It's easy to underestimate the impact of sex scandals.
According to this article  from the Albany (NY) Times-Union, Governor Paterson of New York has abandoned his predecessor's plan for a hiring boom in the SUNY system. In fact, he has gone farther than that, freezing already-collected monies, implementing a hiring 'pause,' and telling campuses to gird themselves for a systemwide cut of 3.35 percent, on top of the $38.8 million already cut.
Just a few short months ago, then-governor Spitzer proposed an ambitious plan to scale up the SUNY system, pouring new funding into it and hiring hundreds of new faculty. (My initial response is here.) Then he got caught in a particularly sordid sex scandal. Now, the system will be lucky to keep most of the people it already has.
(Across-the-board cuts are particularly brutal when large chunks of the budget are effectively uncuttable, such as tenured faculty, utilities, and contracted services. Any cuts have to fall disproportionately on other areas to compensate for the untouchability of those.)
The T-U article is worth reading to the end. I was particularly struck by the union chapter president saying that she had never seen the campus presidents so upset. When the union is expressing sympathy for the presidents, you know things have gone off the rails, and that's not a criticism of either the union or the presidents.
The public sector as an employer is subject to two utterly contradictory realities. On the one hand, it compensates for uninspiring salaries by offering unparalled job security. On the other hand, it's reliant in various important ways on the budgetary whims of the government, which change pretty much whenever the wind blows. Balancing 'unparalled internal job security' with 'volatile external funding' is the frustrating task of administration.
There's no easy or elegant way to do that. If you're too conscientious and build a reserve - the term of art among private colleges is an 'endowment' - then the legislature will take that reserve as evidence that you don't need funding and they'll cut accordingly. If you're not conscientious enough and some sort of interesting waste occurs, headlines will follow, and the legislature will use the headlines as an excuse to cut. So the standard route is an ad hoc combination of cost cuts - adjuncting-out faculty retirements, negotiating multiple-tier union contracts to buy off the opposition of the entrenched while screwing the young - and aggressive
pursuit of philanthropy and profit-making side ventures, like non-credit community programs. It manages to annoy just about everybody, but hopefully keeps the really dangerous wolves away from the door.
Aid-based budgets are tricky, since aid is so unpredictable from year to year. It's also largely divorced from local performance, so incentive-based funding at a local level is based on a gamble that the state won't leave you hanging. If it does, good luck ever running that again.
Honestly, I'm starting to wonder if there might be a better way to fund public higher ed. What if we did away with operating subsidies altogether, and redirected that money to financial aid for students? Make colleges run their operating budgets - not capital, necessarily - on tuition, and subsidize the tuition heavily to ensure that no academically-capable student is excluded for economic reasons. It would still be somewhat volatile, since enrollments fluctuate, but at least the volatility would correlate with actual campus conditions. When enrollments boom and costs go up, revenues go up, too. When enrollments slide and revenues slide, so do costs. Right now, whenever there's a recession, enrollments boom and costs go up, but aid goes down. That doesn't make any sense at all.
On the upside, revenues derived from operations wouldn't have all the red tape that direct aid has. ("This pot of money can only be used for these purposes, and that pot for those purposes.") Colleges could actually allocate available funding as needed (rather than 'as directed.')
As it happens, we're sort of moving in this direction anyway, only without the upside. I've seen many aid cuts, but I've never seen restrictions lifted. If anything, they metastasize. I say, if you aren't going to pay the piper, stop calling the damn tune. If a state wants to micromanage, it can always earmark certain scholarships for certain programs and do it that way. At least then the revenues will have some vague relation to the costs.
Good luck, SUNY. Here's hoping your next sympathetic governor is less of a selfish idiot.