The humble calculator has emerged as a powerful weapon for faculty members battling administrators over spending.
When university leaders say they need to hold down instructional spending because of a budget crunch, the American Association of University Professors often seeks to debunk their claims by crunching numbers.
Nearly always, the AAUP’s financial analyses produce figures showing that the university in question remains in solid shape and has much more money to pay the faculty than its administration lets on. The analysts argue that the university’s real problems are skewed spending priorities, with too much money going to support administrative bloat and athletics programs.
In recent months, for example, the analysts have accused the administrations of San Jose State University and the University of New Hampshire of exaggerating the financial pressures on their institutions in entering contract talks. Both concluded that “any claims of financial hardship are not supported by the evidence.”
In general, universities “just are not spending enough on the core academic mission,” says Howard J. Bunsis, an accounting professor at Eastern Michigan University who conducts many of the analyses as chairman of the AAUP Collective Bargaining Congress.
He and Rudy H. Fichtenbaum, a professor of economics at Wright State University and the AAUP’s president, together conduct about a dozen of the analyses each year at the request of campus AAUP officials.
Although most university administrations do not respond to the analyses at all, some dispute them, especially when the association’s findings attract media attention.
The universities’ rebuttals usually argue that the analyses are based on too little information and fail to take into account factors, like projected increases in benefit costs or long-term declines in state support, that will squeeze institutional budgets down the road.
“I don’t think we put a whole lot of weight in them,” says Michael Uhlenkamp, a spokesman for the chancellor of the California State University system, where several institutions have been the subjects of such analyses in recent years.
Some national experts on higher-education finance, however, praise the group’s analyses as based on solid research and as making a valuable contribution to public understanding of college budgets.
Among those who think such analyses at least raise good questions is Rick Staisloff, a former college chief financial officer and Maryland state higher-education-policy analyst who now heads his own consulting firm, RPK Group.
“Higher-education finance has been in a black box,” he says. “There is a great deal of suspicion around spending in higher education,” and “we are not as transparent as we can be and should be.”
To the extent that the AAUP analyses help people understand college spending, he says, “it helps lead us forward.”
To the extent that the AAUP analyses help people understand college spending, he says, “it helps lead us forward.”
Big-Picture Concerns
Many of the AAUP chapters that ask the association’s national office to perform the budget analyses are either preparing to negotiate a new contract or opposing a university administration’s efforts to shed instructors to save costs. Although university administrators do not acknowledge being swayed by the AAUP’s findings, leaders of campus chapters say being able to cite the analyses gives them a much stronger hand in arguments with administrators over money.
Campus AAUP officials have trouble performing such analyses themselves, Mr. Fichtenbaum says, because their efforts to obtain financial records from their institution’s administration either yield next to nothing or result in them getting “buried in minutiae” contained in thousands of documents.
Mr. Fichtenbaum and Mr. Bunsis have developed a system that allows them to examine a university’s finances and present their results in less than week. They rely heavily on information from universities’ offices of institutional research and audited financial statements, but they also look to other data sources.
For public universities, those include state payroll records, unemployment numbers, tax-revenue projections, and legislative analyses. For private colleges, they include forms that nonprofit organizations must file with the Internal Revenue Service. For both, they include data collected by the Education Department, the AAUP’s own annual faculty-salary survey, and reports from bond raters such as Moody’s Investors Service and Standard & Poor’s.
“Bond ratings are critical to what we do,” Mr. Bunsis says, “because bond ratings often justify the conclusion that the institution is in strong financial condition.”
Different Perspectives
The AAUP’s analysts operate on different assumptions than university administrators. They do not, for example, accept at face value public-college leaders’ assertions that their institution lacks enough state tax support to cover a given expense. Such claims, they say, ignore states’ capacity to shift allocations and find new tax-revenue sources, wrongly blaming a lack of resources for a problem actually caused by a lack of political will.
They dismiss administrators’ preoccupation with keeping budgets balanced by arguing that budgets are merely planning documents, and their focus should instead be on whether spending decisions reflect the right priorities. Often, they will argue that a university is keeping much more money than it needs in reserve.
“Some are better than others, but I don’t think that I have ever seen a school that is spending as much on instruction as they should be spending,” says Mr. Fichtenbaum, who has been performing the analyses for the AAUP since 1999.
A common source of contention is how to treat university funds that external auditors have categorized as “unrestricted reserves,” left over and not formally committed to some specific future need. The association’s analysts treat funds with that designation as potentially available for instructional costs. Administrators often counter, however, that a large share of that money is being stored away for future needs—usually one-time expenditures like laboratory renovations or the start-up costs of new research programs.
“Very few people in my world will pledge reserves to cover salary increases in future years,’ says John R. Curry, who was a financial officer at several research universities before joining the Huron Consulting Group as a managing director.
“In thinking about commitments going forward over time,” Mr. Curry says, “you have to take into account the volatility of revenue sources.”
Among the institutions that have disputed the association’s findings is Portland State University. The AAUP accused the university, in a report issued in January, of spending excessively on athletics and giving administrators huge salary increases over a period in which faculty pay remained relatively flat. The administration, which was in the midst of contract negotiations with the campus’s AAUP chapter, issued a point-by-point rebuttal dismissing the association’s analysis of its finances as being filled with inaccuracies, overly simplistic, and failing to account for attempts to trim administrative costs. The local AAUP chapter then rebutted the administration’s rebuttal.
The back-and-forth was mainly for public consumption and ended up having little bearing at the bargaining table. The two sides reached agreement on a new contract for tenure-track faculty members in April, just days before the union planned to call a strike.
‘A Frank and Honest Discussion’
The national AAUP office lets its campus affiliates decide whether to publicize its financial analyses of their institutions. At the same time, it encourages them to share the analyses with faculty members, students, and the media, and makes Mr. Bunsis and Mr. Fichtenbaum available to discuss their findings.
Sometimes the analyses make a splash. Such was the case with an analysis done at the University of Illinois at Urbana-Champaign two years ago. It documented both a marked decline in the university’s hiring of new assistant professors and a spike in the average number of students taught by each instructor. Soon after, the campus announced plans to hire 500 full-time, tenure-track faculty members over the next five to seven years.
Before that analysis, Mr. Bunsis says, faculty members were unaware of the extent of a recession-driven reduction in faculty. “When you are at a place that large,” he says, “you don’t always know what is going on in other departments.”
Deanna Wood, a University of New Hampshire librarian who is president of the institution’s AAUP-affiliated faculty union, says her collective-bargaining unit has been greatly helped in the past by having a broad understanding of her institution’s financial condition.
“It is important,” she says, “for us to be able to go into bargaining and have a frank and honest discussion about just how much money is there.”
Mr. Staisloff, of RPK Group, says much of what is contained in the analyses represents “an attempt to move beyond just a budget lens to a more holistic look at finance and resources.”
Historically, he says, higher education has been a subsidized industry, and discussions of its financing have focused on how much money universities had to spend. Now “universities are being asked to pay closer attention to that investment and to connect that investment with student success.”
Clarification (7/25/2014, 3:20 p.m.): The article has been changed to more specifically reflect Rick Staisloff’s position on AAUP budget analyses.
