Sunday, May 13, 2018

Money loves quiet: CSU and the surplus

I heard the expression “money loves quiet” from a friend of mine. He meant that discussing money need a quiet, serious conversation; it should not be discussed loudly, with much emotions or naiveté. He is not entirely right, there are times and places for loud, emotional, political conversations. And yet, there are also times and places for quiet, realistic assessments and plans.

These are interesting times in California. The State has a record 9 billion dollar surplus, and yet the Governor is arguing for restraint, warning of future economic downturns. It cannot get more serious for CSU and UC systems, which may experience budget cuts despite the record surplus. Even if we do not, the most important serious conversation we need is on the long-term trend. Just look at this one picture by the Government Accountability Office; it is worth many words. The long-term trend nation-wide is to defund public higher education. Some states did I quickly and abruptly, some gradually. California may be unique in many ways, but nothing suggests a different long-term trend. It has little to do with politics, and everything to do with the economics of mass higher education. Simply put, not one country in the world has figured out how to provide quality higher education to the majority of its youth. If you’re curious, there is a wealth of info on the CSU Budget site.

Yes, there are times for students to go to the Capitol and demonstrate against tuition hikes, and for the Unions to demand wage increases, and for the System to lobby the legislature and the public. Then there is a sober analysis of what the public can and cannot afford and what we should do about the long-term trend. The answer is obvious: we must learn to diversify our revenue streams, and to reduce our expenses. I have never heard a quiet conversation that would dispute this simple thought. If any of you did, please let me know.

Our College is a tiny part of the giant CSU System, but the solutions are the same. We need to invest in building capacity for additional revenues. You can count all the realistic possibilities on the fingers of one hand: (1) Expand Continuing Education self-support programs, especially those online; (2) Enter the consulting business (service contracts); (3) Ramp up grant proposals; (3) Build capacity for fundraising, including a possible major gift; (4) Cut costs by streamlining processes and redesigning some very expensive programs, and closing down habitual money-losers; (5) build retail service business (e.g. diagnostic and tutoring services). All five actually require investments and time. As long as we have a relatively stable budget, we will make these investments. There is no money to waste. In fact, I think all academic units should be evaluated, in part, on their investment strategies, not just on their ability to maintain the status-quo relatively trouble-free.

One of the signs of maturity is the ability to distinguish between the loud political conversations and the quiet economic ones. Can you do that?

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