Economics professor comments on College’s financial situation

Sanjay Paul February 18, 2015 0

Homer ordered the daily special at the Jay’s Nest. As he pulled out his ID card to pay for it, the cashier reminded him the price included a drink — did he want to pick one up?

No, he said, this was his gift to the College.

They shared a laugh at the absurdity of it. How much did the college stand to gain by Homer’s gesture?

Many such gestures, vastly larger in scope, are needed to meet the projected shortfall of $2.7 million in the College’s revenues. Early in October, the Personnel Council, a faculty committee that deals with compensation issues, was told that salary increases in 2015-16 were likely to be in the 1 to 1.5 percent range. By January, however, the news had become much grimmer. No increases were on the anvil, we were told. The College’s finances had taken a turn for the worse.

The president delivered the bad news at a faculty meeting. Silence hung over the room, but then a question. Would scones be taken off the menu at the Blue Bean?

The president was non-committal: all options were on the table. “We will take a close look at all our operations over the next several weeks,” he said. “In April, we will make our recommendations to the Board. It’s too early to say, Homer, whether scones will survive the budget cuts.”

He went on to add that he personally preferred the scones without icing, but Homer knew that the situation was dire. Even the president’s predilections might not be enough to save the scones from an untimely demise.

News that the College was seeking to shore up its finances served to galvanize the faculty. Some immediately called upon the upper echelon of administrators, starting with the president, to cut their salaries. This is a hardy perennial: in Homer’s tenure at the college, he has heard this proposal mooted at the first sign of financial distress, sometimes even in the absence of such signs.

Others suggested that salaries of all employees should be reduced, perhaps using some sort of sliding scale in order to cushion the blow for the least well-off. Yet others mentioned that retirement and health benefits might be on the chopping block. As for any new hiring, it would be done only under exceptional circumstances. Academic departments could be reorganized to generate cost savings.

All well and good, thought Homer. But couldn’t the Trustees play a role as well in helping the college navigate the choppy waters?

Since Jan. 1, 2009, the S&P 500 has risen more than 125 percent, a steep ascent that has led many portfolios to more than double, increasing the wealth of affluent households quite substantially.

If the Trustees were to make a significant financial commitment to the college in these straitened times, the sacrifices being asked of the faculty, staff and administrators would be seen for what they are: a genuine, multifaceted, shared effort to right the financial ship, place the institution on a firmer footing and continue offering a premier liberal arts education to our students.

And perhaps, just perhaps, the scones in Blue Bean would be spared.

 

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