Tuesday, December 23, 2008

Universities and recessions

Instapundit points to this message from the chair of the physics department at the University of Tennessee. It (and the comments it has engendered) raise a number of interesting points.

First, higher education tends to bear the brunt of state budget cutting during recessions because many other items on the state budget are either relative fixed, countercyclical, or politically hard to touch. Sharp budget changes (either up or down) are rarely efficient though, so resources are wasted that would not be wasted with more stability in funding. Private universities have an advantage here in that they can better smooth expenditures over the cycle. A lot of privates are taking advantage of that fact this year by hiring when the state schools are largely out of the market on the demand side.

Second, it is notable that Tennessee's physics department has its own endowment and does its own fundraising. My sense is that this is now pretty common, though it raises some important issues of coordination in fund-raising across departments within a university. You do not want departments competing for the same donor or competing with the central development office for the same donor. It is very easy in such cases to give the impression that the university is not well organized, which I suspect has a dampening effect on donations.

Also, there are issues around the central administration implicitly taxing donations received by individual departments. This is natural enough as some departments (e.g. economics) will have better off alumni than other departments (e.g. classics) and so can attract more donations. At the same time, the threat of such implicit taxation should lead donors to want to fund things that the university normally would not fund, in the expectation that this will reduce the implicit taxation. It is also not so clear how the central administration can commit to zero or low implicit taxation as a way of inducing donors to give gifts with fewer strings, which are of course more valuable to the receiving department.

Finally, the comments seem to suggest a couple of things:

First, many people do not seem to realize that professors sign contracts specifying how much teaching they will do. These contracts cannot be altered unilaterally by the university. Even if they could, a university that did so would lose all its mobile (approximately the same as "good at research or teaching") faculty and keep the rest. Back in my undergraduate days, the University of Washington wanted to cut its budget during the recession of the early 1980s and it offered early retirement. In economics, the key taker was Doug North, who took early retirement, went to Washington University in St. Louis and won his Nobel Prize there. Ooops.

Second, the commenters apparently are unaware that professors do a lot of things other than just teaching undergraduate courses. One thing, obviously, is research. Another is graduate teaching, a large part of which does not take the form of lecture courses but instead takes the form of meetings, seminar presentations, reading and commenting on drafts and so on. Still another is writing letters of recommendation, a task that consumed several working days of my time this year. Faculty also do quite a lot of administrative activities. The most important, and time consuming, tasks include hiring, promotion and tenure. When I was at UWO the administration did a survey of faculty time use and concluded that faculty typically work well over 40 hours per week. Although given the survey's purpose (essentially lobbying) it was clear what the correct answer was to all the respondents, it is nonetheless true that faculty at flagship state schools like Tennessee work very long hours and, in the case of technical fields like physics, for lower pay than they could get in the private sector.