Budget Cuts That Don’t Hurt

Friday’s post was about looking for budget cuts that don’t hurt an institution or its mission. Cuts like those are rare, but they exist. I gave a few examples: energy efficiency to cut utility costs, stipends for folks who forgo the college’s health insurance to use a spouse’s and early-retirement incentives. (Admittedly, that last one can be done well or badly.) I asked my wise and worldly readers if they knew of other options.

It’s nice to know that even after some time away, I still have the best readers ever. I’ll offer some highlights, along with commentary where appropriate.

“It would take some very heavy lifting for more colleges and universities to eliminate or even cut back on expensive sports programs, but it would be financially SO worth it. The hardest part would be changing the culture around campus life and alumni support. Both of those institutions, by the way, have thriving club sports and less expensive intercollegiate sports.”

That doesn’t help much in my particular world, since we’ve never had football or any terribly expensive sports, but it makes a lot of sense in some other contexts. (I remember the point in the early ’90s, when I was in grad school at Rutgers, when the football team went 0–11. It lost scads of money and every single game. The campus … noticed.) The difficult issues here are around visibility and community support. Boston College wasn’t elite until Doug Flutie happened, and Gonzaga was pretty obscure before its March Madness runs. In terms of lower-cost sports, they seem to help with retention. I’ll have to cop out and go with “context matters” on this one.

“I saw your article in IHE, and while I don’t have ideas for large-scale budget fixes, I do have one excellent small one. I once worked in a building where the heating and cooling systems were so broken (or, at times, set to such extremes) that it was stifling in winter and freezing in summer. It was so uncomfortable to work there that staff ran fans and opened windows in the winter and got space heaters in the summer to make their office bearable—so the university was paying electricity for both heating and cooling simultaneously, year-round. I know what my home electric bill looks like these days—I can’t begin to guess how high it is for a university. Imagine how much they would save (not to mention the impact for sustainability) by fixing their HVAC systems!”

Yes, yes, yes. Insulation alone can be an excellent investment, even before getting into the mechanical systems. Fixing climate control has side benefits, too: Space heaters are notorious fire hazards, and running them while the AC is on (or opening windows to counteract overactive heat systems) tends to lower everyone’s opinion of the competence of the school. HVAC is worth getting right (and I’m not just saying that because we have an HVAC program!). For my money, heat pumps are one of the better ideas floating around out there.

“When possible, endow the major gifts! The long-term rewards far outweigh a quick improvement!”

Absolutely. One of the surprises of moving into administration was discovering that some dollars are more valuable than others. The most valuable ones are operating dollars. They pay for recurring costs like salaries and utilities. Endowments can convert one-time dollars into ongoing dollars.

This has historically been an area of real struggle for community colleges. Our sector receives a pittance of the private philanthropic support that goes to higher ed as an industry. We need to get much, much better at this.

“Budget what is spent, not what is planned … ‘zero-based budgeting’ is currently a buzz phrase and presidents brag about employing it. It is really just smart financing. Past performance is the best predictor of future behavior—this is true for humans and for budgets.”

Mostly, yes. The danger with “use it or lose it” budgeting is that cost center managers find clever/wasteful ways to use it so they don’t lose it. And it’s important to have a bit of slack in the budget for unforeseen issues. For example, this year the state of Pennsylvania didn’t get around to passing the budget that started in July until November. We had to cover its share through reserves for a while and took a permanent loss on the interest income we otherwise would have earned. Predicting future behavior of politicians is a high-risk enterprise (says the political science Ph.D.). If you happen to hit an uncommonly sane year and have some left over to put in reserves, take the win.

“Always be in a hiring slowdown. Don’t just fill a vacant position! Have conversations at the front line up to your executive team before filling the position. Let data inform if the position is retained, eliminated or combined/repositioned. Use academic program reviews; for student affairs and financial offices, use industry benchmarks and key performance indicators. And don’t call for a hiring freeze … each exception erodes trust. Involve all employees … ask the people in the department to do the first analysis—front-line employees and faculty know where there are efficiencies. Often the decision is made before it ever gets to a VP. Eliminating a vacant position is an opportunity for continuous improvement. I suggest that most of the time … in a few months, you don’t even miss it.”

Except for the last two sentences, this is pretty much standard operating procedure at this point. I agree that across-the-board moves—whether cuts or freezes—are almost always a bad idea; they tend to freeze existing misallocations in amber. And a “flexible freeze” just sounds like slush. Still, at least in my world, some departments/offices have been reduced enough over the years that leaving positions vacant would cause major gaps in performance or service.

For those who think in generational terms, it’s possible to read hiring slowdowns as shifting the burden of austerity to the young. Prospective employees aren’t there to defend themselves.

“Facilities are a huge expense. When a new building is open, plan for preventive maintenance … it will save you thousands if not millions of dollars in the life of the facility. Don’t let the new building fall into a deferred maintenance problem like older buildings on our campuses. Create a plan and stick to it!”

True, though easier said than done.

“Always negotiate a contract!! Never accept the first or second offer from a vendor. And find ways to create local or regional buying coalitions to reduce costs of products or services.”

Ah, vendors. They’re everywhere, and they can be maddening. So many products work with system A but not with system B, or leave out small but important elements (like our current ERP, which doesn’t allow students to double major), or promise forthcoming features that never arrive, or jack up prices once you’re there, or get bought out by other companies that may or may not be what you had in mind.

Lately, some of the follow-up emails from vendors have been getting weirdly passive-aggressive. That seems new, and very unwelcome. (“Well, if you don’t care about student retention …”)

I’d say probably 20 to 30 percent of my emails are solicitations from vendors. Stop the madness!

“Ensure your development office understands opportunities for workforce investment. Most businesses have dollars for ‘giving’ and for workforce investment. They are traditionally different buckets. Conversations can go in multiple directions with donors and corporate partners … make sure staff are appropriately prepared for both discussions.”

Happy to say, way ahead of you on this one. It makes a tremendous difference. For schools that haven’t gone this route yet, I highly recommend it.

Thanks to the wise and worldly readers who stepped up! Of course, if you have a good idea, it’s never too late—deandad (at) gmail (dot) com.

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