Would ‘breakthrough solutions’ like treating students as customers help or hurt UT on its quest to become a university of the first class?
The Legislature shall as soon as practicable establish, organize, and provide for the maintenance, support, and direction of a university of the first class.
Anyone who’s ever attended The University of Texas should know this line from the Texas Constitution because it is the guiding statement of our alma mater. What kind of university are we trying to be? Not just good—first-class, an aspiration so unequivocal it could belong only to the state that was once a sovereign republic.
By almost any established way of judging a university’s caliber—U.S. News & World Report rankings, research expenditures, graduation rates—UT-Austin is closer than ever to reaching its constitutional mandate. It has done so largely by attracting elite faculty who have helped the school shed its old regional connotation and emerge as a national research powerhouse.
Yet in recent months, some of the UT System regents have begun to doubt that the flagship is first-class or even on the right track toward becoming so. These regents believe that that same faculty who have put Texas on the national map and now attract twice as much external funding as the state’s entire appropriation—are not productive enough. Convinced that drastic change is needed, they have inserted themselves into the affairs of the University to a degree not seen since regents chairman Frank Erwin fired College of Arts and Sciences dean John Silber in 1970.
Who has sown these seeds of discontent? An oilman and philanthropist named Jeff Sandefer, BS ’82, Life Member, who taught at UT for a dozen years before disagreements with the administration led to an ugly falling-out. He now runs a private entrepreneurship MBA program, affiliated with Hardin-Simmons University, and has developed what he calls seven “breakthrough solutions” that he believes will transform higher education in Texas, in part by measuring faculty productivity.
Supporters see Sandefer as a far-sighted revolutionary bent on reforming insular and wasteful systems that place too little emphasis on teaching. Critics see an educational Rasputin, who has cloaked his disdain for academic research in terms like productivity and transparency, then whispered them to Gov. Rick Perry. (Is any political position more unassailable than pro-productivity?)
These solutions, if adopted, would fundamentally alter the identities of UT and A&M because they challenge the way elite research universities work: a balance of teaching for undergraduates and advanced research by faculty and graduate students. Last fall, Texas A&M implemented solution No. 3, separating teaching and research budgets and grading professors based on how much money they “made” or “lost” the university. Shortly after, the Association of American Universities—gatekeepers of the “tier one” university club—sent A&M a letter ripping the solutions.
“Separating research from teaching and oversimplifying the evaluation of faculty does violence to the values that have produced the American universities that are envied and emulated across the globe,” wrote AAU president Bob Berdahl, Life Member. Since the breakthrough solutions were developed during the 12 years Sandefer taught at UT, a full understanding of them requires a knowledge of who Sandefer is and what happened 10 years ago that led him and UT to split.
Jefferson Davis Sandefer IV grew up in Abilene, in the shadow of Hardin-Simmons. His father, “Jakie,” and his grandfather were wildcatters, and his great-grandfather, Jefferson Davis Sandefer I, was the longest-serving president in Hardin-Simmons’ history.
From a young age, Jeff expressed an entrepreneur’s phenotype. Bright and ambitious, he started his first company at 16 painting tanks in oil fields. Rather than paint them himself, he hired his high school football coaches and paid them by the number they finished. The coaches got their players to help and, in short order, the outfit ran circles around competitors. “We charged 66 percent of our competitor’s price and had 80 percent net profit margins,” Sandefer said on the BusinessMakers radio show recently. “[It is] perhaps, to this day, the best business I’ve ever had.” He walked away with a cool $100,000, he said, not bad for one summer’s work in 1976 without ever lifting a brush.
He graduated from UT in 1982 with a petroleum-engineering degree, worked for two years as an engineer at an oil and gas company, then went on to Harvard Business School. When he finished, he started another company, an oil and gas startup. It was 1987, and oil and natural gas prices were low. With $1 million from investors, Sandefer Offshore subleased 17 drilling projects in the Gulf of Mexico that big oil companies were happy to dispense with. He hired industry experts those companies had recently laid off, and had the good fortune to strike it rich at 15 of the 17 sites. In five years, Sandefer turned that $1 million into $500 million, sold the company, and, at 29, started teaching.
