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Budget Cuts: Two Possible Solutions

October 16, 2009

As noted in Deja vu all over again, the university’s budget has just been cut again by 10%.  Our board of regents had an emergency meeting to discuss this latest cut and during the meeting suggested 7 ways that could be used to reduce expenditures.  It is a rather mixed bag that includes cutting faculty salaries and benefits, eliminating programs and permanently reducing the number of faculty and staff, imposing a tuition surcharge for the spring semester only, and postponing deferred maintenance.  This list was evidently cobbled together at a meeting of regents and institution heads a day or so before the regents’ emergency meeting.  During the meeting, one regent added another suggestion to the list, selling university assets to raise money.   The regents gave the universities two weeks to develop a plan to reduce their expenditures by 10%.

Reactions of faculty and staff with whom I have talked about the regents’ dismal list have been uniformly negative.  The universal complaint is that there is no plan, or even a suggestion of how to develop a plan, to get us through this budgetary crisis with minimal damage to our teaching and research missions.  However, the regents’ efforts have resulted in some alternative plans being proposed in our hallways and coffee rooms.  I’ll outline two of them, one facetious and one serious.

The suggestion that we sell of some university assets to raise money prompted one wag to propose that we sell the main administration building – a pseudo-Hellenic pile of limestone and marble – that would make an excellent headquarters for a bank or insurance company.  (There is no nearby parking, but I am sure that we can throw in part of the central quad on which it sits for this purpose.)  As a bonus,  it was suggested that we throw in the president and provost.  The latter is undoubtedly illegal, and, in any case, ethical objections to including them in the sale would undoubtedly be raised by faculty in philosophy and religious studies. The main justification given for this plan was that our new budget model uses formulas to distribute tuition and state appropriations to the colleges and other formulas to transfer money from the colleges to supporting units like the physical plant, purchasing, and the library.  Consequently, my colleague insists that we don’t need the central administration anymore:  we are now just a collection of semi-autonomous colleges.  This interpretation was born out by the president’s response to the board of regents budget-cutting suggestions:  he passed the responsibility of figuring out how to cut the budget to the deans.

The second plan has considerably more merit.  The university is increasingly viewed both internally and externally as a corporation.  We should solve the budget crisis the way a corporation would.  The proposed  corporate plan involves a series of steps:  (1) cutting all unnecessary operational expenses, including travel; (2) using cash reserves to cover as much of the budget cut as feasible – colleges and the central administration can carry over money from the previous fiscal year and they did – estimates of the size of these reserves vary widely and need to be made public; (3) identifying academic and non-academic programs whose budgets are no longer justifiable; for example, there are  huge differences among colleges in the cost per faculty member of delivering programs (teaching and research) – these historic imbalances need to be eliminated;  (4) imposing a tuition surcharge to offset some of the budget cut; and (5) borrowing the remaining money needed and repaying the loan from savings accrued in subsequently years from permanent cuts in academic and support programs.  Using a loan should finally force the university to find ways to scale back or eliminate underperforming programs in order to pay it back.

One way the university could borrow the needed money is from its faculty and staff.   Faculty and staff would agree to temporary cuts in their salaries for the remainder of this year.  (Faculty base salaries and benefits, however, would not be reduced.)  This collective loan would be repaid over the next few years from savings accrued by cutting or reducing academic and non-academic programs and from future increases in tuition.  Before agreeing to loan the university any money, a mutually acceptable plan for determining the size of the loan and the pay-back schedule would have to be worked out between the faculty and staff, the university administration, and the board of regents.

If nothing else, this is a more comprehensive and equitable plan than the hodgepodge of suggestions tossed out at the regents’ meeting and the non-plan of our central administration.  It also gives faculty and staff an active role in solving the university’s budget problem.  This alone would do a lot to raise faculty and staff morale.   Unilaterally, and possibly permanently, reducing faculty and staff salaries and benefits, as suggested by the regents, will result not only in their further demoralization, but also in many faculty leaving the university when the current recession ends and job opportunities open up in other parts of the country.  Let’s behave like a real corporation and solve our budget problem in a rational, responsible, and equitable way.

One Comment leave one →
  1. Elliot Krafsur permalink
    November 13, 2009 00:57

    Great column. Seems that ‘management’ is playing the old trick of delegating responsibility while withholding necessary authority.

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