Monday, May 12, 2008

 

False Economies

A friend who works at a respected public research university just sent me a copy of an all-campus email he received in which the Business Services department reminds everyone that, due to budget constraints, nobody is allowed to use university money to buy bottled water. (The only allowable exceptions would be when either the tap water supply to a building or campus has been cut off altogether, or when it has been diagnosed as unsafe. Naturally, the memo goes on to detail the multiple reports the university files annually to attest to the safety of its water.)

It's one of those superficially-reasonable rules that falls apart as soon as you think about it.

Let's say that you're hosting a meeting of, say, sixty people. Bottled water is banned. Do you send everybody to the water fountain in the hallway? Do you write off thirst as 'their problem'? Or do you buy coffee and soda?

And if you substitute Diet Coke for bottled water, you've achieved...what, exactly?

(A few years ago, after hosting a function for high school students, a colleague pointed out that the high school students drank the regular soda, and left the diet stuff. Faculty do the exact opposite. The one thing I miss about the teen years is the metabolism.)

I had to smile at the memo, since I can easily see the impulse behind it. If you only look at one dimension of the question, the rule makes sense: if the university literally pipes in mass quantities of drinkable water, why pay extra for packaging? Of course, that only makes sense if you don't look at how bottled water (or anything else) is actually used. Using my administrator's crystal ball, I foresee negative savings resulting from this policy, since buying flavored stuff (soda or coffee or tea) for large groups requires buying multiple varieties, making over-purchasing hard to avoid. Water is water, but Sprite isn't Diet Coke (and neither compares to Cherry Coke Zero, which competes with Diet Dr. Pepper for the title of Best Soda). So in buying the flavored stuff, you have to buy enough of each kind to satisfy most people. In buying water, you just buy water.

It's a trivial example of a much larger problem of false economies, which I define loosely at self-defeating efforts at cost control.

“Use it or lose it” is a classic false economy. The idea behind it is to redirect resources that aren't needed in program A to program B, which has demonstrated a need. You can identify what isn't needed, the theory goes, by seeing what isn't spent.

That probably worked once. But anyone who has spent time in nonprofits knows that money cut is never restored, so savvy managers make damn sure that the money gets spent, one way or another. “Use it or lose it” actually encourages stupid spending, since the only way to ensure a cushion for unexpected expenses next year is to overspend this year. If program A is running a surplus as the close of the fiscal year looms, you can bet that the manager of program A will find a way – productively or not – to spend that money. Once it goes to program B, it's gone forever.

Professional development funding is a common target for cuts. The first year you do that, not much happens beyond some local grumbling. But over time, you get an entire faculty ever more out-of-touch with what's going on elsewhere. Yes, some conferences are little more than jaunts, but it's hard to know in advance which ones those are, and some of the best breakthroughs happen in the fortuitous moments that happen when a bunch of people with similar concerns are in close quarters. Go without those moments for a decade or two, and the effects are noticeable. Eventually, a sort of provincialism seeps into the culture, 'justified' by the lack of travel money. By that point, you're paying top of the line seniority-driven salaries to people who haven't paid attention in decades, and who couldn't leave if they wanted to.

Then there's the ever-popular freeze. If inflation is a positive number, a freeze amounts to a cut. In the first year of a freeze, the harm is minor and the savings real. But percentages compound, and a harm that may not have mattered much in one year is quite real in four or five, and devastating in ten. The longer you wait, the harder it is to undo the damage. Freezes are administratively easy, and they avoid certain kinds of political battles, but over time, the damage they do is drastic.

Finally, of course, there's the wholesale outsourcing of instruction to poorly paid adjuncts. Others have made that point many times, as have I, so I'll just acknowledge it and move on.

Wise and worldly readers – what false economies have you seen? (Alternately, is there a soda (or pop, for my Midwestern readers) that can compete with Diet Dr. Pepper and Cherry Coke Zero?)


Comments:
Diet Irn Bru ("Your other national drink") gets my vote for the best soft drink of all time. If/when I ever relocate I'm going to have to somehow ensure a supply. When I'm on the east coast of the US, Moxie's pretty good as well...
 
Let's say that you're hosting a meeting of, say, sixty people. Bottled water is banned. Do you send everybody to the water fountain in the hallway? Do you write off thirst as 'their problem'? Or do you buy coffee and soda?

You fill up your pitchers with water and ice and set them on the table with some cups.
 
