CA judge says NO to furloughs!

Less than a week ahead of a National Day of Action to Defend Public Higher Education, called first by state university workers in California (and organized here at UIUC and UIC by a coalition of campus unions and student groups), a judge orders an end to furloughs — and back pay — for thousands of union employees in California!

Read more right here.

To help spread the word on facebook about March 4 here at UIUC, click here.

Universitas

by Megan McLaughlin, CFA Pres.,
[delivered at Feb. 15, 2010, Teach-In/ Common Action Day]

Universities originated in medieval Europe—as guilds (something like a union) of scholars, who banded together for self-protection and self-regulation. The word “university” comes from the Latin word universitas—which means something like ”the whole,” or, more concretely, “all of us.” I hope you will excuse this little excursion into my area of expertise, medieval history. The point I am trying to make is simply that universities have always been groups of people with a shared love for knowledge and teaching, working together to promote those goals. A university is, by definition, a unifying force, bringing together those with shared values. The real tragedy of the current situation is not the fact that “all of us” need to tighten our belts, but the ways in which it is dividing us from one another. Whatever else this Common Furlough Day and the three others that are scheduled for later this spring do, I hope that they can remind us of our underlying commonalities and our desperate need to work together to save the university and public higher education in Illinois.

Having called for unity, I am now going to say a number of things that will sound pretty divisive. My excuse is this: most of us are already thinking these things. So the time has come to say them out loud and take action to correct them, so that we can restore our common purpose. I would like to preface my criticisms by saying that they are NOT intended as a personal attack on either President Ikenberry or Chancellor Easter—both honest and honorable men. The two of them have inherited a mess not of their making. But if that mess is largely the fault of the State legislature, it has certainly been made much worse by the actions of the university administration over the past ten years. So now it is up to Ikenberry and Easter to correct their mistakes and help us get the university back on course.

One of the buzz-phrases of the administration’s response to all financial problems over the last few years has been “shared sacrifice.” When the furlough policy was announced, President Ikenberry emphasized that he and other highly-paid administrators were taking ten days of furlough, while the rest of us were only taking four. I applaud that action—I really do. But does anyone here believe that sacrifice is ACTUALLY being shared? Budget cuts are clearly hurting some folks much more than others. The ones suffering the most are our students whose tuition goes up and up and up—apparently without end–and the hourly workers on campus, some of whom have been laid off, while many others have had their hours, and thus their wages cut. Faculty members and academic professionals have seen salaries that don’t keep pace with inflation, and now actual pay cuts (the term “furlough” is, of course, just a euphemism for “pay cut”), but we’re not really hurting—at least not yet. But what about the administration? Are they making their share of the sacrifice?

The answer is: it’s hard to tell, because we don’t have budget transparency at this university. We desperately need information about the budget that we can trust, and we just don’t have it. Worse, years of secrecy about university budgets have eroded any trust we may once have had in administrators. Yet in the current crisis, we are apparently expected to rely on those same administrators to bring us out of this situation with both our finances and our values intact. How can we do that when the administration’s track record is so dubious? These are the folks, you will remember, who gave us the Banner system and Global Campus.

Given that history, I decided last week to do a little preliminary reconnaissance in the budgetary jungle, looking, in particular, at administrative costs as they’ve changed over the past ten years, between budget year 2000 and 2009. This is a very complex subject, and I am about as far as one can get from being an expert in this area, but I would like to share some preliminary results with you. Let’s start with administrative salaries. It turns out that our Chancellor’s salary rose nearly 70% during the period in question. That of the Vice President for Technology and Economic Development (on whom more later) rose about 38%. This in a period when salaries for graduate employees, academic professionals and permanent faculty, for contingent faculty and hourly workers, were stagnating.

