[The post below was from July 2020, and responded to measures taken by the University administration in response to a perceived pandemic related financial crisis. For my more recent writings on University finances in response to the present (December 2022) strike, please see here].
My academic institution, like many others in the world, forecasts a severe financial crisis as a result of the response to COVID-19. It has, as a result, preemptively announced job furloughs and other severe measures, including pay cuts to faculty and staff. Many members of the community have, however, perceived the institution as having become top heavy with administrators, often highly paid, and of having made bad prior choices which limit current options (see this excellent article from the Chronicle of Higher Education on the debate at Johns Hopkins, which applies to many other universities too). The institution has meanwhile become one of the more expensive to attend in the US, and therefore in the world, limiting the scope to raise revenue through tuition increases. Students, and families, have helped to pay for the “top heavy” university.
The faculty and students are increasingly concerned with identifying an alternative to the “scorched earth” approach to crisis management currently proposed by the institution, including a more effective and just scheme of revenue raising and burden sharing. Recently, I have been analyzing (see latest version of presentation) the finances of the institution, with the aid of some motivated graduate students. We have assembled and analyzed diverse public data from multiple sources (all collected here, along with the supporting calculations). The university community has, despite a charade of budget transparency, not had the comprehensive view of university finances needed for meaningful consultation and deliberation. The institution’s finances have been perennially – and universally – seen as opaque. This has not stopped top administrators from referring to the supposedly precarious financial condition of the university often – not only this year – as the reason for various decisions. Although it is true that relevant information has been available in various nooks and crannies, it has been difficult to put together and to make sense of the whole.
The exercise in budgetary transparency, which I report on here, although a work in progress, is a small contribution to support a more rational discussion of the options before the institution, and in particular of what would be both effective and fair. It was shared this summer in a webinar with more than 400 faculty, students and staff of the New School, to considerable interest. The New School is a private institution, so some of the options discussed here will not seem relevant to institutions that are heavily or even exclusively publicly funded, in the US and in other countries. Nevertheless, some parallel issues will arise, for instance concerning “administrative bloat” – widely observed in universities around the world.
All figures are preliminary and unverified. There may be errors. No claim is therefore made that the figures or the resulting narrative are fully correct. I will periodically post any updates.
The New School fired 122 workers on October 2nd, 2020.
The New York Times reported on the crisis here, on October 16th, 2020.
The Nation carried a piece by colleagues here. on October 23rd, 2020. One of the more grim but also amusing findings of the colleagues who have been involved in the recently created chapter of the American Association of University Professors and the New School Labor Coalition of which it is a part is that Huron Consulting, the private sector firm hired by the University, recommends, wherever it works, that the university leaderships which hire it use the same language (“reimagining”, “alignment”, “task forces” consisting of “a broad range of stakeholders” etc. to justify firing and “restructuring”).
On October 29th, 2020, our research team created a brief document to respond to a recent university communication justifying its emergency measures. It also includes a link to a more recent discussion based on data from the New School of why articles on the effects of the Coronavirus-related downturn in enrollments on the long-term outlook may be deceptive – in particular because of their inattention to the role of administrative bloat. A broken expenditure model is cast as a broken revenue model.
On November 2nd, I participated in a brief “video podcast” interview with New School AAUP member Prof. Alex Aleinikoff in a new initiative called Public Square aiming to increase transparency and accountability at the institution. The interview with me is available here. I referred in the video to the $30 million that had been borrowed in the spring, and speculated that most of it may have gone to plug a gap in the finances from the Spring. But we now know, due to the recently released financial statement for fiscal year 2020 (ending June 30th 2020) that total losses were less than $1 million, and that the $30 million borrowed in April was simply added to the University’s cash reserve. The university therefore had more than enough on hand to avoid the layoffs (which on its own account, will save only $5 million in the present fiscal year) contrary to the narrative that this measure was necessary to handle the immediate financial exigency. We also contest whether it is necessary from a long-term point of view.