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SENATE From the Chair Moving Forward on Strategic Issues and Budgetary Policy The report by the Faculty Senate Committee on Administration entitled "Budgetary Policies and Strategic Issues" has appeared at an opportune time. There is heightened concern among faculty about resource allocations and a wide recognition that the great changes facing the University require careful ordering of priorities. At the same time, some important steps have been taken by the University. These include the Board of Trustees commitment to making student financial aid a major development priority, the ongoing efforts at cost savings and cost containment, and the recently instituted budgeting cycle which strives to project University budgeting parameters five years into the future. The funds flowing to Schools and faculty are taken to represent the direct support of the academic program of the University. Other expenditures, for purposes ranging from the Library and Museum, to Development and Security, constitute indirect support. To state the obvious, both arms are essential to the academic mission. But what is at issue here is the question of the proper balance between expenditures for the direct and indirect activities. Our report speaks to this question (Almanac March 24). In that same issue of Almanac, the administration representatives to the University Cost Containment Committee offered their response to the Senate report. A close reading of the two documents shows some discrepancies either in data utilized and/or in conclusions reached. We consider this expression of difference to parts of the Senate analysis to be a healthy stroke toward building a strong, open and inclusive consultative process between administration and faculty. The Committee on Administration report provides a starting point from which the faculty, through the Faculty Senate, can make its appropriate contribution to the strategic issues the University must consider. It is worthwhile to restate some of the major findings in our report. In considering them, it must be kept in mind that the changes they refer to took place incrementally over a period of nearly two decades and were not obvious on a year-to-year basis. Also, they describe global University changes and not those in individual schools. As detailed in the report, the result of these increments represents a considerable shift in the relative allocation of University resources. This shift is evident from an examination of the factors considered in the report, among which are student aid, the subvention and allocated costs for schools, faculty salaries and administrative/clerical salaries. The cost of student aid to the schools, and the difference between allocated costs and subvention, are two indicators that show how the fraction of University resources available for support of academic programs has decreased since 1980. Of course student financial aid is a necessity if we are to continue to attract a diverse group of outstanding students. Also, it is likely that the need for student financial aid will increase. Nevertheless, while tuition revenues have increased by 330% since 1980 the portion of student aid charged to the schools' unrestricted budgets has increased by 700%. (Unrestricted and restricted are accounting terms. Unrestricted income may be spent as desired; restricted income is pledged to a specific purpose). Schools receive the bulk of the subvention funds and the assessments of allocated costs. While subvention and allocated costs are independent of each other in an accounting sense and the budget figures for each are arrived at by a different process under different financial conditions and constraints, the difference between these two figures is important. It represents an expense in the school budgets above the direct costs of operating the schools. Since 1980, the allocated costs have increased by over 300%; the increase in subvention has been less than 220%. It is important to understand that the sum of the unrestricted student financial aid and the excess of allocated costs over subvention is the amount of revenues that must be generated in the schools above the schools direct costs in order to balance the school budget. This has a direct impact on faculty. Allocation of funds for faculty support in comparison to the total academic budget, and relative to support for administrative/clerical personnel are two other important measures. Since 1980, the total academic budget (exclusive of health care services) grew by over 350%, but total faculty salaries grew by only 260%. This is a statement about the lack of growth of the tenure track standing faculty, not faculty salary raises. Whether or not faculty raises have been adequate and competitive is not relevant to the substance of the report. (For this information, see forthcoming report of the Senate Committee on the Economic Status of the Faculty). An obvious measure of resource reallocation is the expenditure for faculty salaries relative to expenditures for administrative/clerical salaries from unrestricted funds. This measure is of interest because it is based on money that can be used for any purpose the University chooses. Also, it subtracts out all support that comes from grants or other restricted sources, both for faculty and administrative/clerical staff. For example, it does not include research staff, who are overwhelmingly paid from research contracts and grants. With this in mind, we note that the growth in unrestricted faculty salaries since 1980 was less than 230% while the increase in unrestricted administrative/clerical salaries was over 340%. The Committee on Administration report shows that there has been a dramatic shift in resource allocations over the past two decades. The recent administration initiatives on cost savings, student aid and a five year planning cycle are critically important for modifying this shift and in fact there has already been some slight but definite reversal toward greater relative support of the academic programs. With the Committee on Administration report as a background, the Faculty Senate intends to participate in strategic analysis of resource allocation. An excellent working relationship has already been established among faculty and administration members of the University Committee on Cost Containment. Cost containment and resource allocation are intimately related and need to be done in a strategic context. The Senate looks forward to working with the Administration in this regard.
Almanac, Vol. 44, No. 28, April 7, 1998 FRONT
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