But there’s much more to the story than that. Not only are administrative salaries growing rapidly, but the number of administrators is multiplying. The Office of the Chancellor had ten administrators associated with it in 2000; by September, 2009—when service workers were already being laid off—there were nineteen, and the total amount of salary money designated for administrators in the Chancellor’s office had tripled. Things were even more exciting in the office of the Vice President for Technology and Economic Development. It was a new office in 2000, with only two administrators associated with it; by 2009, there were 37. Spending on salaries in the Office of the Vice President for Technology and Economic development increased ELEVEN-FOLD between 2000 and 2009. Just a month after furlough language first appeared in our contracts, the Board of Trustees approved paying out over $4,000,000 in total salaries to that office—in other words more than one fifth of what the university originally claimed it expected to recoup from its furlough policy (their numbers have since changed). Now frankly, I just don’t see the “shared sacrifice” in these figures. Of course, I’m only a medieval historian, and not an accountant, and I don’t know much about the finances of higher education. Perhaps cutting back on administrators and their salaries wouldn’t really help very much in our current crisis. One thing I am pretty sure about, however, is that INCREASING administrative spending, especially at this rate, is not going to do the trick.

That’s why the Campus Faculty Association is forming a new “Faculty Watchdog Group on Administrative Costs.” The Executive Committee of the CFA is overstretched at the moment, and none of us is a financial expert—so please, if you do have any expertise in these areas, considering helping us with this important endeavor.

Let me now turn briefly to the subject of “shared governance,” in particular as it relates to an issue I am calling “mission creep.” Long, long ago—back before 1999—the mission of the University of Illinois was threefold: teaching, research, and service. That’s what faculty were hired for; that’s the basis upon which they were given raises and awarded tenure. But in 1999 rumblings began to be heard in certain quarters of the administration about a “fourth mission”—economic development. At first, apparently, this was seen as just one form of service, fitting into the traditional threefold mission model. Gradually, though, it took on a life of its own—as witness the creation of the Office of the Vice President for Technology and Economic Development. So far as I can tell, the faculty were never consulted about the addition of a new, fourth mission—it just occurred. And of course, if they were never consulted, they could play no role in defining “economic development.” Does it, for example, mean “development from the bottom up”—programs for empowering the poor to get ahead economically? Does it mean support for small businesses, the ones that produce most of the jobs? Don’t be silly. For the administration, “economic development” means providing resources for corporations—preferably big corporations of the type that you find at the Research Park, or high-tech start-up companies that will take technologies developed at the U of I and make them profitable.

Well, it would have been nice to be consulted about whether we wanted our university to take on supporting corporations as a new mission. But it would have been even nicer to be consulted about the next step, which involves re-allocating scarce resources, in a cash-strapped university, away from programs that don’t serve this bogus fourth mission. Allow me to quote from the budget request currently before the state legislature. The Budgetbook submitted in November, 2009, repeatedly lists four missions for the university, the fourth being “economic development. It then states: “The University of Illinois must [add] capacity in the areas of highest enrollment demand and those of greatest economic development promise. It is essential that additional reallocation accompany these incremental advances . . .” In short, more money will be provided not only to programs with high enrollments (fair enough, perhaps), but also those of “greatest economic development promise.” And that money will be taken from other programs, which presumably offer less economic development promise.

Now this is not entirely new. For as long as I’ve been at the U of I, professors in some fields have been paid more than professors in others. But it was never an explicitly and publicly stated policy; and it never threatened our research and teaching, it never threatened our STUDENTS the way it now does. Under this new policy, if you’re a student in engineering or business administration, you’ll have to pay a higher differential tuition, but you’ll get relatively small classes, more teaching assistants, the latest in classroom technologies, state of the art laboratories, and extensive career counseling services. On the other hand, if you’re a student in social work or special education, in history or English or mathematics, in theater or ethnomusicology, you’ll have more trouble getting advice about requirements because your department only has one advisor for hundreds of majors; you’ll have trouble getting the class you need to graduate because a professor has retired and hasn’t been replaced; you won’t be able to finish your term paper because the library is closed during the only times when you’re not working two jobs to pay for college; and you’ll have to get your letter of recommendation from a professor who only knows you as part of a class of 150.

