Monday, February 25, 2008

You Can't Spell "Funding Cut" Without "Fun"

As my college stares down the barrel of a nasty external funding cut for the coming fiscal year, and a strong likelihood of another one after that, it's becoming clear to me that higher ed is in a really lousy position for dealing with recessions.

It isn't just that we're a relatively easy budget line for legislators to attack. Unlike much of the rest of the state budget, we have an alternate revenue stream available – tuition – that we can use to cushion some of the cuts. (That isn't true for the K-12 system, or prisons, or pensions.) That makes it easier to legislators to cut our line, since they can be fairly certain that a cut of 10 will be experienced as a cut of 5, with the difference made up through tuition hikes. In other sectors, that cut of 10 is felt as 10.

That's true, but it's only part of the picture. The other part is that we're positioned in ways that make it uniquely difficult to respond as the economy rises and falls. This is especially true at community colleges.

As higher ed's 'first responders,' we see fairly dramatic enrollment fluctuations as the economy changes. In my observation – and I've heard this a lot, though I've never seen it studied formally, so any prospective Ed.D.'s out there looking for a research topic, I'm just sayin' – our enrollments tend to go up as the economy goes down, and vice versa. We're countercyclical.

Which makes sense if you think about it. When the economy tanks, it's more difficult for some parents to send their kids 'away' to pricier four-year schools, so they come to us for the two-and-transfer plan. And some folks take recessions (or layoffs, more accurately) as opportunities to get retrained for other lines of work. After all, in a recession, the opportunity cost of pursuing a degree is notably lower than at other times.

The problem for us is that just when demand for our services increases, funding to provide them gets cut. And it's not like we have anything resembling 'endowments' to get through the tough times.

Yes, increased enrollment brings increased tuition revenue, and that helps. But tuition doesn't cover the full cost of what we do, and it was never intended to.

Add to this picture the annoying fact that so many of our costs are fixed or climbing – heating the buildings isn't getting any cheaper, and neither is employee health insurance – and the numbers get ugly pretty quickly.

All of which would be challenging but not awful if we were organized internally to deal with cycles. But we aren't. The tenure system is independent of budget or economic cycles. Curriculum review is independent of them, too. And increased enrollment is interpreted internally as a sign of success. So the internal dynamic is “hey, we're really doing great! Look at these enrollment figures! Now if those pinheads in [state capital] would just get their act together...”

Lest that seem entirely myopic, there's a good argument from our mission to the effect that shutting programs down just when the community needs us most would be contrary to our mission. It's just that the times when it needs us the most are the times when it's least able to pay.

You can't spell 'funding cut' without 'fun.' This should be a fun year.