support—what you’re saying—essentially only two buildings that have received— FD: It’s kind of been out of our hide, as a matter of fact. And you know we’ve got the student recreation building coming on line, coming up for construction here in the next eighteen months. We’re going to have the soccer stadium. Those are things that the students really do get excited about [unclear]. Just talking this morning presents major operational problems for us. It’s been fun; it’s been exciting for the ten years I’ve been here. And I’m telling you the things that were outlined in 1980 in June in Bill Moran’s office for me is still what I’m working on. And I’ve probably still got sixty percent left to do. I think we have a good management structure; we’re not deep as we need to be. We have an excellent, I think, relationship with faculty, considering where we started. We have excellent external relationships with the state government and other agencies. We are highly respected in the state as financial manager, business managers. We have changed the nature of the physical campus. We’ve worked out some major problems with the religious centers. We have self-examined more than probably the campus has been 16 self-examined in years, probably twenty or thirty years, and we’re looking every day for new ways to do things and that kind of thing, just like the faculty are looking for the new areas that they want to move into. And that’s what I think is so vital about the support functions. If you don’t move on the same way that the faculty are moving, forget it. The faculty can’t get there. I’m sorry—you can’t do it without us, and we can’t be here without you. So it’s the whole philosophy—the whole attitude that we take is: provide quality for as many people as we can provide it for and do it well—everything done well. And that’s Bill Moran’s approach—if we’re going to do it, we’re going to do it well. And that’s what I want to do. He and I could not be any closer together on the things that are important, that I deal with on this campus. I have really enjoyed working with that man. Fantastic person—fantastic. [End of Interview] |
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