Sunday, February 28, 2010
posted under Bray , budget crisis , Cornell , Harvard , Summers , University of Illinois by Unit for Criticism
"Veritas" by Joe Moorman at Riverson Fine Art
[The next in our "15 Ways to Take Your Furlough/Voluntary Pay Cut" series on higher education focuses on the budget debate in order to ponder the state of shared governance on campus]
Written by Patrick Bray (French)
I never thought that my experience as an undergraduate and graduate student at Ivy League universities would help me think about the so-called budget crisis at the University of Illinois. After all, I am constantly being told that public and private universities inhabit vastly different worlds, dependent as we are on state legislators and on our mission to serve all the people of the state.
Cornell, where I did my BA (with financial aid that, in fact, made it a less expensive option for me than the University of California at Berkeley would have been), is, to my knowledge, unique among American universities, since it is made up of both privately funded colleges (such as Arts and Sciences, Engineering, Architecture, etc.), and state-funded or land grant colleges (such as the schools of Agriculture and Industrial and Labor Relations). Students of the different colleges, while all receiving a Cornell degree, pay different tuitions based on their college, but students at the statutory colleges are limited in the number of credit hours they may take in the private colleges. This creates a partly state-funded system that was at the same time mostly transparent and rather unequal. The university’s motto, “I would found an institution where any person can find instruction in any study,” comes with the caveat that you have to find someone to pay for it.
At Harvard, where I did my graduate work, the financial system is even more baroque and unequal. According to Harvard’s folksy saying, “every tub on its own bottom,” every academic unit is directly responsible for its own organization and its own finances – this explains why there is no longer a Harvard School of Veterinary Medicine and why the Business School has such a magnificent lawn. But it also precludes the kind of invisible subsidization that Christopher Newfield argues is common to public research universities, a system in which the tuition dollars gleaned from low-research cost and teaching-intensive disciplines like the humanities and social sciences are tapped to cover the indirect research costs of high-end science disciplines in other colleges. Like Cornell, there is no equality among campus units at Harvard, but there is a semblance of fiscal transparency and autonomy, at least before the harsh veritas was revealed that Larry Summers, president from 2001-2006, had gambled away a significant portion of the endowment and billions of dollars in cash reserves.
As the UI administration struggles to explain the necessity of its furlough program, I am reminded of Cornell’s division of state resources by academic unit and suddenly feel nostalgic for Harvard’s brutal laissez-faire philosophy. On February 7, 2010, UI Faculty Senate leaders circulated an informational letter written by Associate Provost Mike Andrechak intended as a response (“but not rebuttal”) of the AAUP-commissioned audit of the university’s finances by economics professor Howard Bunsis. The numerous inaccuracies and even falsehoods (addressed by Bunsis in a recent response) in the informational letter make the blood boil. But the sloppy wording of the document may reveal what is actually behind the furloughs.
The vast majority of the university’s budget ($3.3 billion of a $4.7 billion budget) comes from non-state sources which according to the university are “restricted,” but “80-90%” of the unrestricted (i.e. state) funds go to salaries. Through a convenient accounting trick faculty and staff salaries are directly tied to state funding, while expensive labs, buildings, the research park, and other university pet projects come from unassailable “restricted” funds. Notice the result: the University of Illinois has become a privately funded university whose faculty are state-dependent employees.
While the medieval university, such as the Universities of Paris and Oxford, has often been described as a guild of instructors (as the Harvard Corporation was originally intended to be in 1650), instructors have steadily, and now almost completely, lost control of the university to an army of administrators and non-faculty professionals (UI has around 2,000 tenure-stream faculty versus 3,940 administrators and academic professionals). It is clear from the tone of the Associate Provost’s letter and especially from the hostility emanating from the “critical response” to the Bunsis report by Nicholas Burbules et al. of the University Senates Conference that faculty criticism of the administration’s expertise is considered out of line—even by those, like Burbules, who reportedly represent the faculty (2/10/10 "A Critical Response to the Bunsis Report"). Apparently, in spite of intellectual credentials sufficient to qualify us for tenure-stream positions at a nationally-ranked research university, we are not considered capable of understanding the complexities of the budget.
