This whole argument over the cost of DEI at UVa. is a tempest in a teapot in budget terms. Even if one accepts the inflated figure of $20 million put forth by Open the Books, that is less than one percent of UVa.’s adopted budget of $2.40 billion for the academic division for the next academic year. At the Department of Planning and Budget (DPB), we would call that a “rounding error.”
The university administration would likely be delighted for the Board of Visitors to spend a lot of time arguing about that one percent—what is the definition of a DEI employee, what proportion of salary should be included, etc. There would be that much less time for the members to spend on trying to get a grasp of the bigger picture—the $2.4 billion and how that is spent.
The budget information that is provided on the Board of Visitors’ website provides about a 10,000-foot perspective. I assume, and hope, that more detail was provided to the members in their briefing books before the meeting. Of course, those budget briefing books would be several inches thick and cause all but the biggest budget nerd’s eyes to glaze over just seeing them. Also, one must remember that the members are all accomplished people in their own fields and have only so much time to pore over detailed university budget spreadsheets.
I am surprised by this item reported by Jim Bacon, “But, when asked, no one could readily provide a breakdown of that headcount by faculty or staff.” That is unacceptable. Staff could well have anticipated that question and had the answer ready. If the finance people really do not know the answer, that is a scary thought. It means that no one is in control.
Here is the breakdown of the “sources and uses” of the money for the academic division as set out in the document on the website:
One conclusion stands out from the table on sources of income. The UVa administration is correct in its laments over state appropriations. State general fund money makes up only 11.7 percent of all the revenue that the university will collect in the upcoming academic year for the academic division. More data than are available at this point would be needed to answer the key question: of the average cost of tuition and fees for an in-state undergraduate student, how much of that is covered by that student’s tuition payment and how much by state appropriations? (Money paid by students for housing is used to cover debt service on residential buildings and money for food goes into a special fund. It is not clear if those revenues and expenditures are included in these numbers.)
Turning to expenditures, everyone’s interest, one would need to do some winnowing before beginning an analysis. How much of that $1.6 billion for faculty and staff would be covered by revenue from research, endowments, or gifts? The remainder would be that which should occupy the board’s attention.
Most readers of this blog, including me, seem to think that higher ed’s administrative ranks are bloated, replete with assistant deans, associate deans, assistants to the dean, etc. Scrutiny should start there. However, experience has shown with state agencies in general, and higher ed is probably not much of an exception, a surprisingly small percentage of savings can be achieved by cuts in administration.
That will take board members to the faculty. Scores of questions need to be asked here. How much of that cost is for graduate programs? Should tenure-track faculty be required to take heavier course loads? Could/should some degree programs be consolidated? Does UVa. need both a Business School and the McIntire School of Commerce? And on and on.
Then there is that almost $1 billion in non-personnel expenditures. What does that cover? Are there any areas that could be reduced? Is inflation included in this part of the budget? (When I was at DPB, with some exceptions, agencies were not provided additional appropriations to account for inflation. They just had to suck it up.)
In the face of what needs to be done to really tackle the UVa budget, it is not surprising that many board members want to concentrate on DEI and its cost of between $7.5 million and $20 million, depending on who is counting. That is a much easier task.
There is another method by which the board could make the university’s budget leaner and more efficient without having to dig into the innards of the school’s budget, an impossible task for a part-time board, many of whom have no experience with higher ed finance. When state revenues were experiencing shortfalls from about FY 2009 through FY 2016 or so, agencies were forced to undergo multiple reductions in their budgets, sometimes as much as five percent. Higher ed was also hit with these reductions in state appropriations, but they could and did recover those reductions by increasing tuition. Consequently, most institutions of higher ed experienced relatively little fiscal pain during those years. (That practice of increasing tuition to make up for reductions in state appropriations accounts for the discrepancy between the percentage of revenue obtained from tuition and from state appropriations.) The Board of Visitors could direct the administration next fall to produce a budget for the 2025-2026 academic year in which each unit of the academic division would receive five percent less funding, excluding funds from research grants, endowments, and gifts and money provided by the state for salary increases. Faced with the prospect of a funding cut, it is surprising how managers can find ways to save money.