Thursday, March 23, 2006

 

Capital, Fat, and Arresting Decline

For a whole series of reasons, my college is facing a revenue shortfall next year, and it looks likely to worsen for the next few years after that. As a cc, we can’t just pass on our costs to our students, so we have to find fat in the budget to cut.

This is no fun at all.

Republican rhetoric to the contrary notwithstanding, ‘fat’ isn’t a budget line. It isn’t an isolated expense, easily cut if you can just work up the gumption. It’s a judgment. It’s a judgment that a given expense isn’t worth it, at least at that level.

In higher ed, the major operating expense is labor. Most of that labor is either tenured, and therefore uncuttable, or adjunct, and therefore too cheap to be worth cutting.

Major budget cuts require either eliminating entire programs, and therefore compromising our mission, or watering-down the full-time faculty with a greater percentage of adjuncts, which compromises quality over time.

That’s old news. What people on the outside may not realize is that what little slack that does exist in the budget is what makes it possible to pursue new initiatives.

Over the long term, I can’t help but think that our fiscal fortunes will reflect (broadly) how well we serve our community. Our easiest measure of how well we’re meeting the needs of our community is enrollment. One of the best ways to maintain and increase enrollments is to keep developing new programs that reflect emerging needs or trends. The budgetary slack that gives us room to take a bath on a new program in its first year is exactly the ‘fat’ that gets cut when there’s a budget crunch. It’s like a tech company sacrificing research and development to balance its budget when sales drop. Yes, it works for a little while, but it’s long-term suicide.

The dynamics of decline are hard to stop, once they get moving. We’d like to develop a new program to attract new students, but we don’t have the money to buy the equipment the program needs (buh-bye, Perkins!), or the room in the budget to hire the faculty. So we don’t develop the program. Enrollment stagnates or drops, leading to greater fiscal pressure, and more cuts. So it becomes hard even to stay current with technology in the programs we do have. As those start to fall behind the curve, enrollment drops more, and so on.

As any good capitalist can tell you, growth requires capital. Our capital is being cut, because, in the political rhetoric of the day, it’s considered ‘fat.’ For-profit businesses borrow capital, and pay it back (or not) as the profits roll in (or not). We aren’t allowed to borrow, so we have to glean capital from government support, philanthropy, and internal efficiencies. Of course, ‘efficiency’ involves cutting out fat, which is precisely what enables innovation in the first place. The reaction to budget cuts, which makes sense in the short term, makes future shortfalls even likelier.

As an expat of Northern Town, I’m a student of decline. I’m fascinated by the lesser works of great artists, like Miles Davis’ early 1970's albums. I suspect there’s an absolutely great book in the subject of how colleges handle decline. (Has a college ever cut its way to greatness? Has that ever happened?) I’d just rather read about it than live it.

Comments:
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Dean Dad,

You forgot administrators in your listing of labor. Maybe think about cutting administrators?

Advantages: many administrators won't have tenure, and you've said again and again that tenure's not good; lack of tenure makes cutting easy.

Consider, for example, what you've suggested for faculty in the past: cut the older folks, the ones who aren't super productive, and then hire someone younger, for less money, make sure they really push productivity, and when they slow down, fire them and start over.

Administrators get a higher salary than most others on campus, so a single cut will have more of an impact.

At the two schools I'm most familiar with, administrative growth has outstripped student and faculty growth, often by far. Can you cut some layers of administration without affecting the core mission(s) considerably?

It's not all administrators by any means, but I bet with a little work you can identify a few whose main job at this point is protecting his/her position. (In at least one of "my" schools, you could cut half the "assessment team" without losing an ounce of real educational benefit.)
 
PPP - the link didn't work. What, exactly, set you off?

Bardiac -- Yeah, that's usually the first thing faculty think of. Over the last ten years, the administration here has shrunk by nearly half. It's to the point that some fairly fundamental stuff is falling off people's desks. I wouldn't be surprised to see a bit more consolidation, but you hit some natural limits pretty quickly. We need someone in charge of Admissions, and Financial Aid, and the Registrar's office.

I can think of one or two positions that could be consolidated, for a net savings of maybe 10 percent of our current shortfall. Most of the low-hanging fruit in this area was picked long ago. The rest will have to come from other areas.
 
