Monday, February 01, 2010


Wisdom and Knowledge

In ninth grade, I had a wonderful, high-energy social studies teacher whose favorite exhortation was "wisdom and knowledge!" He'd usually punctuate it by thwacking his yardstick against a desk while we took notes. At the time, it was an entertaining shtick, and I didn't think much about the distinction between wisdom and knowledge.

With age and experience, though, I'm beginning to appreciate the difference.

Knowledge is cumulative. The more you know, the more you know. Knowledge can be stored, transmitted, shared, hoarded, traded, taught, learned, and even brandished. People who are "quick studies" can accumulate a surprising amount of it in a short time. Both trivia and timeless truths can be knowledge.

Wisdom is different. It's about knowing the relative importance of different things, and knowing what can be downplayed or ignored. It's closer to 'intuition' than to 'knowledge,' in that it's difficult to store, hoard, transmit, etc. It's hard to 'cram' wisdom, and some people just never quite get it. Wisdom can discern the difference between the important and the trivial, or the passing and the permanent. My grandfather dropped out of the ninth grade and worked most of his life as an electrical lineman, but he was wise. He knew what to care about and what not to, and allocated his energies accordingly. I always admired that about him. His house had the worst paint job in the Western world, and his fashion sense could be described as idiosyncratic, but he didn't care; he was focused on family, politics, and baseball, and the rest was trivia. He knew exactly who he was.

We could use some of that wisdom locally, in preparing next year's budget. There's plenty of knowledge flying around: the governor wants to propose figure x, various legislators are thinking figures d through j, and state tax revenue projections fall somewhere between 'ambiguous' and 'pulling numbers out of a hat.' If you want it, there's warrant for projecting any one of dozens of different outcomes, each with different implications for what we can afford.

Wisdom, here, comes in the form of knowing what to ignore. Some numbers are just wishful thinking or political posturing, and others are actually realistic. Discerning what to discount and what to take seriously is far more important than knowing the exact figure with which someone will grandstand.

The relevance now is that any tuition increase has to be approved by the Board of Trustees, and the Board will likely be more or less open to increases depending on what it expects will happen at the state level. If the best case scenario comes to pass, then passing a tuition increase would just seem punitive to the students. If the worse case scenario comes to pass and we don't have a significant tuition increase, heaven help us all. For various reasons, the Board has to make its decision before the state has to make its decision, so the game is "guess the gap." By necessity, that involves weighing unknowns, which means guessing likelihoods.

If we base the proposal we bring to the Board on the latest-and-most-inside knowledge, we take the very real risk of basing a crucial decision on a number that was never meant to be taken literally. (Initial proposals are often understood by those making them to be strategic, whether highball or lowball.) If we go in with too much optimism and get it wrong, we wind up in much worse shape. If we go in too pessimistic and get it wrong, we inflict needless pain on students, and damage our own future credibility. But the answer is probably not to be found entirely in more assiduous information-gathering. In fact, in many ways, the trick is to block out the more outlandish numbers, and to go with as realistic a projection as experience-based intuition can generate.

Wanted: budgetary wisdom. Apply within.

Ask for a billion dollars from the state. Even if you get only ten percent of it, that's more than enough to fund operations for quite some time. Plus, the senator who slashes your request gets to claim he saved the state $900 million. Win-win!

You're welcome.
Seems like you have an additional problem: there are so many variables that yesterday's utter pessimism could be tomorrow's clear-eyed realism.

If I were a potential student, I would rather get a pessimistic estimate up front, to be followed by good news if warranted, rather than see my college count on revenue that didn't show up. If your final budget numbers in July leave you with a 20% gap, either your students have to come up with a few hundred dollars with little warning, or get frozen out of sections they were counting on.

I'd tell the students this: "The current economic uncertainty obliges us to inform you that tuition may be as high as X per credit hour for the 2010-2011 school year. We have chosen to warn you of this potential tuition increase so that you may make long-term plans to cover this possibility. We will do everything in our power to keep the actual payment lower than this, and we are eager to assist you and your family in obtaining any and all financial aid for which you may be eligible."
Unfortunately, in my (limited) experience, the ideal course of action is probably to revise the budget process, so tuition isn't set before the state allocation.

Which doesn't help a damn bit right now, I know. Good luck.
We are all in similar boats, aren't we? And, if we have been at these jobs for any length of time, we have also been through similar budget exercises. The difference this time, of course, is the depth and breadth of the problem. Still, presumably we all accumulated some wisdom along with the knowledge.

For us, we are operating on an assumption that sort of goes, "things are bad, but they aren't going to get worse, and might even get a little better". We must absorb an additional cut for the next academic year, and the increase in tuition (already set at 7%) will restore only a smallish portion of the cut. So, we are faced with the impossible situation of maintaining (or increasing!) enrollment levels with less funding.

The wisdom part comes in knowing what really and truly must be funded vs. something that we can live without for a little while. Thus, so-called, "across-the-board" cuts are by definition, not 'wise', as they cut the truly important stuff along with the 'fluff'. This used to be a relatively easy distinction, but by now all of us cut the 'fluff' last year, or the year before.

By now, we are all probably in the situation of having to cut entire programs to make our overall budgets work. So, the wisdom comes from knowing which programs we can afford to lose without the whole house tumbling in on us.

As for the tuition increase, I'm with Dictyranger. You tell students their estimated tuition based on a pessimistic (but realistic) prediction. You probably won't be far off the mark, but if you are a little off, at least it will be perceived as a net gain by students.
I don't think it's possible to be pessimistic enough, unless there's more money in the stimulus bill.
The "guess the gap" mentality is something I don't get at all. I'm brand-new to the world of "budget issues", only recently being invited to join a budget advisory committee.

Having no business background, I have no way to understand why any institution, corporation or governmental office must operate on the basis of guesses and what adds insult to injury is that once you've made your guess you must stick with it!

So, if your budget is approved by your Board of Trustees, you MUST spend X amount of dollars on new buildings (because that is what your budget said you would spend it on), instead of being able to say, "scrap that building project", let's make sure we can pay our employees without raising student's fees".

Sorry, I just don't get it -- but in my small finance world (i.e. my home budget), if I made a budget to refinish my basement this year, and something happens (loss of revenue, i.e. no job), then I'm sorry, but logic would dictate that I will NOT proceed to refinish my basement. I will save that money and make sure I have it to make mortgage payments, pay utilities, etc.

-- IAA
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