I often go back to Max Weber’s 1922 essay on Bureaucracy. Weber, a sociologist, described how an administrator should run a bureau, referring to an actual desk, or, as the Germans called it, a “Bureau” (see picture here http://bit.ly/2ou5e8P ). As an aid administrator, I used to think about how old Max missed his calling. He would have made a great Financial Aid Director. In my mind, I could see him sitting at his desk verifying ISIRs or signing his approval to disbursements and forwarding them to the business office. Time stamped and archived for the sake of keeping sound records. In fact, he could easily fit in in any number of campus administrative departments, because college administration is synonymous with bureaucracy.
According to Weber, an ideal bureaucracy has five characteristics:
1. Division of Labor by functional specialization
2. Hierarchal structure of authority
3. Clear rules of rights and responsibilities of employees
4. Written policies, rules, regulations that guide behavior
5. Competence based career progression, career longevity, education and training determine qualifications of employees etc.
It sounds a lot like a typical college administrative structure doesn’t it? That’s because bureaucracy is actually quite efficient. Even though it’s a term often used pejoratively, when we discuss bureaucracy in terms of its impact on risk, internal controls and compliance, we are speaking about it as a means of efficiently organizing our business operations to ensure consistency not only for ensuring compliance, but also for keeping cash flow consistent.
Whether I’m doing an operational review or consulting on a compliance matter, I’ll often first ask, “What is your school’s policy”?
All too often, school officials don’t know.
When we dig in, we find polices either don’t exist or haven’t been updated since Max Weber wrote his famous essay. Sure, keeping up with the regs can be a full-time job in itself, but if your policy still refers to the Basic Educational Opportunity Grant (BEOG), it’s time to update them. Even the most talented bureaucrat can’t function without clear expectations.
Experience shows us that schools with well documented, up-to-date policies and procedures tend to adhere to adhere to them. And if the procedures are any good, the school has few compliance problems and processes aid efficiently resulting in strong cash flow. The benefits to having good policies and procedures are numerous beyond allowing a school to be a good steward of Federal Financial Aid dollars. For example they help streamline audits and program reviews. They can be a great tool to help bring new employees on board faster and ensure continuity in processes when turnover occurs. Conversely, non-existent or out of date polices simply invite chaos. https://youtu.be/5ilGGP9BDZs
Having written policies and procedures isn’t just a good idea, it’s a requirement. Federal regulations require schools to have written policies and procedures for the administration of the Title IV programs. During a program review, ED typically asks for policies describing the institution’s Satisfactory Academic Progress, Admissions, Refunds, Return to Title IV, Consumer Information, Verification, Campus Based selection and awarding (FWS, FSEOG, Perkins), but there are dozens of other policies that are necessary.
Written policies are essential for maintaining compliance because they provide structure for rules and guidelines and describe key internal control activities. ED also recommends that schools conduct internal compliance reviews at least twice a year. One of those reviews should be focused on keeping policies up to date.
This is an excerpt from our April 2017 Newsletter. Sign up here.
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