Tuesday, November 29, 2011

The financial benefits of excellence

Here are the numbers of budget funding sources and how they have changed over a three year period. Note that the state fraction has dropped by 50%. Also note that all categories except state funding are much higher now -- the capacity of the university to invest in education has increased by 25%. Gifts and grants show the largest percent increase, but an equally important category in terms of total amount is tuition and fees. Some of this has come from tuition increases, but for the most part those increases have been used strictly to balance losses in state funding. Most of that increase is driven by the increase in enrollment, especially for out of state students.

Tuition and Fees
State Appropriation
Gift, Grants & Contracts

Three main points here:

  • Somehow President Lariviere was able to lead the university to unprecedented growth despite the worst economic climate in the state in many generations. When you include the investment multiplier of this spending, this is a multi-billion dollar impact on a state that is seriously struggling. Was this at the forefront of the minds of the governor and board when they considered how much President Lariviere annoyed them? Shouldn't their vision been a bit broader in terms of the students and citizens of the state?
  • The areas in which the budget has been able to increase are in "prestige funding." These are the grants, gifts and out of state students that have been flocking to the university because of our rapidly increasing reputation. Again, this is largely a flow of funds from outside the state to inside the state. It does not seem that the folks making these decisions have thought much about these numbers.
  • The raise in faculty salaries (totaling a few million dollars) in a time of fiscal hardship has drawn much of the attention. First, tax dollars from hard pressed citizens did not fund these raises. Second, OUS member institutions were already empowered to make salary decisions for their academic staff. President Lariviere apparently only perturbed the Governor in his desire for salary freezes; there was no official policy at stake here (i.e., it is all about politics, not finances). Third, this set of employees had just doubled their financial impact on the university while working several years under frozen wages. UO faculty make 80% less than faculty at public peer institutions and are constantly being poached by other universities. Was it a good management decision to adjust their salaries in this climate or to risk the hard fought gains of the last three years by losing them? Perhaps whichever state manager who is currently calling themselves the CEO in this circumstance can explain the proper business case here.
And for those students wondering why tuition keeps increasing, check out the chart below. The central feature of the New Partnership agreement was to stabilize the level of state contribution in order to generate tuition stability over the long term. This is still a worthy goal, not properly acknowledged by the OUS.

1 comment:

  1. This information is very helpful. What are some healthy solutions given the current situation? And what are the pros and cons to those possible solutions? Thanks!