Monday, February 10, 2014

Patient Capital

Sometimes, good ideas come from bad circumstances.  

The ongoing saga of the Community College of San Francisco and its conflicts over accreditation has -- inevitably, given its size -- spilled over into the California legislature.  Senator Mark Leno has introduced a bill in support of CCSF that would, among other things, guarantee the college a consistent state funding level for the next four years.

On behalf of college administrators everywhere, I can attest that predictable funding four years out would be incredibly useful.  Obviously, the optimal case is small but steady increases each year, but still.  It’s far easier to work with the private sector calls “patient capital” than to work with volatile budgets.  That’s especially true when the funding in question comprises nearly all of your operating budget.  (In most states, students cover the majority through tuition.  That is not true in California, or at least not directly.)  

Most of the time, public colleges work with relatively fixed costs and relatively volatile funding.  The bulk of the operating budget is labor.  (Here I’m separating “operating” budgets from “capital” budgets.  Capita budgets tend to be much more volatile.)  When most of the labor is unionized, as is true here (and at CCSF), you know several years in advance what the costs will be.  Most of the time, collective bargaining agreements cover three or four years at a pop.  The combination of locked-in costs and precarious revenues leads to some predictable behaviors.

But if the revenues were locked in, it would be much easier to get the most bang for each buck.  The college wouldn’t have to hold as much back, since it would know that the funding would be there one way or the other.  It would be able to develop multi-year hiring plans, for example, because the ability to hire next year’s crop of faculty wouldn’t hinge on a couple of percentage points of enrollment this year.  Instead of constantly reacting to the latest shift in the wind, a college could actually take some control of its own destiny.  

I know this is true because I’ve seen it with grants.  We’re in the fifth year of a five-year Title III grant, and we’re still using the plan designed at the outset.  We had the great and rare luxury of building a program without needing instant results; instead, we were able to do the groundwork and let the results emerge.  It has worked, and the results now are outstanding, but that only happened because we had the time upfront to do the unglamorous but necessary foundational work.  The part of the budget that came with multi-year guarantees led to terrific efficiency precisely because it came with the multi-year guarantee.  We could plan.

I would hate to have to go through what CCSF has gone through over the last year in order to get multi-year funding, and there’s no guarantee that Senator Leno’s bill will pass.  And in most states, even a multi-year guarantee would be of limited benefit because tuition and fees far outweigh state (and local, where applicable) funding.  

But the principle is right, and the results, when tried, are encouraging.  It may be true that hard cases make bad law, but CCSF’s hard time may have inadvertently given rise to a very good one.  Here’s hoping the rest of the country pays positive attention to California.