Business Higher Education Council
Virginia's coalition of business and academic leaders plays political hardball

By William Trombley
Senior Editor

FALLS CHURCH, VIRGINIA
THE MAN sitting behind the desk--grey brush cut, open shirt, gruff manner--hardly seemed the type to be the saviour of Virginia's public higher education system.

But many educators and political observers in this state say that is exactly the role that John T. (Til) Hazel, chairman of the Virginia Business Higher Education Council, has played in recent years.

Under Hazel's leadership, the Council, which includes more than 40 top executives of Virginia's largest companies, as well as the presidents of its leading colleges and universities, has been instrumental in bringing about these changes:

• state spending on public higher education has increased by $230 million in the last two years.

• a tax cut proposal by Republican Governor George Allen was defeated, after Hazel and other Republican business leaders testified against it.

• Council members have helped to elect state legislative candidates who were supportive of higher education and to defeat some who were not.

"We're pretty aggressive and we make a lot of people nervous," said Hazel, 66, who is founding partner of a large northern Virginia law firm and is also a major developer, "but the thing to remember is the academic crowd was in a lot of trouble a few years ago and now things are a little better."

In other states, including California, there have been efforts to bring business and higher education leaders together, but usually these amount to little more than occasional meetings in pleasant surroundings, to hear prominent speakers.

Florida is an exception. In that state, a Business Higher Education Partnership--12 chief executive officers of large corporations and 12 college and university presidents--has successfully lobbied the Legislature for increased higher education spending and a 25 percent boost in the state's basic grant program. In return, educators have agreed to cut costs, increase productivity and reconsider faculty tenure policies.

"This is the best support we've had in eight or ten years," said Charles B. Reed, chancellor of the State University System of Florida.

But Virginia remains the best example of a business-higher education coalition that has been willing to do political battle, perhaps because of the financial crisis that confronted the state's public colleges and universities in the early 1990s.

Faced with recession and sharply reduced state revenues, Virginia's last governor, Democrat Douglas Wilder, "balanced the budget on the back of higher education," Til Hazel said in an interview.

Wilder cut higher education budgets by more than $400 million, dropping Virginia to 44th place among the states in spending per student. Higher education's share of state General Fund revenues, which had been declining since 1977, reached a new low of 11.7 percent.

Faculty salaries were frozen and administrators at the University of Virginia, the state's flagship campus, complained that they were losing good faculty members to other institutions and were unable to attract the best young Ph.D.s.

Tuition charges soared, as college officials scrambled to replace lost state revenue. Virginia's public institutions became some of the most expensive in the land.

"Higher education was really in the pits," said Hazel, who is a graduate of both Harvard College and the Harvard law school but does not mind being taken for a country bumpkin lawyer.

By the time Wilder was replaced in 1994 by conservative Republican George Allen, the state's economy was improving and college officials hoped that higher education might share in the recovery.

Hazel, an important contributor to Allen's successful campaign, talked to the new governor several times before he took office in January 1994. "I thought we had an understanding that they would at least start to build back to where we were" before the recession, Hazel recalled.

Instead, Allen proposed tax cuts, to be financed in part by another $50 million reduction in higher education spending.

At that point, some of the college presidents--notably George Johnson of George Mason University and Timothy Sullivan of The College of William and Mary--decided to take their case to Virginia's business and professional leaders.

"We had some friends in the Legislature but they said they needed help from the outside, from the business community," Sullivan said.

Among those the presidents went to see were Norfolk attorney Joshua P. Darden, Jr., former Rector (chairman) of the University of Virginia Board of Visitors; James W. McGlothlin, president of The United Co. (coal); and Hays T. Watkins, chief executive officer of CSX Corp. (railroads). Out of these meetings grew the idea for the Virginia Business Higher Education Council.

George Johnson, who had worked closely with Til Hazel in the rapid development of George Mason University, suggested that the plain-spoken lawyer and developer, a powerhouse in northern Virginia Republican politics, should chair the group.

Hazel agreed but only after extracting promises from the college presidents that they would remain united and that they would continue to cut costs and increase productivity.

Many of the presidents were nervous about involving themselves in a partisan political fight, especially against a newly-elected, apparently popular governor.

"There was sort of a defining moment in an early meeting I had with the presidents," Hazel said. "I told them I'm not going to oppose the governor's tax cut and push for more money if you're going to cut and run. John Casteen (president of the University of Virginia) said, 'we've got no choice, our backs are against the wall, we're with you.'"

Karen Washabau, who was the state budget director from 1990 to 1994, was hired to be the council's executive director and she, too, stressed the need for unity.

"In those years, each institution lobbied for its own budget and higher education really had no united voice at all," Washabau said, "so they were an easy target" for budget cuts. "I told the presidents that their 'go it alone' approach meant they really didn't have much clout in Richmond (the state capital)."

Hazel recruited top CEOs as council members. "It was fundamentally done at a high level," he said. "I wasn't interested in dealing with ribbon clerks."

The business leaders insisted that the council's efforts to increase financial support for Virginia public higher education be accompanied by vigorous cost-cutting and other reforms.

"We didn't just accept at face value what we were hearing from the presidents about the need for more money," said council member Paul A. Dresser, retired CEO of the Chesapeake Corporation. "We told them they had to prioritize their needs and they had to take steps to deal with the public perception that higher education wastes a lot of money."

Fortunately, Virginia already had embarked on a major higher education restructuring program, mandated by the Legislature and implemented by the State Council on Higher Education. Administrative costs have been cut, some low-enrollment and duplicative academic programs have been eliminated and credit hours required for graduation have been reduced, among other steps.