One of the lessons Sandefer learned from his Harvard mentor and now teaches his own students is the importance of having “f— you money.” The idea is to always have enough cash so that if you were ever asked to do something unethical or against your value system, you could tell your boss “f— you” and walk out the door. Sandefer offers this advice in the classroom and in public speeches as a way to ensure that if people have the constitution to stand up for what they believe in, they also have the means to do so. But critics argue Sandefer’s proclivity for going it alone, combined with his enormous personal wealth, enable him to say “f— you” simply when he doesn’t get his way.
Not long after Sandefer stepped on the UT campus to teach entrepreneurship in 1989, he began developing the notion that faculty focused too much on research and not enough on teaching. People who knew Sandefer at the time describe him as a singularly gifted lecturer, committed and demanding, but with an air of entitlement and a disdain for some of his colleagues.
“In my judgment,” says former dean Bob Witt, “Jeff either didn’t understand faculty governance and the faculty value system, or didn’t agree with it, or both. But he was one of the hardest-working, most effective, and popular adjunct faculty members I ever worked with in my 27 years at the business school.”
In developing the curriculum for MBA students in the entrepreneurship track, Sandefer eschewed the traditional model of deciding on a textbook and selecting supplemental materials. Instead, he wrote his own, relying on case studies he did at Harvard and drawing on his and his collaborators’ experience with starting companies. Sandefer and five other adjuncts who taught in the program were so committed to good teaching that they drew up and signed a contract stating that if any one of them failed to rank in the top 25 percent of business faculty on student evaluations, he or she would agree not to teach in the program the following semester. They named themselves the Entrepreneurship Teaching Group.
One of the lessons Sandefer learned from his Harvard mentor and now teaches his own students is the importance of having “f— you money.”
Laudable or not, the contract was unenforceable, and UT administrators told Sandefer so. In an email to him in 2000, then-Dean Bob May wrote, “I am not able to enforce voluntary agreements among faculty. I enforce University policy, and where that calls for my personal judgment, I rely on my personal standards and values.” Whoever signed the agreement would have to self-enforce.
At first it presented no problem, because lecturers taught all the classes, and the contract was more gentlemen’s agreement than anything legally binding. But as the program grew, the University hired two tenure-track faculty to do research on entrepreneurship and teach in the program. Sandefer asked that, if they were going to use his curriculum, which the group copyrighted, they sign his contract. He wanted ensure the high teaching standards he and the group felt had put the program on the map and been validated by overwhelmingly positive student feedback. The University told the tenure-track faculty that to sign and adhere to the contract would place their jobs in jeopardy, since it could potentially mean usurping the department chair’s prerogative to make teaching assignments.
The fallout came in spring 2002, when the business school wanted to populate the program with professors who Sandefer and his colleagues thought weren’t good enough but who wanted to use the group’s materials. When Dean May ruled against them, Sandefer fired off an angry eight-page email to the Business School advisory council in which he first articulated the main principle behind his seven solutions.
“The issue is quite simply: Who is the school’s customer?” Sandefer wrote. “The Entrepreneurship Teaching Group believes that we serve the students and the business community, and that our calling is to help our students develop into exceptional business leaders. The tenured researchers believe their customer is the pursuit of scholarly knowledge.” The dispute went public. According to UT officials, Sandefer stoked fears among his students that the future of the entrepreneurship program, and thus their degrees, was in jeopardy.
Shortly after, an article the University says was rife with errors appeared in the National Review, on whose board Sandefer sits. By April, it was obvious there would be no reconciliation. Sandefer and four lecturers who had helped build the program left. “It was clear that our intense focus on the students wasn’t welcome by everyone,” Sandefer says. “Late in the spring, I received a phone call from someone inside the University who told me a decision had been made to fire half the entrepreneurship teachers in the summer, after the students had left, and the rest in December. Our group announced we were leaving shortly thereafter, because we thought our students had a right to know what was happening. For a few weeks, I was heartbroken, given all we had done for the school. I thought we would be there forever.”
In his grievance email, Sandefer wrote that five graduate business schools had approached him about bringing his program to their campuses. Indeed, shortly after he and Texas parted ways, Sandefer taught a class on entrepreneurship at the University of Oklahoma, but did so only for one semester.
Next, Sandefer and his colleagues partnered with St. Edward’s University in Austin. At the time, St. Ed’s had only a nighttime MBA program, so collaborating allowed a full-time program. The arrangement lasted just a year and reportedly ended in a disagreement over money that Sandefer and his colleagues say the institution refused to pay them.
