Land-Grant Universities Consider Restructuring to Cope With Expected Shortfalls

November 12, 2009

More than two-thirds of the institutions that responded to a survey by the Association of Public and Land-Grant Universities are considering overhauling their administrative structure or academic programs to deal with long-term declines in state appropriations and pessimism about the future financial health of their institutions, the association reports.

Sixty of the 87 respondents to the survey said they experienced cuts to their state appropriations for the current 2010 fiscal year, reporting reductions ranging from 5 percent to 20 percent. The association polled the chief academic officers at its 188 member colleges during August and September. The survey responses were tallied from institutions in 41 states and the territory of Guam, most of those large research universities with more than 20,000 students.

While federal stimulus funds have prevented deep cost-cutting in the short term, that money will run out for some states as soon as the end of this fiscal year. That creates a climate of uncertainty among higher-education leaders, who are planning "extensive reviews" of how they spend their money on facilities, academic programs, athletics, and student-support programs, the association said.

The survey results indicate that "universities are striving to protect the core education mission of their institutions," Christine M. Keller, director of research policy and analysis at the land-grant association, said in a written statement accompanying the survey results.

More than half of respondents also said they were pessimistic about the short-term fiscal future, which is not surprising, given the economic recession's impact on state tax revenues. States closed budget gaps totaling more than $109-billion for the 2009 fiscal year, and initially faced shortfalls of nearly $163-billion for the current fiscal year, according to figures from the Center on Budget and Policy Priorities, an advocacy group in Washington that tracks state and federal budgets. Midyear budget cuts are now estimated at nearly $16-billion, the center reports, and early estimates for the 2011 fiscal year predict tax revenue falling $80-billion short of states' spending.

Effects on Hiring

As those budget shortfalls have cascaded down to higher education, public universities have cut costs largely by freezing hiring for vacant staff and adjunct faculty positions, deferring maintenance costs, and collapsing courses to create fewer, but larger course sections, according to the survey. Half of the institutions responding said they had laid off full-time staff members.

Laying off tenured or tenure-track faculty members was one of the least-common cost-cutting measures taken by responding institutions. Other uncommonly used approaches included redirecting restricted donations, eliminating athletics teams, laying off graduate assistants or student workers, and reducing scholarships.

To bolster their revenue, institutions have increased in-state tuition by a median amount of just over 7 percent, the survey found. The median increase for out-of-state students was close to 6 percent.

Institutions have also plugged their budget gaps with some of the nearly $40-billion in federal stimulus money meant to shore up public-school and higher-education appropriations for the current and coming fiscal cycles.

But many states are not expected to fully recover from the recession until the 2012 budget year, and that outlook is causing most institutions to consider longer-term measures to control costs. Fifty-eight of the survey's respondents said their institutions were reviewing administrative structures and business operations in order to "increase efficiencies and eliminate redundancies," the survey said.

But efficiencies in operations doesn't necessarily mean big cuts in full-time staff. Thirty-four respondents—fewer than half—said they are considering permanent changes to the number of professional staff members they employ.

Fifty-one said they will be considering changes to their academic programs, while 19 are planning to reduce the number of tenured or tenure-track faculty members.

David E. Shulenburger, vice president for academic affairs at the land-grant association, said the severity of the economic downturn caught institutions by surprise. Their plans for significant change will take time, he said, and might not provide any immediate savings because of contractual obligations to staff and faculty members, and because of the need to continue academic programs for currently enrolled students.

"If you cut out an academic program, you don't save any money for a year or two," he said.