Wednesday, February 15, 2006

 

Bond Issues and Gift Certificates

I like gift certificates. They’re easy to find, they admit a certain humility on the part of the giver (“I know you like movies, but I don’t know which ones you have, so...”), and they’re great fun to receive when they’re applicable to the right places.

All of that said, there’s a reason stores sell them. They lock up cash for a specific purpose.

Bond issues are like that, too.

Bond issues are usually allocated for construction and/or major capital outlays. The money is ‘earmarked,’ similar to grants, and cannot be used for other purposes. It’s not unusual for the availability of earmarked money to cause a college to recalibrate its priorities; if one area can be funded externally and another can’t, it’s a pretty sure bet which one will get done first.

I like bond issues. I’m glad that we can use bond issues to pay for the construction costs for new academic facilities. If we couldn’t, we probably couldn’t build at all.

That said, it’s a hard sell to a pressed state legislature to increase allocations for operating budgets in the face of a large bond issue. They see it as overlap. It isn’t, really: if we don’t have the operating budgets to pay faculty to teach in the spiffy new building, it’s hard to say just what purpose the spiffy new building is supposed to serve.

This is the same objection I have to the idea that we can replace reduced government operating support with private philanthropy. Private philanthropy is great, and I’m all for it, but it almost always comes with strings: reporting requirements, ‘matching fund’ requirements, restrictions on use. Only in very rare cases can it be applied to salaries or labor costs generally.

Think of bond issues or philanthropic gifts as gift certificates, and operating budgets as money. I’m always happy to get relevant gift certificates, and they can reduce my use of cash in certain very-well-defined contexts. But I can’t pay my mortgage or utilities with them. For the basic needs that comprise the overwhelming majority of my spending, only money will do. For the college, that means unrestricted operating funds.

I’m concerned that a well-intentioned move towards bond issues could poison the well for increased operating budgets, which is, by far, the greater need. I’m always happy to see cool new buildings go up, but if I have to fill them with adjuncts, I’d consider it a mixed blessing at best.

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