Monday, September 22, 2008

Forecasting Fallout

The recent game of “let's see, where did I put that hundred billion?” is likely to lead to some ugly fallout for public higher education. Putting on my prognosticator's cap – and like Easterbrook says, all predictions guaranteed or your money back – a few likely scenarios:

1.Midyear budget cuts. These happen when tax revenues fall below projections, and the states (or localities) can't (or won't) borrow or dip into reserves to make up the difference. Midyear budget cuts are uniquely brutal, since there's typically very little wiggle room in a budget after the annual contracts have already gone out. If someone is on a July-to-June contract, an October or December layoff may require a payout equivalent to what she would have made through June, thereby negating any savings. (Once you factor in the inevitable discrimination/wrongful termination/procedural irregularity lawsuits, it's a net money loser.) Between permanent fixed costs – facilities, tenured faculty – and costs that are fixed at the start of the fiscal year – most other staff – there just isn't much left over, especially if it has to do twelve months of fiscal duty in only eight or nine months. You can cut travel, and some ceremonial/fluffy stuff, but you're dealing in tenths of a percent of an overall budget. It's necessary, but not even close to sufficient. You can reduce your Spring adjuncts, but it's incredibly hard to save money by squeezing the lowest-paid employees, especially when they have a direct connection to your major revenue source. Philanthropy almost certainly won't save you, either, since that money is almost always barred from being used in 'operating' budgets. (Of course, with the financial services crowd running scared, there may not be as much philanthropy sloshing around anyway.)

2.Increased spending on financial aid for students, since economic downturns tend to mean fewer people capable of paying full fare. Combining increased financial aid spending with midyear budget cuts is all kinds of fun. (Cc's may be spared some of this, to the extent that the poorest of the poor elect residential colleges instead, the better to have room and board subsidized.)

3.Tuition increases. This one follows pretty directly from 1 and 2. Admittedly, combining 2 and 3 leads to a chasing-your-own-tail exercise, at some level.

4.Local strategic planning consigned to (increased?) irrelevance. Strategic planning isn't my favorite exercise in the world anyway, but ideally, it's supposed to represent the best hopes of an institution, combined with its best guesses as to future circumstances. If those circumstances change for the worse, abruptly, then those plans quickly become untenable. Yes, we'd love to beef up the Underwater Poetry program, but right now we aren't sure we can cover the cost of heating the buildings. First things first.

5.More of the 'replace retired full-timers with adjuncts and hope for the best' approach to hiring. In the very short term, the cost savings from adjuncting-out the classes that had been taught by a high-seniority full-timer are significant. The damage to the institution is (usually) somewhat abstract at first, and hard to quantify, but the savings are concrete and easy to quantify. When the bulkhead is broken and water is rushing in, the quick fix holds real appeal. If last week's IHE article was right, and the pace of full-timers retiring will slow as the returns on their pensions slip into negative territory, then the pressure to adjunct-out the few who actually do retire will be all the greater. Expect an already unforgiving job market in the evergreen disciplines to get that much worse, at least until the dust settles.

6.More 'votes of no confidence' on individual campuses. Since the faculty can't fire the governor, the voters, or Ben Bernanke, they direct their fire where they can. If I were a betting man, I'd expect to see a spike in these over the next year or two.

7.Little to no help from either Presidential candidate or political party. I'm open to being proved wrong on this one in a few months.

Astute readers will note that most of these represent continuations of existing trends. Attribute that to a lack of imagination, if you want, but I think it's accurate. When 'politically chosen' austerity becomes 'forced' austerity, it's still austerity.

I don't often want to be wrong, but as far as this post goes, I want to be largely wrong. Wise and worldly readers – make me feel better by pointing out how I'm wrong. Seriously.