This is not in the future—it’s already happening, right now. But that doesn’t make it acceptable. A university is—by definition—all of us. We can’t allow a small number of misguided administrators to distinguish the worthy few from the unworthy majority. For make no mistake about it, most of the faculty on this campus will fall into the unworthy category, the category of those who don’t have much “economic development promise,” those who “merely” educate our students to be informed, engaged citizens and productive members of society. It’s time for our colleagues in the senate to take a stand against “mission creep.” It’s time for the rest of the faculty to support them by writing to the administration and the board of trustees about this pernicious policy. It’s time for students to reassert their right to a world-class, affordable education. And when April 21 rolls around, it will be time for all of us to get on the bus to Springfield, to insist that the legislature properly fund OUR University.

American Universities as Hedge Funds?

We’d also like to direct your attention to the following story at Huffington Post by Bob Samuels: How America’s Universities Became Hedge Funds. A few notable quotes:

When journalists asked the UC president, Mark Yudof, how the university could lend millions of dollars to the state, while the school was raising student fees (tuition), furloughing employees, canceling classes, and laying off teachers, Yudof responded that when the university lends money to the state, it turns a profit, but when it spends money on salaries for teachers, the money is lost….

To understand how both public and private research universities have gotten themselves into this mess, one needs to understand five inter-related factors: the state de-funding of public education, the emphasis on research over instruction, the move to high-risk investments, the development of a free market academic labor system, and the marketing of college admissions. These different forces have combined to turn universities into corporations centered on pleasing bond raters in order to get lower interest rates so that they can borrow more money to fund their unending expansion and escalating expenses.

Do go read the whole thing. David Swenson and others are implicated in this move, and many major universities, including the UC system, Harvard and Yale, are all doing the same stuff.

And as someone who is an alum of both Harvard and Yale, and a former organizer for Yale unions, I want to say the union movement at Yale was critical of Swenson’s tactics from the beginning. From a Yale Alumni Magazine story in 2005:

Perhaps because Swensen prides himself on his integrity, he bristles when critics come after him. Student activists have accused Yale of investing in oil and timber operations that are environmentally irresponsible. Others, including a U.S. senator, blamed Yale for backing a hedge fund that planned to pump, export, and sell water in the San Luis Valley of Colorado. Yale’s unions, in particular, have targeted the university, saying it is needlessly secretive about its investments. “They’re doing a fabulous job of making money, but what are the social and environmental costs?” asks Ben Begleiter ’04PhD, who works for the group that is trying to organize a graduate students’ union. Two years ago during a union strike, eight retired employees seeking higher pension benefits occupied Swensen’s office overnight. They refused to believe him when he tried to explain that he had no sway over their pensions.

Farallon is the hedge fund many universities use, and it is important to consider not only our own personal costs — loss of raises, furloughs — that have come from higher ed financial mismanagement, but the social costs. This is a report from 2005 sponsored by the Yale Unions showing Farallon’s support of Corrections Corporation of America, the largest private prison company in the country. It details Farallon’s relationship to CCA, but also the human rights abuses that occur within the CCA’s prisons.

The BUNSIS report

If you would like to read the in-depth report on the overall health of the University of Illinois system, there is now a link to the pdf for you to read.

This study was commissioned by the UIC United Faculty Organizing Committee, the American Association of University Professors (AAUP), the American Federation of Teachers (AFT) and the Illinois Federation of Teachers (IFT). It has somewhat more detail about UIC finances because it was commissioned on our Chicago campus. The study was prepared by the AAUP’s national treasurer, an elected office held by Howard Bunsis of Eastern Michigan University. Dr. Bunsis has a law degree and a PhD in accounting. He specializes in analyzing university finances.

latest from AAUP

from Cary Nelson, AAUP President (and longtime CFA member) and Howard Bunsis, AAUP Treasurer

The State does have a fiscal problem, and it has been solving the problem in the short term by delaying payments to vendors, and now the State is delaying the appropriation for higher education.

