Monday, September 12, 2011
Ask the Administrator: Planning, Emergencies, and Opportunities
Our college has made some important strides in aligning long-term planning goals with our budgeting processes. The two issues, however, which seem to cause the most debate and discussion involve emergencies and opportunities.
For example, we're still working towards developing a coherent plan to allocate resources for emergency budget items. On the flip side, when opportunity knocks and a group on campus is urged to apply for a grant which is made known to them at the last minute, or a department on campus is approached by an external body offering an opportunity for funding, program building, etc., we don't have a coherent process to enmesh these into our planning goals/processes/program review and, when applicable, curriculum development structures.
Any advice on best practices for integrating these types of scenarios into planning? I know that a lot of this is based on institutional culture and other factors, but I'd love to hear some ideas from you or your blog's readers.
I love this question. I love it because it recognizes a couple of key facts:
1. Strategy and budgeting should actually take account of each other.
2. Stuff comes up.
The fact that stuff comes up is not necessarily a function of imperfect planning. Nobody knew a few years ago that Bill Gates was going to pick community colleges as a focus. Federal and state policies change rapidly, often for inscrutable or obscure reasons. Various grant opportunities come along, sometimes with alarmingly short deadlines. (The most common scenario for that on my campus is the inter-institutional collaboration grant. A major university applies for a pile of money for, say, increasing the pipeline of students of color into STEM fields. It quickly realizes that it doesn’t have the population or programs in-house to manage that itself, so it reaches out to local community colleges to partner with it. We’ve had requests on Monday to sign on to grants by Friday.) Since many grants come with “matching” requirements and/or fairly elaborate reporting requirements -- the kind that require significant staff time -- we need to have some money available to get access to more. The private sector calls this “investment.”
Most budgets have a “contingency” line item. The idea behind that is to set aside some money for stuff that comes up, but that can’t necessarily be specified in advance. Emergency repairs, replacement of stolen items, or random opportunities would fall into this category. Most of us try to have something like that in our personal lives for those random moments when you get an expensive car repair or the water heater dies. You don’t know exactly what the next thing will be, but you can be pretty sure there will be one. Best to be prepared.
The issues with contingency lines are several. First, they make tempting targets for cuts when the need arises, especially if you get the dreaded midyear rescission. (California, I’m looking at youuuu...) Money that hasn’t been specifically spoken for is always easier to cut, since there’s no constituency to scream bloody murder when you do. In practice, that makes contingency lines hard to protect in tough times; it takes committed leadership to declare that no, no matter how hungry we are, we aren’t going to eat the seed corn.
Second, and related, is the politics of it. Depending on the local climate for labor relations, it’s easy for unions to paint contingency funds as “slush” funds. In a year with furloughs or flat salaries or layoffs, aggrieved folk will point to that line, no matter how small, and wonder why it doesn’t go directly to them. Similarly, if you have the misfortune of being in a use-it-or-lose-it organization, there’s a direct incentive to use the contingency line stupidly.
Finally, there’s the basic question of getting the number right. At most public colleges these days, it’s not as if we have piles of unclaimed money lying around. If anything, budgeting typically boils down to choosing which ten percent of your documented needs to solve. In that situation, making the case to divert money from a specified need to a line that’s unspecified by design can be an uphill battle. The best way to do that, beyond having broad conceptual buy-in, is to do your homework. Look over the last few years’ budgets for those sudden, abrupt expenses. If you can find a sort of rolling average for emergencies that you had to fund somehow, it’s easy to make the case that you aren’t really diverting anything; you’re just planning ahead. Water heaters die whether you budget for it or not. An argument like “look, we know we have to spend roughly x on emergencies anyway. Wouldn’t it be better to set it aside now, so we don’t have to do the usual mad scramble?” at least has the virtue of rationality.
The same basic idea would apply to grants. If you can get some sort of rolling average for the last several years, and combine that with anything new that you actually know is coming, then you can make the argument that you’re not really spending more; you’re just preparing to do it without all the drama. And if you are trying to spend more, at least you can bring some honesty to the process.
In a nutshell, I’d suggest making sure that you have the support of the President and of the campus chief financial officer upfront. If they agree not to treat contingency lines as cuts waiting to happen -- or as their own personal travel funds, for that matter -- then this could work. If they just cock their heads and look at you quizzically, you’re better off picking another battle.
Good luck! You’re fighting the good fight on this one.
Wise and worldly readers, has your campus found a reasonably intelligent and sustainable way to plan for emergencies and opportunities? Is there something you’d suggest?
Have a question? Ask the Administrator at deandad (at) gmail (dot) com.
We budget so that our contingency fund will carry forward if no emergencies arise. I'll second your observation that it is easier to set aside money if everyone sees that it does not get spent wildly at the end of each fiscal year. I don't know if the college as a whole tries to predict certain kinds of expected emergencies, but I do know that track that for lab maintenance and repair/replace items.
The one thing you didn't mention is the consideration of longer-term costs of short-term projects. If you commit some of next-year's money, the project must fit into the strategic plan.