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Mar 18, 2023

Budget Cuts: Breaking the Quick Fix Paradox

When financial challenges strike universities, budget cuts become their go-to solution. When prosperity returns, they hold fast to the status quo. This is the quick fix paradox.

Universities often resort to budget cuts in difficult times, seeking immediate relief while neglecting long-term strategies to increase and diversify revenue. However, when times are good, they reinforce the status quo rather than invest in innovative projects that can make them more financially resilient. These investments take time and require setting aside funds for growth, but campus leaders often struggle to justify such frugality when budgets are in good shape. So everyone gets something. Enormous efforts are spent on lobbying state authorities for more budgets, but very little in exploring the higher education market, and opportunities to pivot and to grow. It is especially troubling, given the long-term demographic trend of declining college-age population.

The transition from funding existing programs to investing in innovation is not easy. It will face political resistance and could upset many within the university community. However, embracing this shift is crucial for long-term success. When budgets return to "normal," it's essential to remember that normalcy can breed complacency. To avoid this pitfall, universities should focus on funding units and programs that demonstrate specific plans for cutting costs or generating revenue.

This is nothing new; it is just an attempt to remember those things next time when we have some breathing room. In the sort run, the options are few: spend reserves, freeze hiring, cut expenses. Our system has been hit with budget crises many times before; not one of them produces a meaningful reorientation of the system. It is still heavily dependent on state funding, which is an unsustainable strategy.

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