The posting below looks at how to support make the case for new programs and initiatives in these difficult budgetary times. It is by N. Douglas Lees, special assistant to the dean and former chair of the Department of Biology at Indiana University-Purdue University Indianapolis and author of Chairing Academic Departments (Anker, 2006). Email: email@example.com The article is from The Department Chair: A Resource for Academic Administrators, Spring, 2011, Vol. 21, No. 4. For further information on how to subscribe, as well as pricing and discount information, please contact, Sandy Quade, Account Manager, John Wiley & Sons, Phone: (203) 643-8066 (firstname.lastname@example.org). or see: http://www.josseybass.com/WileyCDA/WileyTitle/productCd-DCH.html
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Developing Persuasive Arguments for Resources
The first question that might be posed in response to the title of this article is which resources could one be talking about during these difficult fiscal times? Clearly the recession has had a profound impact on higher education, but we were already on a path to austerity; the recession just accelerated that process. Those programs, schools, and institutions that undergo budget reductions and go into hibernation hoping to awake and resume business as usual will be in trouble on two counts. First, we are not likely to see budget restoration, and political pressure along with consumer resistance will prevent the large hikes in tuition (except perhaps in elite institutions) that we have experienced in recent years. Second, the world we will face upon emergence will not be the same one of two years ago. The needs of society and demands for programming will change while we are dormant. It is those institutions that, despite the negative fiscal climate, are identifying future opportunities and redirecting remaining resources that will be prepared to hit the ground running and gain great advantage.
Moving forward with innovations can happen only if institutions can generate new resources or call on reserves, still possible for those with deep pock- ets, or for those willing to reallocate in real and substantial ways. The first is easy; the second requires a genuine boldness that is likely to involve vertical restructuring or the elimination of the sacrosanct. That is, in the former, the elimination of administrative structures or the abandonment of programs, departments, and, perhaps, schools; in the latter, the violation of historical institutional tradition.
As we plan for the future we should not forget that the accountability movement is alive and well and that we will be expected to justify how we spend the resources we get from government sources and from students and their families. These pressures, as well as financial realities, will make us look at what we are doing and how much it costs. At times this may challenge institutional values, traditions, and cultures. For example, a small liberal arts college may have been known for decades for its performing arts program, but when its costs are examined (faculty, staff, space, and equipment versus enrollment income) it is found it must be heavily subsidized by other campus programs. Such programs will ultimately come under close scrutiny, unless supported by philanthropic dollars, as the budgetary noose tightens. These programs may be saved through alumni donations and vocal/political support. At public institutions, preserving entities that are drains on budgets may be less tolerated.
A final point is how unit budgets are set at many colleges and universities. In many examples the present budgets are the result of allocations that were established at an undefined point in the past. Over time they have been incremented by an amount not too different from the campus average. In difficult times they are reduced by some percentage not too different from that of most other campus units. The basis for the budgets may be unknown (black box) but any major tinkering (except on the positive side) is fiercely resisted. The situation is quite different for those institutions that use responsibility-centered management (RCM) as a budgeting tool. Here the sources of unit (usually school-level) income can be easily identified, and expenses, including those paid to campus for services (utilities, police, registrar, administration, etc.), are available for public scrutiny.
Operating in times of fiscal restriction and perhaps with black-box budgeting, how can one influence institutions to make the tough decisions to reallocate resources to promote the overall good health of the institution and meet constituent expectations? The answer is with hard data that are based on sound fiscal principles founded on past performance and present conditions, sound projections for the future, and the track record of other similar initiatives elsewhere. Another critical ingredient is a reasonably accurate fiscal accounting of what it will cost and what it will generate. Here the principles of RCM can be applied, even in cases where this budgeting model is not practiced.