Philosopher Jacques Rancière reminds us that the ancient Greek term dēmos means the common people: those who have no right to claim or exercise power. Democracy is, in a sense, the formation of a community of disempowered equals by those who have been excluded from power. I contend that since faculty have been relegated to a dēmos of this kind, it is our duty to challenge the authority of the “experts” who rule our university. It is our duty to assert that, though we are not all accountants, we are perfectly capable of seeing through the shifty numbers and competent to manage our own affairs. To that end, let me conclude this post with a list of questions I have after reading the Associate Provost’s letter, the Bunsis report, and the 2010 budget the University has released.
1. Professor Bunsis claims that in 2009 the university had about $600 million in cash reserves. Senate leaders and the Associate Provost have suggested that the university has “burned through” its reserves trying to make payroll, and yet according to Moody’s recent rating of university finances, the university has over $400 million in cash reserves which can be immediately accessed. Where did this money go, and how did it magically reappear?
2. Professor Bunsis bases his analysis on the university's own reports to the federal government, including a statement written by the university as recently as January 2009 which claims that "the University is well positioned to continue its strong financial condition." The fact that the state of Illinois has not yet paid the university money that has already been apportioned should not greatly influence the long-term budget outlook, considering the university's increased revenues, large cash reserve, and very good credit rating. Is the university misreporting its own financial situation to the federal government or is the Provost's office misrepresenting the university's finances to the faculty?
3. The Associate Provost’s letter claims that "$200M is 28% of the budgeted unrestricted funds, the vast majority of which (80-90%) are for salaries and payments to personnel." We have heard many times over the past year or two that salaries are between 60, 70, 80, or 90% (depending on the e-mail) of the university's "operating budget". What proportion is it exactly, and what proportion of the total budget? Is it, as one might imagine, 20 or 30% or is it more? How can there be such uncertainty in the percentage? The ten percent difference reported amounts to $20 million of the money owed by the state to Urbana-Champaign—more than was conserved through the spring 2010 furlough and enough to pay hundreds of faculty members a salary of $100,000! Why, moreover, are salaries considered "unrestricted funds"? Are endowed chairs and science faculty who receive grant funding considered to be paid through "restricted funds"?
4. If we concede that the University of Illinois is in a dire budget crisis and needs to make up the $200 million owed by the state just to Urbana-Champaign, why do we need a furlough program when the relatively small amount ($17 million) generated will not even make a dent in the budget gap? Either the crisis really is monumental, in which case we would need 94 days - and not just 4 days - of furloughs, or the university could borrow a relatively small amount from the Illinois Foundation (the money generated by the furloughs represents less than 1% of the Illinois Foundation's endowment). Other Illinois public universities are borrowing money, why can’t ours? Then again, why can the university plan to borrow $47 million to pay for the construction of the “Stanley O. Ikenberry Commons,” but not borrow a measly $17 million to avoid faculty and academic professional furloughs? To my knowledge, the University of Illinois is the only state university that has implemented furloughs on its own, without directives from either the governor or the state legislature (as occurred in California, Maryland and Wisconsin). Why is the University of Illinois’s unelected administration so ready to do what the state’s elected representatives have not yet done?
5. Here is a hypothesis. Is it possible that the relatively small downgrade of the credit rating for all Illinois public universities, a downgrade which has since been reversed, is at the root of the administration's push for furloughs? The Associate Provost's document makes a point of emphasizing the university's credit rating according to S&P, while Bunsis refers to Moody's US Municipal ratings. Yet Moody’s has recently raised the university’s credit rating to pre-crisis levels. Why hasn’t the university adjusted its policies accordingly?
What the slightly downgraded rating really meant for the university was higher costs for projects that have been dear to the administration (such as the research park, Global Campus, or the stadium expansion), but remote from the instructional and research interests of faculty and students. In order to prove to its bondholders that the university can control labor costs it classifies faculty pay as "unrestricted" and imposes a small but, for the bond rating agencies, highly symbolic faculty furlough, while also proving it can increase revenue at will by raising student tuition and fees. Is it fair to say that the administration is ceding the university’s financial autonomy to rating agencies?
6. The University budget for 2010 shows the budget for every campus unit and indicates how much comes from so-called “state” funds. Why does the budget collapse tuition and state appropriations into one number? How are tuition dollars apportioned? How are state appropriations divided among units? If these funds are all “unrestricted,” who decides which units get money?
At this still great university, where, for the moment at least, one can study pretty much anything and faculty have not yet been driven to find our veritas in vino, it’s time to remind the university community of Illinois’ motto that “Learning and Labor” go hand in hand.