“Both parties decided it was in our best interests to go our separate ways,” says Marsha Kelliher, dean of the graduate school of management at St. Edward’s, who declined to elaborate. She confirmed that Sandefer and his group did make a monetary donation to the school but declined to say how much, what it was used for, or whether it was returned. The split, she says, was amicable.
Having tried his program at UT and St. Edward’s, Sandefer and his colleagues decided to take matters into their own hands. They rented space in downtown Austin and opened the Acton School of Business in 2004. They named the school for Lord Acton, a 19th-century scholar and Catholic contrarian famous for his quote: “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.”
“The issue is quite simply: Who is the school’s customer?”
As an independent program, the school lacked accreditation, so Sandefer went looking for a relationship that would bring the school in compliance with the Texas Higher Education Coordinating Board. He found what he needed back home in Abilene at Hardin-Simmons. He struck a deal with the university that allows Acton to exist alongside an MBA program offered in Abilene and sends Hardin-Simmons 10 percent of its revenue.
The Acton School has 12 professors, including Sandefer, all of whom are described as successful entrepreneurs. Seven have taught long enough and scored highly enough on student evaluations to earn the school’s designation of master teacher. Eleven of the 12 are male; one has a Ph.D. They get paid $5,000 stipends per semester but can earn up to $25,000 based on student rankings. None do traditional academic research, but they all have other jobs.
The MBA program, which graduated 27 students this spring, lasts one year, requires 100-hour weeks, and promises students three things: that they will learn how to learn, how to make money, and how to live a life of meaning. The school doesn’t say what that meaning should be. It is affiliated with a Baptist university, and Sandefer describes himself as Christian. But nowhere in the Acton program materials are Jesus Christ or God mentioned. If anything, Sandefer says, they teach a Socratic approach to finding a life of meaning, and for many students that results in religious or humanistic paths. A poster in the school’s reception area reads: “Our mission is to attract, equip, and connect principled entrepreneurs, inspiring each to pursue a calling and pass on the blessings of liberty to the next generation.”
In a speech Sandefer gave recently to a group of aspiring entrepreneurs, he spoke of living a life of purpose, but there was no talk of God.“Winning the rat race will not bring you happiness, satisfaction, or fulfillment,” he said. “The winner of the rat race is still a rat, no matter how fancy your corporate office or how large your jet. You can remain on this fool’s errand chasing money, power, or fame, or choose instead a Hero’s Journey—where you are the hero who changes the world.”
Sandefer uses a separate rat analogy as part of a lecture. In it, he recounts an interaction with a man who wanted his son admitted to Acton. “He’s probably not smart enough to get into Acton,” the father said, “but he’s got a certain RLC that makes him a good businessman.“ “A certain RLC?” Sandefer replied. “What’s that?” “Rat-like cunning,” the man said. “I knew exactly what he meant,” said Sandefer. RLC, Sandefer says, is a less polite but more accurate way of articulating what many describe as street smarts: skills such as making sales, reading people, haggling, never paying cash for anything, protecting your downside, and collecting free options. It is the opposite of, say, owl-like wisdom.
As a program, Acton has been recognized as innovative and worthwhile for students wanting to learn how to start businesses. It has never been held up as a model for higher education. And yet the differences look stark between the type of schools he says Texas needs and the one he has actually created.
Sandefer laments the rising cost of higher education, even though Acton costs $50,000 for one year. Granted, none of that is taxpayer money, and Sandefer argues that compared to Harvard or Stanford MBAs it’s a bargain. He suggests professors at UT and A&M could be more productive by teaching more students, yet his school has 12 faculty and 27 students—a student to teacher ratio of almost 2:1. How is it, critics ask, that principles he says should guide our vision for higher ed don’t all apply to his own school?
This disconnect is what most concerns higher education professionals, particularly those at UT and A&M. It is less that the solutions’ goals are misguided and more, they say, that the presumptions they make about academia are. The idea that teaching more students is inherently more productive or that teaching and research can be separated flies in the face of hundreds of years of academic experience. Smaller classes often make for more productive learning environments, and teaching and research go hand-in-hand. That relationship is one critics say Sandefer knows nothing about.
