In the ongoing saga of the presence or absence of a budget surplus (see this and this), EMU-AAUP’s Howard Bunsis offers this analysis of the financial condition at EMU in response to this “Q&A” (sorta) with Chief Financial Officer John Lumm. I know, that’s a lot of reading to assign right before finals week, so I’ll try to paraphrase:
Back in October, EMU-AAUP president Susan Moeller sent around an email about how Lumm had reported EMU is running a $5.8 million surplus. I wrote a post that might be summed up as “oh really? I don’t get that.” Moeller emailed me and I posted her response in November, which can probably be summed up “yeah really, we have a surplus,” and she sent me the Lumm spreadsheet that indicated that surplus.
A couple days ago, Lumm responded to questions asked by the Echo (though I have to say the questions seem kinda soft to me, which makes me wonder if he responded to all the questions from the Echo folks) where Lumm more or less back-peddles from all that surplus talk (he calls it a “forecast” and says “I’m not sure I’d characterize it as a surplus of money,” etc.), and he suggests a lot of doom and gloom for FY 2010-11, up to a 20% cut from the state.
Shortly after Lumm’s statements, Bunsis posted his analysis of why Lumm is wrong, and, to Howard’s credit, he cites his sources and makes a pretty compelling argument that most of what Lumm said is either debatable or flat-out wrong.
Now, I don’t much about the budgets on this scale, but I do know two things. First, of course the administration is claiming poverty and the faculty union is claiming there’s plenty of cash to go around! So while I think that the faculty union generally has better and more reliable numbers, but clearly these people are arriving at different conclusions on EMU’s finances based on perspective.
Second, no one has a clue what sort of budget cut there is going to be next year from the State. I think that Lumm is being pretty alarmist in suggesting it might be as high as 20%, and I think that Bunsis is being very optimistic to suggest that we’ll get about the same from the state in 2010 that we got in 2009. But again, that’s just a logical guess– no one knows, and that’s part of what makes some of this budget talk fuzzy and speculative at best.
But hey, at least the conversation is happening. That’s a heck of a lot more transparent than it’s been in past years.
Am I wrong? Didn’t John Lumm mention in his Q and A that the surplus is more of a projection of what might happen if things go well ?
I posted 2 months ago the shoe is going to drop on the budget in 2010 and got a lot of “wow” we have record enrollment and don’t worry. Again the administration has hired a lot of high priced administrators and coaches (R. English 250K) while saying things were financially looking good. Now they are finally seeing the mess the state budget is in and crying for everyone to take notice. We will be in crisis management by June so get ready. There will be work force reductions, further cuts to benefits, and the faculty contract negotiation should be interesting in the fall. The new administration message is all about setting expectations for 2010. The Ypsi mafia (Wilbanks and company) will start to play a larger role in dictating what will happen budget wise for next year and that is not a positive sign.
Well, what’s interesting about this to me is that just a few months ago, the word from Lumm and the EMU-AAUP was that there was a surplus. Again, this is all a projection and not on paper. But projecting a surplus is a heck of a lot better than projecting a loss. Furthermore, as the Bunsis argues pretty convincingly IMO, EMU has run a slight surplus for the last couple of years.
The Dec 11 issue of the CHRONICLE OF HIGHER EDUCATION has a map listing the state by state cuts in state appropriations for public higher education, from fiscal year 2008 to fiscal year 2010. The average cut is 6%, and the figure for Michigan is 9%.
Does anyone seriously think that such cuts will not continue in the land of shuttered auto plants? Michigan has a structural deficit problem far worse than most states, and our legislature is paralyzed by term limits from being able to tackle the problem. The cuts to higher ed in Michigan would have been much higher this year if not for the Obama stimulus money – which isn’t going to last forever. That means that the 9% cut over two years would have been higher without stimulus money, and there’s little prospect of increased state revenues in a year or two or three for the legislature to maintain spending at stimulus-supported levels for the last fiscal year. Public higher education appropriations from Lansing will almost certainly take heavy cuts in the next few years — as will K-12 education and virtually every category of spending. The fiscal crisis for Michigan government is huge, and of historic scale. That should be no surprise, given what’s happened to manufacturing in the state in the last decade. Look at what’s happening to school districts! The fiscal crisis is spreading, not narrowing, in Michigan.
I can’t predict what level of cuts in state funding we’ll face at EMU, but it’s far more likely to be worse rather than better in the next five years than it’s been in the last five. All the more reason, then, to engage in strategic budget making NOW rather than delaying the hard choices. EMU has NEVER engaged in strategic budget making, and it’s past time to start. This would require focusing resources on academics and student services. Doing so is the key to recruitment and retention of students, and thus key to the university’s fiscal future, as we are going to be increasingly dependent on student generated revenues as EMU gets less money from Lansing.
One big danger is that EMU will impose cuts that are penny-wise, pound-foolish: cuts to the academic core of the university rather than to areas that don’t draw and keep students here. That’s been the past practice here, and it was shameful then and would be worse than shameful now.
The January 4, 2010 issue of the NEW YORKER has a fine article by Tad Friend, “Protest Studies,” on the fiscal crisis facing the University of California and the resulting protests. The 2nd paragraph reports that in July the governor signed a budget cutting state appropriations to the UC system by $637 million, or 20%.
These cuts resulted of course in the well covered protests in the fall – which Friend covers well. California and Michigan are very different states, and their population is booming while ours is stagnant, but there is one critical similarity between the two states: in both, the political and business leadership classes have totally failed to deal with structural deficits, built in year and year and getting worse, due to political choices (that is, limiting the types of wealth and income in the states subject to taxation).
What’s the basis for thinking that Michigan is immune to such cuts to our own higher education institutions? Let’s hear the case from the optimists who may insist that Lansing will not seriously ever reduce the appropriation given to EMU.