Moody’s downgraded the State of Illinois debt in December of 2009. Fitch, another ratings service, gave Illinois an A rating on 12/30/2009, and put the state on a watch list for a possible downgrade as well.

The reason for Illinois’s fiscal problem is that income tax receipts have been lower than expected. The size of the problem for the 2010 budget is $2 billion, which is approximately 7% of the State’s General Fund budget.

Looking further in the future, there has been talk of budget holes in the $12-$13 billion range. The current governor wants to raise the income tax rate on those earning more than $250,000 per year, and a democratic candidate for governor wants to implement a progressive income tax system (instead of the current flat tax system). Every Republican candidate for governor is against a tax increase.

What is the response to this?

1. What is the State likely to do? The State appropriation is only 16% of the total revenue source for the UI system. There may be a 6% reduction in the appropriation. The appropriation is only 16% of the UI system’s revenue, so in terms of total revenues, the 6% reduction will reduce overall UI revenues by less than 1%. This reduction is not large enough to lead to furloughs.
2. The UI administration, in its budget documents, at times implies that the State appropriation funds the entire academic mission at the UI, which overstates reality. Administrators often argue that “this” money can only be used for “this,” and “that” money can only be used for “that.” However, the reality is that the UI system is one system, not a General Fund only system or a State Appropriation only system. That is why an analysis must focus on the health of the entire system, and not some component of the system that the administration claims is out of money.
3. The State is not considering eliminating the entire appropriation; they are considering delaying payments to the UI system. These payments are going to be repaid at some point. Note that the rating agencies did not rate the State bankrupt or junk; they gave the State “A” ratings, which is the 3rd highest rating for both Moody’s and Fitch. If the rating agencies believed that the higher education appropriation would NEVER be paid back, then the rating would have been much lower (such as the Baa2 rating given to the State of California).
4. What about the current cash flow problem caused by the delay of payments? Michigan faced this exact situation about 18 months ago, when the State delayed 2 months of the annual higher education appropriation. In Michigan, like Illinois, the state funds between 15% and 30% of the public universities’ total revenues (note: this percentage is over 65% in California). Not one public institution in Michigan asked the employees to give back salary money, nor did the administrations at these schools give back their salaries. All that happened was that the universities used their existing cash reserves to deal with the short term problem, and then were made whole when the full payments were made about 6 months later (it was 6 months from the time a payment was delayed to when it was repaid in full by the State). Now, is Michigan in worse shape than Illinois? Absolutely.
5. What should the UI do in response to a short-term cash flow problem?
6. a. The first thing would be to use existing reserves. The Moody’s viability ratio measures how many months of reserves an institution has in relation to total expenditures. If we omit the UI Foundation (which is a very conservative approach), the UI system had approximately 12% or 2 months of reserves as of June 30, 2008. The standard recommendation is to have between 5% and 15% of reserves. Note that these reserves are 12% of total expenses. Therefore, a reduction in a few months of the state appropriation should easily be handled from current cash reserves, which are significant.

b. If the administration claims they have no cash reserves, they can borrow short term money to guide them through this period. Borrowing money is not a long term solution, but this is a short term cash flow problem. The UI system still has a very strong credit rating.

c. Any reduction in spending should not come from the employees, but from administrative costs and administrative spending.

d. The reserves of the UI Foundation should be used to help with any short term cash flow problem. The UI Foundation has over $1 billion in assets; any temporary shortfall can be borrowed from the Foundation, and then repaid when the State pays the appropriation. It is not advisable to use Foundation dollars, but since they will be repaid in a short time, it is a solution that is preferred to reducing the pay of current employees.

e. The last option, after the above three have been exhausted, would be to ask the UI system’s employees to accept a temporary reduction in pay. When the administration gets the appropriation back from the State, then the pay reduction should be paid back to the employees, with interest. Let’s be clear: the 6% decline in the annual appropriation may be a permanent reduction. However, this small reduction is not nearly large enough to support any furlough. Consider this: if the UI system is receiving a temporary decline in the appropriation, then any reduction in pay should be temporary and should be fully refunded.