[link edited to work]

In my morning routine, at least the routine that has evolved on this particular project, I skim over the headlines and drop into a blog or two. High on my list is the confessions of a CC dean, mainly because he is at times witty and always interesting posts. I usually agree. Today, he pissed me off.

More here.
 
PPP -- thanks for reposting. A quick response: at my cc, tenure is with the college, rather than the department. So even eliminating a program wouldn't necessarily get rid of any tenured faculty. Faculty on the tenure track are vulnerable, but they're also usually relatively cheap, and they were hired for a reason.

I've never hidden my p.o.v. on the way adjuncts are used. I think it's exploitative, and I've taken public flak for warning the next generation against this kind of career. That said, the decision to use adjuncts to balance the budget was made quite some time ago, and the budgetary slack to reverse that decision is a thing of the past.

On quality -- no, I don't think that adjuncts are worse teachers by definition than full-timers. As my regular readers know, I got my start as an adjunct. My concern about quality comes from the relative lack of stability. Even at my cc, where over half of the courses are taught by full-timers (quite good by cc standards nationally), the larger departments have a fairly steady turnover of adjuncts. That means almost every semester brings a few last-minute personnel changes (someone backs out at the last minute, so we make an emergency hire), and those are always rolls of the dice. Sometimes they work, but we've had a few train wrecks. F-T faculty may not all be stars, but (almost) all of them are at least competent and reliable. (The ones that aren't are a monster headache.)

There are also the old-standby issues of professional development, student advisement, departmental citizenship, etc.

I was at a presentation several years ago by someone from Rio Salado college, which is a branch of the Maricopa County system. They're something like 99% adjunct. To me, the fact that they haven't lost accreditation for that indicates that the accreditation system is badly broken.
 
Dean Dad: How restrictive is your contract with your faculty?

From what you describe, your tenured faculty do not generate enough revenue to cover their salaries and their part of the administrative overhead. You could fix that by either increasing productivity per faculty member, or raising tuition. (I know some of your students are poor, but you should contemplate that, too.)

Do you have the ability to demand that each tenured faculty member pick up one more course per semester? Can they be asked to pick up some administrative functions?

At my facility, which is not a traditional college, we sometimes have situations where a tenured scientist is (for whatever reason) no longer able to do the work for which he had been hired. In those cases, the person is usually assigned other duties. Is that sort of repurposing possible, or do the fac contracts state "three classes a semester, teaching only"?
 
Unlike the railroads, which unloaded the passengers onto the taxpayers (directly in the case of Amtrak and the commuter train authorities, indirectly to the airlines that have never been weaned of their corporate welfare) and hung out the "freight service only" sign (and nearly downsized that to death), higher education appears to have fewer opportunities to discontinue money-losing services. But it has been done. In the early 1980s, Washington University in St. Louis decided that rather than attempt to be uncompetitive in sociology, they would close the department completely. (Check the university web site.) Pennsylvania, the first university to set up a regional science program, abolished that department in the mid 1990s.

Regular readers of my site are (painfully?) aware of my preference to get higher education out of the high school business as an economy measure that simultaneously boosts student and faculty morale.
 
Whether any college has "cut its way to greatness" might well be tested to a degree with the changes ongoing at Tulane in the wake of Katrina. Cuts a plenty, and we'll see what happens to quality.
 
Dicty -- there isn't much room there. My state has a statutory limit on the number of credit hours that can be assigned to a professor in a given semester, and we're already at the limit. I wouldn't want to stuff the classes much fuller than they already are, either, because experience suggests that faculty compensate by using more scantrons and assigning less writing. Not good.

The Katrina example is a good one, and shame on me for not thinking of it. I've praised Tulane for not trying to nickel-and-dime its way out of the problem, instead focusing on what it can do best. History will decide...
 
Is it time for the Washington Monument defense?
 
In that case, you're probably stuck with a tuition hike.

Here's how I'm thinking. Odds are that your tenured people cost, on average, $100,000/year with salaries, overhead and the facilities costs they consume directly. (That does NOT include the costs of the classroom or other college functions--just the cost to heat and clean their offices, stuff like that.)

If your fac teach 3 classes/semester, 30 students each, then they cost $550 per student they teach. (An adjunct, paid $4000/course, costs $130 or so per student.) What does your school charge per course?
 
Look for buy outs. Often you can put together a package for someone a few years from retirement that save money and free up slots, with the pension payments coming from a pot that is not your pot.
 
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