The individual in the best position to promote innovation and demonstrate opportunity within existing programs is the department chair. How does the lowest level of the administrative structure get the attention of the top-level decision makers such that the resources to launch or expand are made available? One approach is to make the case with an excellent idea or with a program that has had and promises to continue to have a strong upward trajectory. In either case there would have to be accompanying data that support the longevity of the initiative and data that indicate it is at least self-supporting. Hard data are difficult to ignore or refute and administrators should be alert to identify and explore any reasonable proposal that would generate additional income and raise institutional visibility regardless of the budget woes of the day.
If the request is for a new program or for expanding a small but successful program, the chair should assemble data and other information that address several aspects related to fiscal issues. For example, if the new program can be run in part from existing coursework then that can be an in-kind contribution. The case for expanding a program that is in operation may be easier to make because of its known history. In both instances if there are elements that require new resources, say two faculty lines, then they should be listed with estimated total costs of the hires including salary, fringe, and start-up, if appropriate. To balance this, the chair can assemble existing data on student demand that include information requests and inquiries, students taking coursework in the absence of the entire program, waitlists, and projected demand for graduates with the expertise and background to be conferred by the program. If a similar program exists elsewhere and is successful then the conditions of that environment may be similar, inspiring confidence that it is likely to work locally. In the end an estimate of new students attending/served by the program should be forthcoming. Finally, and this may be a challenging component, the chair must be able to assess the new revenue that would accrue per admitted student. With RCM and an open budget this is a simple task. At private institutions where full-time enrollment may be twelve to seventeen credits at a fixed price and where endowment contributions and tuition buy-downs are unknowns, the calculations become less precise. For example, if it is an undergraduate degree program the major may constitute 25 to 33 percent of the enrollment and therefore an equal percentage of the tuition generated. The remainder would go to other units, thereby improving the overall fiscal health of the campus provided the students brought in are new and not just internally recycled to the new program. Innovative graduate programs are likely to see all of the hours go to the home unit without fear of stealing students from others.
Another example might be an innovation that promises to enhance student retention (defined as the percentage of full-time beginners who return for the second fall term) where the retention rate is a low 70 percent. If the class size is two thousand students that means that six hundred students do not return for their sophomore year. If the program proposed can increase the number of returning students by just twenty, the institution could recover as many as sixty years at full tuition. Let's assume there may be some loss at later stages, even though the first-to second-year period is the most critical, such that forty-eight tuition years are recovered. Assuming a public tuition rate of $8,000 per year, that would generate $384,000 in new revenue assuming no tuition increases. The yield on the private side would be larger. This is with just a very modest swing of twenty additional students being successful. There are many proven strategies to improve retention, and some, like first-year seminars or learning communities and disciplinary-based, on-campus work programs combining the resources of federal work-study and institutional dollars, can be launched with a mix of existing personnel and new staff or nontenure-track hires plus some adjunct costs in the first example and dollars for hourly positions in the latter. At full implementation when there are sixteen to twenty rescued sophomores, juniors, and seniors in the pipeline the investment annual yield provides a regular flow of dollars that would not otherwise be present. Many of the retention strategies available, including the two examples cited here, generally produce a better rate than the twenty out of six hundred if most students participate. In addition, such programs may be eligible for ex- ternal grant support.
Beyond the positive balance sheet of the proposal there may be other benefits that would be included. There is the institutional visibility that comes with innovative new programs that attract a new student population or make high-demand programs available to additional students. The improved retention not only raises the ranking of the institution but also sends a message to students and their families that the college is committed to helping beginning students succeed. This can also translate into increased attendance.
In summary, higher education institutions cannot afford to just wait out the recession. It is also unlikely that full budgets will be restored at this time so the mindset must be one of how we can reduce costs permanently and how we can enhance revenue streams now. While some may regret or even reject the emphasis on dollars, the reality is that the things we must do must at least pay for themselves and, better yet, must generate excess income that sustains other units on campus. The things we value and everything we do and use have costs- people, space, equipment, lights, heat, student organizations, tutors-thus mandating that new initiatives be closely vetted for their potential to at least cover their costs.