Tuesday, October 12, 2004

Dilbert Budgeting

If Scott Adams hasn’t won the Pulitzer yet, he should.

The budget director for academics recently informed me that we’re heading for trouble, because several departments are on pace to exceed their annual budget line for adjunct instructors. We’re spending too much on adjuncts. When I calmly replied that that’s because we haven’t replaced any full-timers in over a year, so of course the adjunct line would go up, he informed me that those are two separate budget lines.

(Insert forehead-slap here.)

Currency beats the barter system because currency is fungible. Whoever invented the concept of budget lines didn’t quite grasp this.

We can’t replace full-timers who leave, because adjuncts are cheaper. But we can’t increase our total allotment for adjuncts. We are, literally, trying to replace something with nothing. This, while trying to increase enrollment, presumably by offering students more options.

Basic arithmetic suggests that we’re at cross-purposes.

Dilbert Budgeting (hereafter DB) takes as a premise that no two budget lines are related in any way. Therefore, according to DB, cuts in one should have no impact on any other. If we reduce the number of full-timers, but we don’t reduce the number of classes, DB suggests that we should be shocked to find that we’re spending more on temps.

DB operates at many levels. Over time, DB actually rewards profligacy, since one of the tenets of DB is “use it or lose it.” Savvy department chairs figure this out, and find ways to blow through whatever they’re allocated, whether they really need to or not, because they know that a real need will come along eventually and previous frugality will be held against them. In the meantime, they build secret stashes of blue books, copier paper, etc., to make sure they hit the golden zero at the end of the budget year.

(In an earlier blog entry, I explored the implications of ‘use it or lose it’ on faculty hiring. Simply put, a department that believes that it will lose a line if it denies someone tenure will avoid hiring anybody ‘risky’ – anybody doing anything new, taking a different approach, etc. Short-term rationality, long-term devastation to the academic mission.)

DB completely overlooks the concept of incentives. For example, it’s common for academic managers to support new initiatives by faculty (say, running the student newspaper) with ‘release time,’ which is a reduction in courseload. The idea is that running the newspaper takes a significant amount of time, so the only way to keep the professor’s workload reasonable is to drop a class. In practice, the cost to the institution is the cost of the adjunct who has to be hired to cover the class dropped by the full-timer.

DB sets ‘release time’ as a separate budget line, and cuts it every time the budget gets sticky (which is, more or less, always). Over time, the star performers (the full-timers who actually take initiative) are punished for their leadership by having the course reductions go away while keeping the extra tasks, while the cynical, punch-the-clock types are confirmed in their ‘wisdom’ of doing the absolute minimum to not get fired.

The tenure system raises the stakes of DB exponentially. Low performers with tenure are a chronic nightmare. DB, because it fails to understand incentives, relies on a strategy of ‘working around’ the low performers. Like Dr. Seuss’ north-going Zax and south-going Zax, low performers quickly learn that by just standing their ground indignantly, they can make everyone else do more work to compensate. The high performers are effectively punished, since their extra labor is usually uncompensated (or, to the extent that it is compensated, the compensation is cut, over time), and the fence-sitters figure out pretty quickly on which side they’d rather sit. Since the low performers are tenured, and indignant people with job security can cause no end of headaches, the temptation to simply indulge them is real.

Alternatives are easy on the micro scale, but hellishly difficult on the macro scale. Since our subsidies are increased (when at all) by fixed (and small) increments, there’s a temptation to suspend all ‘special pleading’ from various departments and simply implement ‘across-the-board’ freezes, or increases, or cuts. It’s easier than thinking, and it looks, from a distance, like fairness. The problem is that it fixes existing unfairnesses in place, more or less permanently.

The Chronicle of Higher Ed had a piece a year or two ago about a regional university in what I think was Tennessee, where the budget director suspended the ‘use it or lose it’ rule and allowed departments to carry over unused surpluses from one year to the next. Overall spending went down, which makes sense – with the incentive to waste suspended, department chairs put the kibosh on their local boondoggles. A move like that requires a certain leap of faith in the departments, and, over time, a leap of faith in the legislature that it won’t simply regard unused funds as excuses to cut appropriations. If each side holds up its end of the bargain, the result should be more bang for the buck. The test will be to see what happens after a few years, if external funding tightens. Those sitting surpluses could make awfully tempting DB targets…