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Getting Real on Budgets

Getting Real on Budgets
 

I know I’ve written about budget issues before (they have to be a preoccupation in my job, so I don’t feel abashed about inflicting periodically on others). Besides, it’s the season — the governor will announce his budget on Dec. 19. I know there’s sincere interest in “doing something” for higher education, so we will listen carefully.  It’s an interesting commentary on our disarray that we seem to pay at least as much attention to state issues as we ever did, despite the dwindling funding available.

And this, of course, is the first point. It has been clear for a decade that state contributions to public universities are dwindling, and given the competition for state dollars (quite apart from the current economic crisis, which merely exacerbates and highlights the dilemma) no one really expects a reversal. State contributions in most places now range from 5-25% of total operating budgets, in contrast to the 60-70% of the late 1990s and before.

Most public institutions have survived by raising tuitions, an act routinely misinterpreted (sometimes naively, often manipulatively) as a cost increase as opposed to a transfer of support sources. But regardless of the misinterpretations, we all know that we’ve pushed the tuition solutions about as far as they will go.

All of this is currently exacerbated by the slump-induced hesitations in private philanthropy, which we hope will prove temporary, and by fears about the changes in the federal funding climate for research. It’s not a pretty picture.

So while continuing to monitor tuition, philanthropy, and research carefully, we in the university world look for additional options.

Economizing is one, particularly since there is a deep assumption in some political quarters that universities harbor hosts of inefficiencies. We recently commissioned an “efficiency” study that did indeed reveal a few opportunities for reconsideration worth possibly half a million next year (frankly a drop in the bucket) while also highlighting that, compared to our state-agreed peer institutions, we currently spend 72 cents on our peers’ dollar. Quite probably we’re actually under-investing, not the reverse. So, no great joy in this category without serious harm to educational service, at least for Mason.

“Other business opportunities” drew a flurry of well-meaning (and time-consuming) attention over the past two years. Lots of ideas were debated, but most proved irrelevant or even contrary to our mission (a drive-in movie theater was one example) and/or productive of very little revenue. We’ve had a high-powered committee looking at our real estate assets, and while this may be a vital category at some point (again, current economic conditions constrain) it’s fair to say that dramatic new sources have not yet emerged. It is true that auxiliary enterprises from vending machines to the Patriot Center to housing do now contribute some to the operating bottom line, and the category may warrant further attention.

But in my view the two most promising sources of a modified revenue base sit quite close to the University’s academic sector. I claim no great originality here – lots of universities are onto these options – but rather a need to focus on the obvious, lest the pursuit of less realistic options distract us from our most obvious backyard.

First, of course, is the commercialization of intellectual property. Under our Research arm, we’re actively converting to a greater focus on these opportunities, as opposed to a more generalized patent approach, and I think there’s hope here for the future — though probably not right away.

Second is a more strategic approach to out-of-state recruitment, with the understanding that the results bring desirable diversity (valuable for in-state students) as well as a desirable tuition level that more than covers expenses. We’ve been working on this at Mason for some time, with both domestic and international targets in mind and again for several reasons beyond the fiscal. The results are already important:  over the past decade we’ve added 2600 out of state students, more than doubling numbers in this category as our overall enrollment increased by about 50%.  The result, even allowing for some expenditures in discounting and financial aid, is a well-over 20 million addition to our annual bottom line (compared to what would have resulted merely from comparable in-state growth), in turn the largest single source of new funds we’ve garnered over the same time period.

Now  it’s time to zero in on this category more clearly, recognize its fundamental importance to our financial future, and think even more strategically about the investments and commitments needed to produce even better results. Oddly, I don’t think either the University community or our overseers have quite registered on the priority here, partly perhaps because the lures of other commercial options posed a brief distraction.

The point is this: We have a deep problem; we’ve grappled with it partially, but amid the cushion of a tuition margin that is probably not long for this world.  We have some solutions available, but they need more explicit recognition and nurturing. We can and should be changing the specifics of our recurrent debate.