It’s the little things that worry me. The slowdown in China. The continuing failure of the Euro-zone to grow. The fact that the ratio of the US Stock Market Cap to GDP is approaching the levels seen right before the crashes of 2001 and 2008. Our economy might muddle through, or it might not.
Now add on to economic uncertainty the clear evidence that governments are showing decreasing enthusiasm about supporting higher education – nationally, there’s been a real decline in provincial higher ed funding over the past four years to the tune of about three percent. Better than some sectors, certainly, but also very problematic, given that our universities essentially seize up if their budgets don’t grow at least 3.5% per year. Oh, and throw in the clear reluctance of most governments to let tuition rise to compensate for any funding cuts.
Given all this, I’d say there’s a reasonable chance that universities in more than one province are heading for budget cuts on the order of 10% or so. It’s likeliest in Ontario, but it could happen pretty much anywhere.
Is anyone ready for that? Does anyone have a plan in their back-pocket that would help them get through that kind of restructuring.
I can hear all of you rolling your eyes. Of course not – who does that?
Well, almost everyone, really. Any business worth its salt has some pretty clear contingency plans if revenue drops. Colleges don’t have exact contingency plans per se, but they pretty much all measure break-even points on a per-program basis; if required to cut, they would be able to produce plans very quickly.
But universities? It is to laugh. They’ll plan for growth until the cows come. But plans to shrink? Never.
Yet, it’s not as though they can claim blindness to the danger. It’s not as though universities don’t remember the 1990s, when double-digit cuts occurred. It’s not as though cuts on a limited scale aren’t already happening. Despite the dangers, universities continue to merrily sign agreements with faculty that commit them to large expenditure increases in the future (Hey! U of Ottawa! Yeah, I’m looking at you!) instead of focussing on contingency plans.
I can sort of understand the reluctance of administrators to take this step, given the predictable faculty backlash. What’s more puzzling is the absence of any pressure on institutions from their Boards of Governors on this score. Our whole system of university governance is based on spheres of competence: academics run academic affairs through Senate, while Boards – supposedly filled with men and women with a modicum of business nous – are supposed to take care of the money. And yet, more often than not, “taking care of the money” means dong fundraising or small-ball stuff like advising on endowment strategies. It doesn’t seem to involve asking hard questions about the medium-to-long term solvency or stress-testing institutions to see how they’d fare if things go south.
Yet it should. The risks institutions face are getting bigger each year. A crash may not happen; but if it does, we’d all be better off if our responses were based on thoughtful long-term plans rather than the usual beheaded chicken routine that universities seem to prefer. Boards of Governors are the ones best-placed to make it happen. They need to step up and do so.