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Provost's Corner

by Scott G. McNall

The Elephant in the Glove Compartment
Huge budget deficit hard to describe and impossible
to ignore

How do you tell if there is an elephant in your glove compartment? You can smell the peanuts on his breath. I suppose one reason elephant jokes became popular is that the elephant is hard to describe and impossible to ignore, especially if there is one in the room. The elephant, like our current budget situation, excites comment. We want to describe this animal, explain how it got into the room, and talk about what we are going to do to get it out.

As you have already been told, under the budget proposed by the governor, our campus stands to lose almost $12 million.1 Strange as it seems, this is a best-case scenario. Our potential budget cut is $18.6 million, but this will be reduced to $12 million if student fees are increased. The fee increases proposed by the trustees would yield $6.7 million in new revenue. It is crucial that we understand the magnitude and importance of the fees: If we do not receive them, we will have to cancel at least 1,300 sections of classes in the fall and spring (650 each semester). That reduction would be devastating to our students. Once we calculate the anticipated revenues and total the reductions proposed under the governor’s budget, in Academic Affairs, we are looking at a permanent, base-budget reduction of close to 10 percent, or $9.6 million. Reducing our budget by this amount, and still serving the same number of students, is a daunting challenge.

If we are to serve the same number of students, we need to protect faculty lines. In Academic Affairs, the total amount spent (wages and benefits) on the faculty is about $53 million. If there is no reduction to faculty lines and attendant benefits, we will have to reduce all other areas in Academic Affairs by 26 percent. The number of areas from which we can cut is limited. For example, we have $25 million in nonfaculty positions (staff, chairs, vice provosts, deans, associate deans) and $10.5 million in operating expenses. If we follow the recommendation of the governor, faculty lines would be reduced by 5 percent, and we would still have to trim about 20 percent from other areas. The impact outside Academic Affairs would be equally painful. The governor’s budget requires sacrifice from everyone in the university community.

How did the elephant get into the room? The state of California’s spending obligations for such things as schools, medical care, and prisons outstrip its revenues. Typically, a combination of spending cuts and tax increases (e.g., those proposed by the governor) covers the deficit. What this California Assembly and Senate will do, and when, is not clear. No responsible analysts are predicting the state’s budget situation will improve anytime soon. Whatever they do, we must take charge of our own future.

We must make clear plans to reduce the budget, and we should assume the problems we are facing are not short term. Across the country, state-assisted universities face an erosion of tax support. The point is that the economic problems of universities are long term and structural.2 If that is the case, we must generate long-term solutions. For a long-term reduction in revenue for the university, we must be clear about how we will maintain the quality of work life for faculty and staff. With fewer resources comes the potential for unplanned and undesirable structural change: changes in the way we work, teach, and serve students. We must be clear about the kind of university we want to be three to five years from now. We don’t want to be flattened by the elephant.

This situation requires all of us to answer collectively at least three questions: (1) How can we generate both short- and long-term savings? (2) How can we generate new revenue? (3) What can we cut in the university that does not erode the core values of the institution?

Some current suggestions are these: use the electronic infrastructure to create a paperless university and reduce paper and distribution costs; use WebCT to provide students with course materials and assignments; reduce copier costs; reduce travel; reduce the use of long-distance services; reduce the use of utilities through the elimination of appliances on campus; reduce the book budget in the library and maintain online subscription services; etc. There are also useful discussions ongoing about how to streamline the curriculum and provide flexibility in meeting GE requirements that could provide savings.

In the area of new revenue, it has been suggested we step up our international and out-of-state recruiting efforts, grow the institution at off-campus locations such as Redding, and, when we know that enrollment will be fully funded, increase enrollments on the campus, being careful to maintain a balance between enrollments and resources. Grant and contract work, which generates incentive funds for project directors, departments, and colleges and provides numerous opportunities for students, must be stimulated.

Finally, we must maintain faculty and staff development, because that enhances productivity, and we should support the wise use of academic technology, when it enhances productivity.

We cannot continue to do business the way we have in the past. We don’t want to be overwhelmed by changes imposed on us by others. Please join the budget discussion. One easy way to participate is to go to the Web site for Academic Affairs and click on the budget, where you will find a wealth of information. You will have a chance to ask questions and to contribute to the budget discussion. Together we can get the elephant out of the room.

1 I want to emphasize that these numbers are subject to change, depending on the May revision of the governor’s budget, the actions of our legislators, the changing financial picture of the state, actions of the trustees, etc.

2 Ray Scheppach, National Governor’s Association, 2003.