Tuesday, October 14, 2008

In Praise of Boondoggles

I have the relative misfortune of following in the footsteps of some pretty good managers. Right now a brain-dead predecessor would come in handy.

As veterans of downcycles in the public sector can tell you, large-scale cuts are often done in an 'across the board' way. (“Every cc in the state will lose ten percent of its appropriation this year” -- that kind of thing.) That means that previous profligacy can actually save an institution, since there's fat to cut. It also means that previous frugality is punished, since the only way to sustain a serious reduction when the fat is already gone is to cut things that actually matter. Across-the-board cuts are made without reference to the spending habits of any given college, so an already-efficient college has nowhere easy to go.

Annoyingly enough, my predecessors seem to have been pretty good with budgets. What I wouldn't give for an “executive retreat” line item, or maybe an “annual vanity conference” appropriation. Those come in handy when times get tight, since you can cut them without giving up anything that really matters.

Capital projects often resemble boondoggles, but 'capital' and 'operating' budgets are typically kept separate, so savings from 'capital' won't save you if you need to cut 'operating.' There's also the unfortunate truth that once you've gone to a certain point in a construction project, it's actually cheaper just to finish it.

In a perfect world, of course, legislators would be savvy enough to know which colleges make a habit of spending money stupidly and which don't, and would distribute cuts accordingly. (Actually, in a perfect world, the concept of 'cuts' would be foreign and bizarre.) But that's not how these things play out. Typically we either get the flat percentage cut, or – and this can be worse – the percentage cut that also comes with rules (what we on campus call a “negatively funded mandate”). The rules are a gesture towards prudence, but since they're usually at least as blunt as the cuts, they wind up causing all manner of counterproductive response on the ground. I'd rather take a straight 10 percent cut than a 10 percent cut that also comes with a mandatory hiring freeze, for example, since some positions only have one person in them, and not-replacing is really not an option. In practice, we'd take a pretty strict line on hiring anyway, given a 10 percent cut, but it would be nice to be able to make those decisions according to actual need. (“Implement a 10 percent cut, but don't replace the auditor who just quit.” Alrighty then.)

The public image of higher ed doesn't help, either. The Harvards and Stanfords of the world dominate media coverage to such a degree that if you didn't know any better, you'd think that the major issue around higher ed finance is failure to spend enough endowment money. That's true of a remarkably small slice of higher ed – all of it private – but it doesn't help us rally the troops.

The lesson I'm picking up from all this is to be just a little less critical of Presidents who fund otherwise-inexplicable pet projects. When those horrible, thoughtless, across-the-board cuts arrive, it's good to have something relatively painless to sacrifice. Frugality in good times leads to brutality in bad. A little wastefulness in good times may actually serve a purpose.