You’ve heard of climate change denialism? The use of spurious, crap data to try to undermine public acceptance of the well-established phenomenon of climate change? Well, there’s something sweeping Canadian campuses that’s very similar. I call it budget denialism. Let me show you some examples from two universities in particular: Dalhousie and Wilfrid Laurier.
The Dal budget is here. The focus of complaints at Dalhousie has been the $5.6 million cut to “faculties”. Now, when you hear the word “faculties”, you think teaching (or instruction and instructional support, more broadly) – so when you hear about a cut to the faculties’ budget, while overall budgets are rising, you’re meant to think: “mean, empire-building administration, taking money away from teaching and giving it to themselves/building new buildings”. That’s certainly the tenor of this article.
Except for one thing: the faculties budget doesn’t include salaries. Salaries are up $9.9 million, 86% of which goes to faculties. So actual spending on instruction and support within faculties is rising this year by roughly 2.1%. Indeed, if you read the budget with any kind of care, it’s pretty clear that the main reason faculties are taking a $5.6 million hit to non-salary areas is precisely because this $9.9 million increase in salary needs to be accommodated. Budget denialists of course see no connection here.
Most inane is the comment from the Dal Faculty Association that there shouldn’t be any cuts because Dal is in perfect financial health. Her evidence? That Dal has over a $1.6 billion dollars in assets. Seriously, that’s what she said. Like she’s never heard of the difference between an income statement and a balance sheet. Like assets can magically be turned into income. I look forward to seeing the DFA elaborating on this point by explaining its approach to liquidating endowments, and how to choose what buildings Dal should sell so as to never ever have to make a tough budget decision ever again.
Wilfrid Laurier University is an even better example of budget denialism in action. The Laurier budget isn’t even a particularly tough one. Though it’s predicting a $25 million gap between income and expenditures in three years, it doesn’t do much to close that gap. In fact, it’s allowing for a 5% increase in the overall salary/compensation budget this year, while revenue will only increase 3%. The math only works because Laurier is: a) choosing to run a $2 million deficit; and, b) laying off 22 staff.
The response from the academic community? Well, there’s this guy who basically says budgets are political instruments, and you should only look at financial statements. And since no previous financial statements show deficits, any talk of deficits in future must be a lie. And this guy apparently has a Ph.D. I presume he also thinks this can’t be the year 2015, because no previous year has ever been 2015.
And then there are the folks who just simply can’t understand how increasing salaries by 5% while increasing revenues by only 3% means something has to give. Running a deficit is part of it; so too are layoffs to reduce salary mass, which Laurier did to 22 people the week before last. Cue sniffy complaints of Laurier having lost its soul, ruined by management, and – worst of all – being run like a business.
(Running things like a business is, of course, the ultimate sanctimonious academic insult, spat out in disgust by people who by-and-large have never actually balanced an organizational budget. I’ve always wanted to ask people who say this whether they believe non-profits never fire people, and if their budgets magically balance themselves, regardless of salary commitments.)
There’s room, obviously, for debate about university budgets and what gets prioritized. But pretending there is no price to pay for hefty (5%! Who gets 5% these days?) annual compensation increases, which everyone in universities seems to have got used to, simply isn’t on. As with climate denialists, we should assume that budget denialists have some fairly self-interested reasons for taking the stance they do, and evaluate their evidence accordingly.
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Just to be clear, Faculties budgets at Dal do include salaries of personnel in the Faculties, both faculty members and staff. There is a slightly arcane budgeting process whereby each Faculty budget is first incremented by the negotiated compensation increases for all personnel in the Faculty and then cut by the recommended ‘BAC cut’. This part of the budgeting process is not represented in the BAC reports. So in the end you are entirely correct to say that the BAC cut largely results from salary increases but this is not because Faculty budgets don’t include salaries! This is an important issue because it means that Faculties have control over hiring (in the case of faculty members) or hiring and firing (in the case of staff). Further adjustment to the budget allocation is made according to the enrolment related budget adjustment (ERBA), which can be positive or negative depending on which direction enrolment is headed. This means that Faculties with growing enrolments (e.g., Computer Sciences, Engineering) can actually increase their overall budgets year over year because the ERBA is greater than the BAC cut.
Hi Chris. Fair enough. I was referring to the way the amounts are presented in the budget, rather than the way they are controlled operationally but this is a a good clarification.
Great post.
There are really two issues here: university finances and how debates about university affairs unfold (including finances). Having served as faculty, as a university Director, consultant to government, and as an education vendor, I’ve noticed during my travels is that there is a significant difference in the ability, capacity, and willingness of people in different roles in higher education to debate university-related issues in the public sphere.
Broadly speaking, academics have more freedom to discuss these matters in public, are often less accountable if they get the facts wrong (they are hired/rewarded for their expertise in cellular biology, not university management, after all), and they are especially good at arguing; not surprisingly, given that crafting and delivering arguments is a core skill of the academic occupation. (If you need examples, check out the comments section of The Guardian (Higher Education: http://www.theguardian.com/education/higher-education )
This contrasts with administration and government voices that need to be more cautious in their public statements. When they speak publicly they are representing entire organizations, not just themselves, and they aren’t protected by notions of academic freedom. (I still remember the moment soon after I became a University Director that I was told to keep my opinions to myself: “You’re no longer an academic!”) Also, I find that administrators are less skilled at debate. This isn’t to suggest that management are powerless or any more honest – not at all. But when it comes to debating issues in public, the rules of engagement seem to favour academic voices, particularly as the volume of channels for public expression multiply.
Keith, you make a great point. In addition, I find it very confusing at times to cut through the rhetoric when hearing different groups debate things like budgets, collective bargaining, etc. As was evident in Alex’s blog, data and information can be manipulated. It makes you realize the importance of identifying where information is coming from and what their motives may be. This posting reinforces the value of doing your own research to come to conclusions rather than taking any given information at face value.
Hi Alex,
In writing “And since no previous financial statements show deficits, any talk of deficits in future must be a lie” you’ve almost hit on the credibility issue linked to budgets. I think that you should have written
“And since every past budget forecasted a (large) deficit while the subsequent audited financial statement showed a (large) surplus, any talk of budget deficit in the future is at risk of being seen as a lie (or certainly can’t be trusted without inspection).”
It is strange that when the future becomes the (audited) past the negative numbers pretty much consistently become positive. It doesn’t breed trust and it limits credibility of budgets. It does feel like a lie when it happens year after year.
One day you should post something about non-restricted but creatively-named Internally Restricted Funds with imprecise designations and no declared timelines for use; squirrelled-away multi-million dollar “contingency” and other funds are another credibility factor.
Herb