Or, an alternative to Joe's is that the university has a big water dispenser thingie,just like the ones they use for iced tea. I've only very rarely seen bottled water provided at events sponsored on my campus.

But as for your real question, when I arrived there was a *teensy* amount of professional development money that was available university-wide (most comes from depts.) that one could apply for. After that first year, all of that money was redirected to a new office, the soul purpose of which seems to be to run workshops on how to use blackboard or to run other workshops that suck away hours of one's time and that don't actually help with either teaching or research. The idea originally is that resources would be distributed more fairly, that there'd be more oversight, that faculty would have more support for professional development, etc. What it really means is that faculty have less money to do creative and interesting things.
 
I occasionally see bottled water at functions at my large public research university, but I'm surprised they think that banning its use will save them any significant about of money. Actually, "bottled water" presumably also includes the big bottles for water coolers that some departments have, but still. I wonder if there's some (inane) ulterior motive here, like facilities is tired of rumors that the water in building X has high levels of lead in it.

In regards to carrying over budgets, there was a case where a Provost dealt with a budget crisis in part by decreeing that budgets would now carry over to future years. This was enough to save a couple percent, since everyone didn't burn through their remaining funds just before the end of the fiscal year like they usually did.
 
My turn to play Grumpy Old Road Foreman (or, everything I needed to know I learned while working summers on construction projects):

I am so old that I remember when MTV played music videos and when the only bottled water came from France rather than a municipal water supply. I remember when beer bottles had deposits, and the landfill was not filled with aluminum and plastics.

Bottled water is a *very* recent change, and I'll bet it adds up to a lot more than you think.

It is not a false economy to leave a meeting where the trash cans are not filled with half-used bottles of water that are basically diet soft drinks without color added.

Back in that day, there would be huge national meetings (thousands) where the water was ... in a pitcher like joe said, or made into coffee in a giant urn. There were no diabetes inducing soft drinks except in a vendor suite where they also had beer, and rum for that Coke.

Smaller meetings (like 60 or so) were BYO. Your coffee cup, your Sigg bottle, your flask, your Diet whatever.

Put that money into something that adds value.
 
Small rural community college here and "false economies" were in place when I arrived:

Centralized fax machine: In fact, so centralized that there's only one on campus, in admin at the information desk. Thank heaven for e-mail attachments.

Replacing conferences with distance learning via CD: The professional development area of the library is full of CDs I could watch on all those things that might help me improve my teaching skills absent, of couse, the interaction with other educators to be replaced with the comments of "mature" faculty saying 'we tried that a few years, it doesn't work, you're wasting your time.'

Adjuncts don't attend in-service: Or anything else we would have to pay them for, which as we all know means that 60% of our staff has no idea what really going on and why since in-service is the only time all of the faculty are in one place at one time. Instead we have part-time orientation for three hours just before the semester starts.

We will get bottled water at meetings, albeit it the cheapest available, but we aren't likely to get coffee and/or tea.
 
I'm with Joe and Dr. Crazy. I'm not yet 30 and even I remember when pitchers or large dispensers of iced tap water were common at meetings.
 
I work at a realtively wealthy private institution and we've got the opposite problem - no one will make a rule against the stupid stuff.

My personal favorite is an issue surrounding the university-paid credit cards. One is encouraged to use them for payment. However, we as an institution will not pass a rule against accepting OUR OWN CARDS for payment of INTERNAL charges. Why, exactly, does it make one lick of sense to pay a merchant fee to pay in internal charge?

Then we won't enforce the rules we've got. One rule is that the unviersity will not pay for its own employees to use visitor parking. We have a free, frequent shuttle and allow free, handy, 20-minute parking virtually anywhere. Why, exactly, do we then reimburse (or worse, pay using the university credit card) for this prohibited expense?

So if you're thinking that more money solves all ills, I'm here to tell you it isn't necessarily so. It just changes the ills. There still isn't enough money for salary increases, professional development and travel because we're spening it all on cr#% like visitor parking!

Also, you haven't lived until you've had a Diet Coke with vanilla from Sonic.

I'm accounting as fast as I can
 
I find the decision to "ban" bottled water (for budgetary purposes) interesting. Every organization I have been in, including the current University, has the policy of not paying for bottled water for the faculty/staff. The exception has been specifically for events.

Of course, we shouldn't be wanting to get/use bottled water anyway. Forget the "forever in a landfill" argument. Just the cost of transporting, by truck, something that is delivered pollution free by pipeline, should be enough to stop our regular consumption.

