Trade-offs and Menus

I heard an interesting story this week which I thought I would share with you. About two weeks ago the feds finally decided that they were, in fact, going to renew the $4200 maximum Canada student Grant (see previous blog explaining why they might not do so here) at a cost of something like $600 million (give or take $100M). This is good news! They have also hinted, though, that they won’t be able to do this again unless they find savings somewhere else and – apparently – they have finally realized that maybe, just maybe the government can’t really afford (and should never have tried) to subsidize all interest on student loans (see here and here for more on what a bad idea interest subsidies are). Which, you know, also cost something like $600 million.

This is a moment everyone can learn from: in a moment where budgets are under pressure, we can keep (good, targeted) subsidies for poor students simply by giving up (bad, untargeted) subsidies for graduates who already have things like degrees and jobs. We can argue a bit about what policies we use to re-introduce student loans – we absolutely do not need to go back to the status quo ante of 0% interest during studies and prime plus 2.5% after studies, which was also kind of goofy. Many more sensible alternatives exist and should be considered (my particular favourite is the Dutch option, but YMMV.)

But it’s not just governments that can learn from this. Every institution should be thinking about these kinds of explicit trade-offs. The problem is that having good discussions about explicit trade-offs requires you to have a sense of what things actually cost at a university or college. I kind of think that if I were President of an institution (and yes, everyone can thank God I am not and never will be), one of the first things I would do would be to create a menu of what everything costs. So, for instance:

• A 1% change in base salary levels (up or down, presumably it is the same) for faculty, non-academic staff and – that old bugbear – “senior admin”
• The cost of various types of enhancement to benefits
• Imposing a class size minimum of 10/15/20/whatever students
• Cleaning all buildings half/twice as often
• A 10% cut in the travel budget
• Cutting/adding to scholarships by 5%
• Reducing health services by 20%
• The net cost of any satellite campuses
• Expected savings from a one-year/two-year hiring freeze.

For the sake of completeness, you’d want something similar on the revenue side – how much would a 5% increase in tuition bring in, how much would introducing higher parking charges on campus bring in, etc.

For purposes of comparison, I would also probably add things like the budget of each faculty, and the costs involved of removing a staff member via invoking exigency. Not, I stress, because one would ever want to cut a faculty or declare exigency – but rather for a sense of scale. You’d want to know if a planned cut was the size of the faculty of Kinesiology’s budget or the Faculty of Science’s. And you’d also want to be able to show how long it would take for any kind of staff reduction to generate real savings

(One of the big arguments in the Laurentian affair was whether, given all the consultancy fees, it was cheaper to achieve staff reductions via bankruptcy rather than via the exigency clauses in the collective agreement. This is an empirical question one could figure out with enough data, but data transparency was no more Laurentian’s strong suit that it is any other Canadian institutions’, so we can’t know for sure…my hunch is that exigency would have been somewhat more expensive, but I fully admit that’s no more than a guess.)

Anyways, the point is that armed with a public menu like this, literally anyone on campus could come up with a set of budget reductions/revenue enhancements that would cover whatever the gap for the year would be.  Think about how this make internal discussions about budget cuts so much easier. If everyone knows the cut is $X million, then armed with such a menu, literally anyone on campus could just look at the menu and work out which combination of measures might actually cover the gap. 

Now, obviously, this doesn’t mean everything would be sunshine and light. It’s unlikely that everyone would agree on which measures to take – politics will still matter. But the point here is that those discussions can be held in terms which are vastly more concrete and evidence-based than the kinds of discussions we have right now, where only a very small group with the administration really understands the trade-offs and then gets annoyed when no one takes their word for the trade-offs they make.

(I would add here: actually publishing numbers like this on a regular basis would go a long way to de-mystifying the collective bargaining process, in the sense that if you do this in enough detail, it would be obvious to anyone from the get-go how much both sides’ offers actually cost and thus how far apart the two sides are at any given point.  If a strike ever happened, everyone could say something like “oh my God, you guys are only $2 million apart, just find a way to split the difference already!” I think strikes – when they happen – would be much shorter as a result.)

The benefits of this approach are pretty clear, I think, the amount of effort to produce it would be relatively small, and I can’t think of any obvious drawbacks (if you can think of any, do give a shout in the comments). Someone should try this!