As I go from campus to campus across the country, one of the things that truly astonishes me is the poor quality of conversation about money.

There are far too many campuses where the administration insists everything is fine, until it comes time to negotiate collective agreements (especially with faculty) – at which point everything is suddenly disastrous.  As a result, faculties are naturally suspicious of these claims.  If everything really is disastrous, they reason, why are we only hearing about this now?

When administrations present claims ham-handedly, this scepticism is fair.  Where problems arise, however, is when faculty unions decide to play on this scepticism, and start spreading (what are essentially) falsehoods about university finances.  “They’re diverting operating budgets to the capital budget!” goes one oft-told story – which seems to be born of unwarranted jumping-to-conclusions about “unrestricted” and “restricted” funds in institutions’ annual financial reports (the unions assume they are equivalent to operating and capital, which they aren’t).  So one major problem we now have is that there is simply no common set of understandings on campus about the financial situation institutions face.  It’s getting to the point where some schools practically need a Parliamentary Budget Office to set out some common ground.

Though people like to make university finance out to be hugely complicated, it’s not.  You can more or less ignore everything going on in the capital and research budgets: for most purposes, the operating budget is what matters.  On the income side, well over 90% of operating budgets come from government operating grants and tuition fees.  On the expenditure side, salaries and benefits make up 75% of operating expenditures.  If salary mass is growing more slowly than operating grants and fees, a pay raise (or some new hires) might be in order; if operating grants and fees are growing more slowly than salary mass, you’ve either got to rein in salaries or find some other stuff to cut.  Many people out there want to complicate this, but that’s really all there is to it.

What institutions need to do is constantly inform their communities about what’s happening to those three things, and invite everyone to think through scenarios for the future.  Think we should all get 3% raises?  How likely is it that government income will rise to match?  If not, is everyone prepared to take on more international students to keep the appropriate amount of money coming in?

Institutions could be publishing something on this every month in their house newspapers.  If they wanted to, they could send something out to all staff every week.  They could invite faculty to help them find better ways to communicate budget information.  Then there would be some shared understanding of financial situations, and the atmosphere on campus would get a lot less tense.  I’d cite McGill here as something of a leader: I’m a big fan of their budget infographics and budget books.  Not coincidentally, McGill seems to be one of the places that has adjusted to declining revenue with the least amount of fuss.

Most faculty know times are tough, and want to be part of the solution rather than part of the problem.  But their goodwill can’t be tapped so long as institutions aren’t more open about finances and financial projections.