I even wrote about this on my blog (being the good Supply Chain guy that I am.) I first wrote about it here, http://theprofessornotes.com/archives/252 and then followed up here: http://theprofessornotes.com/archives/254
 
We have a large company with an exclusive contract to providing food services on campus. Anything over $100 must be purchased through them, or an "approved caterer."

The net result is that I cannot order $150 worth of pizzas for a student social function. Instead, I wind up paying an "approved caterer" $300-$400 to provide a spread of deli meats and bread which the students will like a lot less.

The university defends this, as the "exclusive contractor" puts resources and infrastructure into the campus as part of the contract. This is true, but who is benefiting? Not those of us with the budget being drained!
 
Rather than cite a good one, how about a new contender for the title of "Most Evilest Soda Pop?" Ladies and gentlemen, I give you: the Sunkist Float.

The horror...the horror...
 
I'm with Joe. I was surprised when I moved to Toronto that people had bottled water at meetings rather than a pitcher of water and some glasses. It's not a false economy to refuse to pay for water at rates higher than people bitch about for gas!
 
I agree that people can and should be trained to bring their own reusable mugs/water bottles, and the college can provide pitchers of ice water. That's not a false economy; that's a real economy, for the environment and for all the stakeholders in the college.

Besides, what's the problem with leftover flavored beverages? All our departments have (or at least share access to) refrigerators for lunches, etc. Put the leftover sodas in there, either for the next meeting or as bonus treats for the staff/needy grad students/needy adjuncts. And get whoever orders the sodas to keep a note of what committees drink which beverages.
 
My favorite example of false economy is the slow migration of clerical tasks from support staff to faculty. We pay highly trained professionals to fill out forms when we could have someone with a high school degree do it faster and better. In the short term you save on salary but in the long run, more mistakes are made a people's time is spent on things other than the instruction which (at least in theory) gets the bills paid.
 

Then there's the ever-popular freeze. If inflation is a positive number, a freeze amounts to a cut. In the first year of a freeze, the harm is minor and the savings real. But percentages compound, and a harm that may not have mattered much in one year is quite real in four or five, and devastating in ten. The longer you wait, the harder it is to undo the damage. Freezes are administratively easy, and they avoid certain kinds of political battles, but over time, the damage they do is drastic.


what they're really doing here is allowing you to make up for the fact that you're paying too much for something with a sticky price.

If it turns out that I'm overpaid than inflation is my boss's best way to give me a pay cut. May have nothing to do with my skills could just be that there are now 100,000 indian programmers willing to work for less. Or maybe postmodernist thinking isn't as in demand as it once was. Either way this is an easy and slow way to bring the price back in line with the real value.
 
As a parent of college age children, anything that reduces the 10% a year increase in the cost of college is worth doing. If you are not smart enough and disciplined enough to do it on your own, then maybe the administration does need to micromanage.
 
James,

While I understand your frustration with rising tuition costs, I have to point out that income taxes in my state (which subsidize the colege) have dropped by 30% over the last 10 years. So I'm sure that if you looked at your tax bill you would have more than recouped the money you're now shelling out for tuition. You get what you pay for - and taxpayers increasingly are reluctant to pay for very much.
 
Yeah, I have to go along with the bottled water haters.
 
While normally I'm all about avoiding useless regulations, this is one I actually agree with.

Investing in some good pitchers & some ice is really all you need. Price comparison:
1.50 for a bottle of water vs 4$ for a pitcher (serves 6) it makes a difference rapidly in our budget.
 
u buy coke is it there joe

credit repair
 
Diet Cherry Coke is delicious, but when I'm not in the mood for cola or caffine, I really like Diet Cherry 7-Up.
 
4$ for a pitcher of water? You must have some really delusional cost accounting procedures . . .

(fixed vs variable cost is apparently too sophisticated a concept for most professional accountants [see Relevance Lost by Kaplan and Johnson])
 
Dean Dad says, "Water is water...."

Sometimes, deandad, I wonder whether you are actually a cc dean at all because how could you be if you haven't been in a room with a bunch of hypochondriac teachers whining about how they only drink Poland Spring because Dasani has trace elements of strontium 90 and studies have shown that Aquafina is bottled by right-wing radio hosts and pickles the drinker's higher thought centers and so on?

--wayupnorth
 
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