Managing university budgets: thinking strategically
Although it is not absolutely a true picture, I have a feeling that in my entire academic career one constant feature has been ‘the cuts’. I started as a lecturer in Trinity College Dublin in 1980, and for those old and decrepit enough to remember that period in Ireland, it was a time of non-stop economic woes and recurring public spending reductions. By 1982 the situation had got so bad that the then short-lived government led by Charles Haughey had to break its own agreement with the public service unions and abandon pay increases, and there were more budget cuts. By around 1986 the situation had become so dire that the College actually set up something it called the ‘Cuts Committee’, whose task it was to find more savings.
In 1991 I joined the University of Hull in England as Professor of Law, and shortly afterwards as a Dean. For those who can remember that particular period, it was the time of annual 1 per cent British government ‘efficiency gains’, this being an automatic mechanism for reducing higher education funding. Every so often there were larger cuts, and I remember receiving a circular from the Vice-Chancellor just before Christmas one year trying to get us to address the question how we could manage the budget reductions without redundancies.
Just as things began to look up a little towards the end of the 1990s, I moved to Dublin, Dublin City University and the high-octane exuberance of the ‘Celtic Tiger’. Or so I thought. In 2002 the then Minister for Education decided that higher education was over-funded, and from then on we had real-term budget reductions, pretty much year-on-year, until in 2008 the roof fell in and we were faced with a dramatic change in our circumstances.
Now I am in Scotland, where actually things are probably better than anywhere else in the near neighbourhood, but we are still looking at a likelihood of at least some further cuts.
Other academics may of course remember the years differently, and in fairness I moved around in such a way that I often arrived in a system just as it was going from good times to bad (or at least not so good) times – though in other ways I have over recent years been lucky to be in universities that were and are smart in difficult economic circumstances. But for those who also think that ‘the cuts’ have followed them around, it is a terrible de-motivating experience, producing a degree of lethargy and fatalism and eroding a capacity for innovation. Furthermore, on the whole universities don’t cut strategically; they cut opportunistically (i.e. exploiting staff departures and the like), and where they cannot do that they simply apply cuts across the board. Doing so is, however, inherently anti-strategic, depending as it does on a mixture of chance and common misery.
It becomes particularly counter-productive when it involves exhortations to re-use paper clips and print on both sides of paper. In fact, and demonstrating that this is an international phenomenon, the newspaper USA Today recently ran an article on ‘cutbacks outside the box’, describing steps such as smaller food portions in canteens, removing phone lines and abandoning printing.
Of course, university expenditure has to be properly controlled, and appropriate efficiencies are quite proper. But that in itself is not a budget strategy. Neither are cuts, by themselves. A budget strategy needs to connect with an overall strategic purpose, which includes a decision on what to prioritise and resource, and including decisions on growth for those priorities. It should also include plans for the diversification of revenues. Budget strategies should not react to decreases in public expenditure but should anticipate them and prepare for them.
It is unlikely that universities will ever again be able to expect public expenditure largesse. That era, if it existed, has probably passed. Even if the resources were once again available, they would probably be much more directed to government priorities rather than to general increases in funds. This means that higher education must lose the ‘cuts mentality’, and become financially strategic. And that requires a change in mindset. It won’t be all easy.