Thursday, August 19, 2010

Saving Stimulus

This is one of those “individually rational, collectively insane” moments.

The New York Times reported that some of the federal stimulus money that was supposed to save the jobs of teachers, police officers, and other public employees is instead being squirreled away by states and school districts, in anticipation of even lower tax revenues next year. The quote that jumped off the screen for me was:

“We’re a little wary about hiring people if we only have money for a year, but we know that’s the intent of this bill,” said Jeff Weiler, chief financial officer for Clark County schools.

Exactly so. And yet, the whole point of a stimulus is to be spent quickly for maximum impact.

We’re facing something similar here. We have some ARRA money for this year, and it has certainly helped us deal with the fallout from disappointing state revenues. But the ARRA (stimulus) funding will go away next year, whether the recession goes away or not. (Even if it does, education funding typically lags recoveries by a year or two.) Given that the federal fiscal year overshoots the state fiscal year -- don’t get me started -- there’s a pretty good argument to the effect that it’s prudent for the college to save what it can, while it can; if we’re going over a cliff a year from now, any cushion is better than none.

Short-term funding can work when the emergency itself is short-term, or when the projects being funded are short-term. It’s great for abrupt emergencies, like natural disasters, or for one-off tasks, like replacing a furnace. But it’s a terrible fit for staffing, and a ridiculously terrible fit for tenured staffing.

If you have a realistic expectation of having to let somebody go next year, how eager will you be to hire this year? Especially in cases in which they get tenure this year? The termination costs alone...

I don’t mean this as an anti-stimulus argument. I’m convinced that it has made things somewhat less bad than they otherwise would have been, and to the extent that we’re able to buy time, it’s at least possible that revenues will rebound enough (and quickly enough) to avoid catastrophe. If it tides us over, great. And it has allowed us to address some lingering capital needs on campus that probably would have gone neglected even longer than they already have. In some cases, replacing old and inefficient equipment with new and more efficient equipment may even redound to some savings in ongoing energy expenses, which is all to the good.

But saving permanent staff requires long-term money. It requires sustained, predictable, don’t-mess-with-it, long-term money. For colleges without huge endowments -- that is, for every community college I’ve ever seen -- that makes short-term infusions look like good candidates for saving.

If we really want to save permanent jobs -- and I absolutely believe we should -- we need a structural change. We need dedicated, long-term, predictable, don’t-mess-with-it funding that the institutions themselves control. Right now, by default, that usually means tuition. This is actually one of the drivers of the cost-shift to students: tuition is much less subject to the whims of state legislators than state aid is. When your costs are mostly fixed and your funding maddeningly variable, you’re up against it any time the state has an issue. Cost-shifting to students equates to sustainability, from the institution’s perspective, even if it’s severely damaging from a social justice perspective. If we want permanent staffing and low tuition at the same time, we need a hugely different funding model. Stimuli are great, but on the ground, institutions will do what they need to do. If you want to change what they do, change their needs.

To play by the intended rules of the stimulus -- that is, to blow it all quickly in the name of ginning up local demand -- would be institutionally suicidal. Yes, it would (at least arguably) be of great collective benefit, at least in the very short term, but it would require a level of denial bordering on negligence.

I’m only surprised that this is news.