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False Economies
May 11, 2008 - 10:12pm

A friend who works at a respected public research university just sent me a copy of an all-campus email he received in which the Business Services department reminds everyone that, due to budget constraints, nobody is allowed to use university money to buy bottled water. (The only allowable exceptions would be when either the tap water supply to a building or campus has been cut off altogether, or when it has been diagnosed as unsafe. Naturally, the memo goes on to detail the multiple reports the university files annually to attest to the safety of its water.)

It's one of those superficially-reasonable rules that falls apart as soon as you think about it.

Let's say that you're hosting a meeting of, say, sixty people. Bottled water is banned. Do you send everybody to the water fountain in the hallway? Do you write off thirst as 'their problem'? Or do you buy coffee and soda?

And if you substitute Diet Coke for bottled water, you've achieved ... what, exactly?

(A few years ago, after hosting a function for high school students, a colleague pointed out that the high school students drank the regular soda, and left the diet stuff. Faculty do the exact opposite. The one thing I miss about the teen years is the metabolism.)

I had to smile at the memo, since I can easily see the impulse behind it. If you only look at one dimension of the question, the rule makes sense: if the university literally pipes in mass quantities of drinkable water, why pay extra for packaging? Of course, that only makes sense if you don't look at how bottled water (or anything else) is actually used. Using my administrator's crystal ball, I foresee negative savings resulting from this policy, since buying flavored stuff (soda or coffee or tea) for large groups requires buying multiple varieties, making over-purchasing hard to avoid. Water is water, but Sprite isn't Diet Coke (and neither compares to Cherry Coke Zero, which competes with Diet Dr. Pepper for the title of Best Soda). So in buying the flavored stuff, you have to buy enough of each kind to satisfy most people. In buying water, you just buy water.

It's a trivial example of a much larger problem of false economies, which I define loosely at self-defeating efforts at cost control.

"Use it or lose it" is a classic false economy. The idea behind it is to redirect resources that aren't needed in program A to program B, which has demonstrated a need. You can identify what isn't needed, the theory goes, by seeing what isn't spent.

That probably worked once. But anyone who has spent time in nonprofits knows that money cut is never restored, so savvy managers make damn sure that the money gets spent, one way or another. "Use it or lose it" actually encourages stupid spending, since the only way to ensure a cushion for unexpected expenses next year is to overspend this year. If program A is running a surplus as the close of the fiscal year looms, you can bet that the manager of program A will find a way - productively or not - to spend that money. Once it goes to program B, it's gone forever.

Professional development funding is a common target for cuts. The first year you do that, not much happens beyond some local grumbling. But over time, you get an entire faculty ever more out-of-touch with what's going on elsewhere. Yes, some conferences are little more than jaunts, but it's hard to know in advance which ones those are, and some of the best breakthroughs happen in the fortuitous moments that happen when a bunch of people with similar concerns are in close quarters. Go without those moments for a decade or two, and the effects are noticeable. Eventually, a sort of provincialism seeps into the culture, 'justified' by the lack of travel money. By that point, you're paying top of the line seniority-driven salaries to people who haven't paid attention in decades, and who couldn't leave if they wanted to.

Then there's the ever-popular freeze. If inflation is a positive number, a freeze amounts to a cut. In the first year of a freeze, the harm is minor and the savings real. But percentages compound, and a harm that may not have mattered much in one year is quite real in four or five, and devastating in ten. The longer you wait, the harder it is to undo the damage. Freezes are
administratively easy, and they avoid certain kinds of political battles, but over time, the damage they do is drastic.

Finally, of course, there's the wholesale outsourcing of instruction to poorly paid adjuncts. Others have made that point many times, as have I, so I'll just acknowledge it and move on.

Wise and worldly readers - what false economies have you seen? (Alternately, is there a soda (or pop, for my Midwestern readers) that can compete with Diet Dr. Pepper and Cherry Coke Zero?)

 

 

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