“I don’t think he’s on the right track about how a university should be configured to do all the things it is expected to do,“ Larry Faulkner, PhD ’69, Life Member and Distinguished Alumnus, who was UT’s president during the Sandefer fallout, told the Houston Chronicle. “He has an extremely narrow experience, and a university has a vast range of constituencies.”
Sandefer finds this argument unpersuasive. “Successful nonprofits, like Acton, and successful businesses all make clear promises to those they serve. The specific promises and models will be different for each and every group of students served. But the biggest mistake a school can make is to claim that its mission is ‘too complicated to explain’ or ‘too valuable to measure.’ That’s simply poor management.”
While the substance of the seven solutions has alarmed faculty, administrators, and alumni of both UT and A&M, much of the pushback has been in response to what is perceived as one man’s undue influence on the debate. “It seems that the seven solutions put forth by the TPPF and the related personal opinions of the Sandefer family are now being used as a new blueprint for Texas A&M University,” A&M associate professor Jamie Grunlan told the A&M regents in May, a video of which has been widely distributed. “I have solutions of my own, and I’m just as smart as the Sandefers. I’m not as rich, but I promise I could go toe-to-toe and come up with equal solutions.”
Emails obtained by the Austin American-Statesman this spring show that Sandefer has been in contact with the former chancellor of the A&M system and certain UT regents, discussing how to implement their reform agenda. Sandefer’s $400,000 in donations to Perry appears to outsiders to have bought the governor’s ear, rather than won it on the strength of his ideas.
Then there was the controversial hiring in February of Sandefer pal Rick O’Donnell, a fellow at the Texas Public Policy Foundation (where Sandefer is on the board), as a special advisor to the UT regents. He was hired in secret, during a hiring freeze, for $200,000 a year. When O’Donnell started asking UT for data on faculty salaries and workloads, it altogether raised suspicion that the regents were—and are—moving the University in a new direction against its wishes.
Upon reflection, Sandefer says he believes the UT community, including the Texas Exes, has overreacted and tried to steer the discussion away from the one he wants to have. “The seven solutions were meant to spark a debate, not to be applied in a formulaic way,” he says. “But they do describe principles embraced by all great organizations: make clear promises to those you serve, set measurable goals, and reward your top performers.”
To Kenneth M. Jastrow II, BBA ’69, MBA ’71, Life Member and Distinguished Alumnus, the notion that a person who runs a school for 30 students has insights into running systems that graduate 400,000 students is preposterous, particularly since the seven solutions are nothing like the recommendations made by UT’s Commission of 125, which Jastrow chaired in 2003. That process involved more than 200 stakeholders, all with an interest in and knowledge of higher education, who worked for more than two years on charting a vision for the University’s next 25 years. Their two overarching recommendations called for revamping the curriculum and putting great people into leadership positions.
“The members of the commission recognized the enormous progress made by the University and determined that it could be the best public university,” Jastrow says. “Achieving that goal would be the ultimate service to society and in keeping with the Constitutional mandate of being a university of the first class. That value cannot be captured in an accounting statement.”
Whether and how the seven solutions will be implemented at UT remains to be seen. Amid speculation this spring that UT System chancellor Francisco Cigarroa was going to be fired, the regents invited him to address them at their May meeting. At the end of it, the regents unanimously approved his vision and resolved not to micromanage his affairs, seemingly putting to rest speculation that the Sandefer solutions were non-negotiable. Hours later, however, Regent Alex Cranberg* sent out an email asking for detailed information about individual faculty members’ workloads, grades, and student evaluations.
As of press time, dueling interpretations of the resulting data had emerged. A critical one by Richard Vedder of the Center for College Affordability and Productivity suggests UT could lower tuition simply by making “unproductive faculty” teach more students. An analysis in the Texas Tribune criticized the Vedder report as “technically accurate but substantively misleading” and “overstating the feasibility of reducing faculty costs without undermining the quality of UT’s academic programs.” UT president Bill Powers has also argued that by calculating the number of students UT graduates for the amount of money the state puts into the school, UT is one of the most productive institutions in the United States.
In the end, the final question, the one that will determine the University’s future, is whether the Sandefer proposals will help or hurt UT on its quest to be a university of the first class. Judging from their responses, UT administrators, faculty, and alumni believe they will hurt. What remains to be seen is whether that even matters.
Correction: An earlier version of this article misspelled Regent Cranberg’s last name.
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