|January 14, 2009|
THE RISING WINDS
It was only recently (see the June 12, 2008 UFF Biweekly article) that while public universities were being crunched, private universities were in the gravy. But last November, both Brown and Cornell announced hiring freezes for non-faculty positions; they anticipated declines in enrollment, endowment losses, and less donor support. Dartmouth, which gets a third of its revenue from its endowment, lost 5 % of its endowment and cut its budget by 10 %. Harvard's soap operatic announcements seem to culminate with losses of perhaps 30 % (but stay tuned), and Harvard was freezing salaries and suspending searches. Now even the Ivy League was bleeding red ink.
Meanwhile, Dana College was giving up on trying to lay off tenured faculty and is now trying to cut off their pensions. The University of Texas ordered 4,000 layoffs from Galveston Island, blaming Hurricane Ike. Anticipating a cut of $ 66 million, California State University Chancellor Charles Reed threatened to restrict admissions for fall, 2009. Maryland’s system was cut 3 % despite enrollment growth, and instituted a faculty hiring freeze and will cut course offerings in fall. Nevada cut 8 % last year and was anticipating another 14 % cut. The Chronicle of Higher Education reported that "expensive but popular programs [like nursing instruction] are being reduced despite widespread work-force shortages." At the annual meeting of the Modern Language Association, participants heard that job listings for historians had fallen 15 %, for foreign language 20 %, and for English and literature 22 %. But on an upbeat note, the board of the University of North Carolina-Charlotte voted 8-0 to spend $ 45.3 million to bring Division I-AA football to Charlotte by 2013.
Outside of academia, the situation is grim. The official unemployment rate last month was 7.2 %, but the total for people looking for work or having given up was 13.5 %. Unemployment among those with college degrees reached 3.7 %. The Wall Street Journal reported that 40,000 truckers employed by YRC Worldwide, Inc., would soon vote on a Teamsters-bargained pay cut of 10 %, and that a teachers' union in Maryland and a firefighters' union in Arizona had agreed to skip pay raises this year. And Motorola, Federal Express, and Eastman Kodak are no longer contributing to employee pension funds.
BATTENING THE HATCHES
"Higher education, compared with many other sectors of the municipal market, is normally more insulated from near-term budget shortfalls caused by recessions," wrote Moody’s in October. "However, the potential impacts of the combined credit freeze and recession on some colleges and universities will be significant if current trends persist."
Education consultant Laurence White wrote that the crunch is hitting the colleges and universities where it hurts: cutting endowments and parental investments for college, while shutting down credit for both institutions and parents. Notice that this is on top of a national contraction – or we should say, an acceleration of the longstanding national contraction – of state funding of universities.
Tuition hikes were on the table. For example, on November 20, Florida Governor Charlie Crist presented "a comprehensive proposal to reform our state university system" that included giving university trustees the power to raise tuition (former Governor Bob Graham was not appeased, and will continue his suit to keep the state government from dictating tuition policy). But there are limits: if the students do not have the money, they must borrow it or drop out. The 2008 FastWeb Student Loan Survey found that nearly half of all applicants for private student aid are rejected; even more remarkable, while a sixth of the students surveyed borrowed money from family or friends, a seventh borrowed money from...credit card companies.
The thoughtful reader might pause to reflect on recent scandals in student aid loans – and on Secretary of Treasury Henry Paulsen’s November 12 statement said that bailout money will go to student lenders.
An alternative was to tighten our belts. Critics have been complaining about perks – like free laptops and new recreational facilities – that colleges and universities used to market themselves to prospective students and parents. The latest Campus Computing Project said that nearly half of surveyed public universities have cut their IT budgets and about half have outsourced e-mail accounts for students.
Belt-tightening often involves pay freezes, pay cuts, and layoffs. A survey of about 200 institutions conducted by the Chronicle of Higher Education and Moody's reported that about a tenth had laid off employees and a fourth were thinking of doing so. Only 5 % had imposed total hiring freezes on faculty, but 40 % had imposed partial freezes and 60 % had imposed freezes on non-faculty hiring.
Still, not everyone is suffering. The Career College Association's Annual Higher Education Investment Conference focused "on the growing profitability and market share of for-profit colleges." Inside Higher Ed reported a study by the brokerage firm Stifel Nicolaus, which concluded that for-profits grow nearly twice as fast during economic downturns than upturns. "While many experts have predicted that this recession, like previous ones, will result in higher college enrollments over all as laid-off workers return to school for retraining, many public and private institutions will be hard-pressed to accommodate them because their other sources of financing will be squeezed," reported Inside Higher Ed. For-profits, on the other hand, seem to be improving their financing.
USING ONE'S HEAD
Lawrence White wrote, "As is always true in periods of financial stringency, labor malaise will affect workplaces. The number of employee grievances and employment-related lawsuits will grow, and collective bargaining will become more contentious. Any executive-compensation arrangement that could be characterized as excessive will be questioned." Gary Rhoades, General Secretary of the American Association of University Professors, wrote that the AAUP has been receiving an unusual number of reports of problems, and that "This is not the first time in our history that administrators and policy makers have claimed that we cannot afford to engage in shared governance, to maintain a wide range of academic programs, to increase the number of tenure-track faculty and the security of faculty in contingent positions, and even to maintain tenure." But notably, some administrators chose to show their solidarity with university employees by sharing the pain: Stanford’s president and provost each took a 10 % pay cut, and when Wilberforce University employees were put on involuntary furloughs, president Patricia Hardaway put herself on furlough as well.
Not everyone was convinced that belt-tightening was the right prescription. Chronicle of Higher Education writer Goldie Blumenstyk asked "What would Warren [Buffet] do?" She quoted Ronald G. Ehrenberg, director of the Higher Education Research Institute at Cornell University saying, "This is a great time to be hiring faculty if you have the money." And she added, "Protecting the endowment at the expense of a new or continuing transformative program could be a mistake." "You may have to raid the endowment for a year or two," says John S. Griswold, director of the Commonfund Institute, "Taking the shock to the endowment is better than taking it in the operating budget."
This may be a good time to recall a financial tracking system implemented by Oregon State University several years ago. As Inside Higher Ed explained in 2007, "On Oregon State's budget reporting Web site, users can track expenditures, transaction by transaction, by clicking through the various budget lines in an academic department or administrative office, from the president's on down...Budgeted monies, actual expenditures, and available balances are displayed for individual line items." Inside Higher Ed suggested that "The site offers an intriguing approach for colleges responding to increasing pressure to demonstrate fiscal accountability and transparency." Inside Higher Ed quoted the site's designer explaining that the primary difficulties were political, not technical, and "I think of it as sort of a struggle to change the culture. This is the kind of information that in most institutions is closely held and is really not broadly disseminated." Charles Miller, who headed the Secretary of Education's Commission on the Future of Higher Education, said, "We have this thing going on in the world where information's just going to be widely available, which is why when universities resist having that data available they're just fighting a long-term trend."
With that last thought in mind, we invite everyone in the USF community to join the movement towards transparency and attend Leroy Dubeck's presentation on USF's financial statements and budget. Thursday, January 22, at 2 pm, in Marshall 2001 on USF-Tampa campus.