Cut administration, corporate welfare first

Scorching new letter to the editor by CFA Executive Committee member:

Before we implement furloughs that will cause considerable hardship, we should reduce the costs of activities outside the research and teaching missions of the university.

We continue to increase administrative positions, for example, often at high salaries, even as cuts undermine these missions.

How can we implement furloughs fairly if it comes to that? First, acknowledge that these are substantial wage cuts following several years with tiny or no raises. We have fallen further and further behind. Now wages – along with travel, research, and other funds – are being reduced. Cuts in academic units continue to diminish the quality of undergraduate and graduate education.

Second, acknowledge the vast salary gaps between faculty and the proliferating number of highly paid administrators. The university’s plan to exempt workers earning less than $30,000 and assess a small number of top administrators a higher number of furlough days is a modest effort in this direction. If the number of impacted administrators were increased, it would be possible to exempt a greater number of the lowest paid.

This crisis draws our attention to some misplaced priorities and a conversation that is long overdue. We should reduce our bloated administration and the charity we practice toward private corporations in the research park. We cannot afford the costly corporate policies implemented over the past decade.

The human costs could be reduced if we invested our limited resources where they are needed most – in teaching and basic research, not huge administrative salaries and support for private corporations.

JIM BARRETT

Will we lose tuition waivers for our kids?

Unfortunately, this is a valid question for workers at the University of Illinois. The News-Gazette reports that legislation has been introduced to get rid of the fifty percent tuition waivers that Illinois employees can use for their children if they work here for seven years or more. They write:

State law allows employees who have worked for one of the Illinois’ public universities for seven or more years to receive a 50 percent waiver of their children’s tuition costs.

Employees would lose that benefit if legislation (HB 4706) introduced earlier this month by state Rep. Dave Winters, R-Rockford, is eventually signed into law.

“I think a lot of the universities have been using this as part of their compensation package,” said state Rep. Naomi Jakobsson, D-Urbana. “Taking away a part of their offer is not something I can support.”

Randy Kangas, director of the UI system’s office for planning and budgeting, said 942 of these tuition waivers were issued in fiscal 2009, totaling $3,981,600 of revenue the university never realized.

Most of those, 722 waivers, were issued for students at the Urbana-Champaign campus, erasing $3,254,800 that would have been added to the campus’ budget.

UI officials are saying they will need time to discuss the bill with state representatives before they develop any particular position.

Jakobsson and UI spokesman Tom Hardy said they had not spoken with Winters to determine his motive, and Winters did not return several calls from The News-Gazette to his offices on Friday. But Jakobsson said there might be a better way if it is a budget issue.

“If we stop giving legislative scholarships, it would add more than” the $4 million, Jakobsson said.

Every year, each of the state’s 177 legislators are permitted to issue up to eight years’ worth of full tuition waivers to students wishing to attend any of the state’s universities. The only prerequisite is that the student live in the legislator’s district.

The program has drawn scrutiny over the years – from The News-Gazette and other news organizations – after some legislators were found to have been giving the scholarships to children of political contributors. A bill introduced by Jakobsson to kill the program was defeated in 2003.

Eliminating the program “would be a better way to find $4 million,” Jakobsson said. She added that she opts not to dole out the tuition waivers.

A bit miffed, I tweeted:

University of Illinois officials want to take away employee benefit of tuition waivers for our children

And linked to the News-Gazette story. Janet Stemwedel, Associate Professor of Philosophy at San Jose State University and also known as the ever-clever Dr. Free-Ride of Adventures in Ethics and Science, picked up on the story and wrote a blog post herself:

Some universities (public ones and private ones) offer tuition waivers to family members of their employees. Where they are offered, tuition waivers are a part of the compensation package that is usually meant to be a counterweight to a salary that is lower than one might have liked. Health insurance and pensions (where they exist) work this way, too. If the benefit is not offered as part of the compensation package, the potential hire might (or should) sit down and calculate what those additional costs (to buy insurance, save for retirement, pay for a child’s college education) will be, and whether it is plausible to cover them on the salary being offered.

