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Jan 8, 2009

Hard times ahead

I am back from vacation and glad to find all things in decent shape. We are ready for the next semester. It is nice to see colleagues trickling back into McKee: just as smart, dependable, and funny but not as tired as in December.

That was the good news. The bad news is that we still have not received any money from last academic year's Extended Studies revenues. Again, we are flying blind financially. Our Dean is in the same position, and so is the entire University. This encourages hoarding behavior. For example, the Provost is holding back our money, because he does not know what is going to happen to the University budget. As for the Dean, I can see him tightening his fist for the same reason. Because no one knows how much money we have, everyone assumes the worst. Colorado is one of the states that are required by their constitutions to balance budgets. This means that if tax revenues drop significantly, we might be required to return money to the State. Last time it happened in 2002, and the university took drastic measures: cancelled searches, implemented a hiring freeze, eliminated travel budgets, cancelled salary raises, etc.

We worked really hard to earn the off-campus revenues. Over the last three years, we virtually doubled the revenues while providing much needed services to the community. The assumption was always that at least a small fraction of the money could be used for our travel funds, program development, technology, furniture, etc. Now I am told that everything we earned can be taken away from us. Although I understand the nervous administrators above me, it is still very hard to accept such a turn of events even as a possibility. Instead of being invited to solve the shared problem as partners, we are treated like peons: the people above know better. Instead of engaging our brains, and our knowledge of the details at the ground level, we are being ignored and dismissed.

The truth is, the people at the bottom of the pyramid can both save money and make more money. To do that, we need to be able to count on a certain portion of these savings and earnings. Otherwise, we have absolutely no incentive to be creative about either savings or earning. The confiscation policy will kill the goose that lays golden eggs.

No one knows the extent of the budget shortfall. It can be negligible, or huge. But what is the best way of dealing with uncertainty? Perhaps it can be done best by trying to operate as normal as possible, by honoring previous commitments, and by developing plans B and C. The worst way is to cause panic, to make every unit hoard its resources, and to damage long-term expansion plans.

Perhaps this is an imperfect analogy, but it works: The Great Depression could have been another short-term recession, if not for Hoover's stupid idea that that was a good time to balance budget. What the feds are doing now is to provide a large stimulus to the economy, even if it means bigger deficits. I know we have nowhere to borrow from, but we need to keep people working and thinking creatively, not to freeze all activity just to wait the crisis out. The solution is simple: honor the previous agreements, distribute the money to the units, then come back to us and ask to pitch in to solve the shortfall if it becomes a reality. We may even give most of this money back. Or better else, STE will lend money to the University, at a moderate interest.

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