Gordon K. Davies, executive director of the state council, said about $110 million has been saved so far and the money has been reallocated to the 16 public four-year campuses for instructional purposes.

However, the future of the restructuring effort is in doubt because the state council, now packed with Governor Allen's appointees, ousted Davies as director last month.

Meanwhile, Karen Washabau was producing a series of news-letters and fact sheets that stressed the importance of higher education to Virginia's economic future, and also pointed out that the state's investment in public colleges and universities had slipped below not only the national average but even the average for the southern states.

Hazel testified against Governor Allen's proposed tax cut at legislative hearings. "I invoked everything from the moon and the stars to Thomas Jefferson," he said. "It got us some visibility." And it helped to defeat the proposal.

Hazel's testimony, and some of the Business Higher Education Council's other activities, have been bitterly resented by Allen and especially by some of his young conservative staff members, and they have sought to strike back.

"Allen really was vindictive," said George Johnson, who retired last year after 18 years as president of George Mason University. "He made a bunch of bad appointments to my board and he tried to cut our budget, but we were able to turn it around in the Legislature."

Having dipped their toes into political waters, council members decided to venture farther out during the 1995 elections by asking all 140 candidates for the State Senate and the House of Delegates to sign a "statement of support for Virginia's public system of higher education."

The office-seekers were asked to vote to increase state spending for community colleges and four-year institutions in each year of the 1996-98 budget biennium and also to cap tuition and fees at the rate of inflation. More than three-quarters of the candidates signed.

"Democrats signed because they saw it as a chance to beat up on Republicans," said William and Mary President Sullivan. "The names on the council letterhead had a considerable impact on Republicans, especially in northern Virginia. You just don't fool around with Hazel if you're a Republican and you want to have a political future in northern Virginia.

"And I suppose there were a few who signed because they thought it was good public policy," Sullivan added.

Only the "hard Right Republicans" and a few others refused to sign, according to Hazel.

Although Hazel acknowledged that the council's support for those who signed "might have been implied," he insisted there was no quid pro quo for signing. "We told them, 'You sign the pledge and we'll let people know you support higher education.'"

The group took out ads in the major Virginia newspapers and in The Washington Post, listing the candidates who had signed. The ads read, "These incumbents and challengers signed on to support higher education. They recognize its importance to Virginia's future. Is your candidate on the list?"

Political observers think the Business Higher Education Council campaign was an important factor in half a dozen close races and that the resulting Legislature has been much friendlier to public colleges and universities than it might have been otherwise.

The Legislature approved a $200 million increase in higher education spending for the 1996-97 academic year--only half of what the council sought, but far better than the $50 million cut that Governor Allen initially proposed for the 1996-98 biennium.

The council lobbied for another $200 million for the 1997-98 academic year and received only $30.5 million, much of which will be used to increase faculty salaries. "We didn't do as well this year," Hazel said, "partly because the state is almost totally on its uppers."

Virginia Secretary of Education Beverly H. Sgro, an Allen appointee, was cautious in her comments about the business-higher education group.

"They have done a good job of making the public aware that higher education's needs were not being met prior to the time we took office," Sgro said, "but they have not helped people understand that higher education is just one piece of the budget."

Norfolk attorney John D. Padgett, an Allen appointee to the state higher education coordinating body, criticized the business-academic group for paying too much attention to the amount of money Virginia spends on public higher education.

"I don't believe money necessarily buys quality, and that seems to be where they are," Padgett said. "The real issue is making sure we provide quality education, not how much money we spend."

"That misstates our argument," William and Mary's Sullivan replied. "No one has said it's purely a matter of dollars, but no one can argue that dollars don't count, either."

Where does the Business Higher Education Council go from here?

"The novelty of the entire thing has worn off," Sullivan said. "We all think we'll have to do some different things now."

Political activity will continue, as the group tries to influence the final budget that Governor Allen will present before leaving office next December. They also will push to make higher education a top priority for the two candidates who will compete for Allen's job--Lieutenant Governor Don Beyer, a Democrat, and Attorney General James Gilmore, a Republican.

There will be less emphasis on comparing Virginia's higher education spending with other states, especially other southern states.

"Why should we set our sights on parity with a group that includes Alabama and Mississippi?" asked Eugene Trani, president of Virginia Commonwealth University.

Hazel has asked for a sort of "vision statement."

"The presidents have to develop a tight plan for where higher education is going," he said, "what they really think they need to make Virginia's educational system fly." Sullivan said such a document would be ready by fall.

But the money to finance a grand plan of any sort may be lacking in a state where there is strong opposition to higher taxes, and where other needs--prisons, Medicaid, elementary and secondary education--are deemed more important than public higher education.

"Virginia's needs exceed its revenues," Gordon Davies wrote recently. "Were it not for windfalls of various sorts, the state would not have enough money to provide the services Virginians apparently want."

There is concern that the unity of the campus presidents may dissolve as some decide that membership in the council involves too much political risk.

"There is a political downside, no question about it," Sullivan said. "But the alternative is far worse. We can sit around and let this happen to us or we can fight to make sure it doesn't happen. I'd much rather do the latter."

Hazel wonders how long the council can be effective, with its tiny staff and limited budget. "The facts are on our side," he said, "but you can't keep this up forever with an outside-the-box group."

So far, however, being "outside the box" has been no disadvantage for this unusual coalition of business and academic leaders.

"I think the group has been enormously successful," said former Virginia Governor Gerald A. Baliles, who is now an attorney in Richmond. "They have provided a bipartisan umbrella of support for legislators in both parties who wanted to support higher education but were concerned about the political consequences."

Said Davies, "The higher education and business communities still have trouble communicating, but at least the right people are at the table, having the right conversation."