Tuition waivers may not be a big deal for potential employees who have no children (and have no intention of having children), but for those who do, they may be part of the calculation of whether one offer of employment is better or worse than another. They might also be a data point in sussing out whether a university is a family friendly work environment.(emphasis mine)

I think her point about the tuition waivers helping to create a family friendly environment is an important one. Illinois prides itself on creating a good environment for families — they have a great dual career program, are generous with their tenure rollbacks, and in my experience treat parents and non-parents, dual hires and regular hires equally. This is part of the reason getting rid of these waivers would be such a big mistake for Illinois.

And finally, Chad Orzel, Assistant Professor in the Department of Physics and Astronomy at Union College who writes at Uncertain Principles weighed in on the topic, because of a comment on Dr. Free-Ride’s post regarding whether waivers are fair to folks without kids:

It takes no time at all for the “Tuition benefits are unfair to people without kids” argument to pop up in comments. This is, as always, pretty stupid, because the same logic leads to thinking that health insurance benefits are unfair to people who don’t become catastrophically ill. Tuition benefits are basically kid insurance– it’s a commitment to employees of an educational institution to compensate for lower salary, guaranteeing that even though they are not being paid as much as they might earn elsewhere, should they have children, they will be able to provide those children with a good education.

And that’s the real problem, here. In a sense, the current employees of the University of Illinois have already “paid into” the system– they have worked for less for the last several years, and planned their investments, with the understanding that their children would be provided for. In the absence of the benefit, they might have chosen to work elsewhere, and they certainly would have handled their finances differently.

….

This general class of problem is not unique to academia, of course. You see the same thing in the business world– businesses who have traded generous benefits for lower salaries, who find themselves strapped for cash, and start attacking the benefits of their employees (or, worse yet, their retirees). This was a big part of GM’s problems, for example. Sadly, the solution always seems to end up screwing the employees, who have less money and power.

….

In the general case, I have essentially zero sympathy for managers and administrators who paint their institutions into this kind of corner. They made the choice to buy employees off with generous benefits that they didn’t think would end up costing them anything, and while it looked great on the balance sheet in the short term, it’s blown up in their faces long-term. They deserve to sweat and squirm for a bit, but they should not be able to renege on their commitment to their employees. (emphasis mine)

So, what do you think of the possible repeal of our tuition waivers for our children? What should we be doing about it?

Inmates dreaming of running the asylum

The News-Gazette outdoes itself in its December 10 editorial salvo against University of Illinois faculty presuming to inject themselves into their corporate-dominated Board of Trustees.

The editorial evokes a Churchill barb. It stumbled over the truth (faculty’s centrality to concepts of “shared governance” distinguishing universities from other institutions and propelling them to world leadership), but picked itself up and hurried on as if nothing had happened. Leave aside its apparent unawareness of faculty representation on trustee boards in other states. If the core mission of a university is teaching and research, a faculty presence on the Board of Trustees offers insight from those who actually perform those functions. Even when the editorial dismisses faculty as mere employees, it shortchanges evidence that the expertise of worker representatives on corporate boards (mandated in many OECD countries) can contribute to an efficient and cooperative corporate culture.

The News-Gazette is in good company. Ousted trustee David Dorris declared that “The last thing we need is a faculty member on the board.” The last thing? How about trustees who misuse their insider status or whose qualifications had more to do with their campaign contributions to Governor Blagojevich than their educational contributions? The citizens of Illinois, along with UIUC community members cast as asylum inmates by their local newspaper, have much to gain from Rep. Jakobsson’s and the Campus Faculty Association’s proposed reforms, and much to lose from taking seriously the News-Gazette’s superficial treatment of this issue.

– Mark Leff

[published in an edited version in today’s News-Gazette, i.e. without the clever “inmates” reference to the N-G’s own editorial of Dec. 10 – ed.]