Friday, November 20, 2009

Biting the Hand That Feeds You

by Daniel L. Bennett

Inside Higher Ed has a story this morning discussing how business and college leaders collaborate on many things, but differ on tax policy. This comes as no surprise as taxes have a negative impact on profitability and the ability to expand for the former, but a positive affect on the ability to expand for the latter (public universities in particular).

Both parties obviously have an interest in state-level tax policy. Colleges make the case that they are engines of economic growth and that they provide a public service a la research and education. Businesses are undoubtedly engines of economic growth (employing a far greater share of citizens than the public sector) and providing the taxable profits and employee salaries that are needed to support the public sector, including colleges. There is an added dynamic at play in which private businesses provide the income by which parents use to pay for their children's tuition.

State budget's are struggling in the current recession and unlike the federal government, have to balance their budget every year - forcing them to make tough decisions. The two primary options to balance the budget are to reducing expenditures or to raise revenues (i.e. tax hikes). The public sector prefers to avoid the former scenario, and the current downturn has made the former option less viable, as the nationwide unemployment rate has surged to double digits (nearly 17% if you count the underemployed). Businesses have scaled way back in order to survive the crisis and need an environment that fosters economic growth before they can resume hiring. By imposing additional taxes, it further squeezes businesses and private consumers, reducing the likelihood of a quick recovery and a decline in unemployment. The private sector needs incentives to grow, not disincentives.

Increasing taxes in a recession is a zero sum game that makes to the recipients of public funds (e.g. colleges) the winners in the short run, while possibly imperiling their long-term viability, as businesses downsize or relocate to more business-friendly locales, and the public resentment of and willingness to support fiscal irresponsibility grows.

A report this week revealed that colleges continued to hire non-instructional employees during the recession, adding fuel to the fire. While many businesses and families are struggling to keep the heat on and put food on the table, colleges are taking advantage of public support to engage in rent-seeking behavior and expand their regimes, while at the same time squeezing increasing amounts from the students and their families through tuition hikes. Effectively biting the hand that feeds them. This is fiscally irresponsible, morally inappropriate, self-serving behavior that needs to come to an end.


capeman said...

"A report this week revealed that colleges continued to hire non-instructional employees during the recession"

Gee, I don't know where to find this "revelation" in the voluminous report that was linked. The report certainly doesn't contain the word "recession" as far as I can tell.

Are you talking about the front office secretary my department hired back in Fall 2008? But that was a replacement for someone who had retired. We didn't exactly know there was an official recession then. Anyhow, business was (and is) good, enrollment way up. You could say that is just ripping off the students, I suppose. But oddly enough, about a hundred times a day, students and others come through the front door of the office, looking for information, which they get from that secretary (who also does quite a few other things throughout the day). And nobody seems to feel resentful about having somebody there to help them out.

Or perhaps the postdoctoral research associate I hired January, 2009? But I was just spending grant money according to the contract that I and the university had entered into. No tuition money involved. I don't exactly consider this rent-seeking.

Todd said...

The report did not contain the word "recession" because it had nothing to do with recessions--or any other economic indicator. It was a report on postsecondary employment. The report simply showed non-instructional hiring in the Fall of 2008, which happened to be during a recessionary period(according to the National Bureau of Economic Research). I don't know if we should give Daniel too big of a pat on the back for this "revelation", but it is Friday...

capeman said...

Oh, yes, hirings for Fall 2008. Those must have mostly been arranged by Spring 2008, or earlier. The universities should have known by then that we were in a recession; that the market was at the beginning of a crash, not a minor downturn; that the entire financial system would be on the verge of collapse in Fall 2008. After all, they are supposed to be clairvoyant, right? Or they could have asked their friends on Wall St.

I guess this is what Daniel means by "biting the hand that feeds you"?

It takes a real nasty junkyard dog to think like this.

Cowboy said...


Cowboy said...

LOS ANGELES (AP) - Hundreds of protesters chanted, marched and took over a building Thursday on the UCLA campus, where University of California regents were scheduled to vote on a 32 percent student fee increase.

The UC Board of Regents is considering boosting undergraduate fees—the equivalent of tuition—by $2,500 by summer 2010.

For a second day, the proposal drew demonstrators to the University of California, Los Angeles. Some came from other UC campuses and stayed overnight in a tent city.

The demonstrators outside UCLA's Covel Commons building chanted, beat drums and waved signs urging "No fee hikes" and "Wanted: Leadership."

Campus police in helmets with face shields stood guard outside the conference building. UCLA officials said police from several UC campuses were brought in.

Laura Zavala, 20, a third-year UCLA student, said she may have to get a second job to afford the increase.

"My family can't support me. I have to pay myself," she said. "It's not fair to students, when they are already pinched."

About 30 to 50 protesters staged a takeover of Campbell Hall, a building across campus that houses ethnic studies, said UCLA spokesman Phil Hampton.

They chained the doors shut but were peaceful and there were no immediate plans to remove them, Hampton said.

No arrests had been made, although 14 demonstrators were arrested on Wednesday and cited for failure to disperse or disturbing the peace.

Demonstrations also were held at other UC campuses.

UC President Mark Yudof told reporters Wednesday he couldn't rule out raising student fees again if the state is unable to meet his request for an additional $913 million next year for the 10-campus system.

"I can't make any ... promises," he said.

After a series of deep cuts in state aid, and with state government facing a nearly $21 billion budget gap over the next year and a half, Board of Regents members said there was no option to higher fees.

"When you have no choice, you have no choice," Yudof said after a Regents' committee endorsed the fee plan Wednesday. "I'm sorry."

The Los Angeles meeting was repeatedly interrupted by outbursts from students and union members, who accused the board of turning its back on the next generation.

"We are bailing out the banks, we are bailing out Wall Street. Where is the bailout for public education?" asked UCLA graduate student Sonja Diaz.

University of California, Irvine, economics student Sarah Bana told the board,
"You are jeopardizing California's future."
Associated Press Writer Marcus Wohlsen in Berkeley, Calif., contributed to this report

Todd said...

"Oh, yes, hirings for Fall 2008. Those must have mostly been arranged by Spring 2008, or earlier."

--Keep in mid this is NON-INSTRUCTIONAL hires we're referring to

capeman said...

Todd: just because a job is non-instructional doesn't mean you just hire someone off the street a couple of days before you want them to start work. The postdoc I mentioned hiring in January 2009 actually got his contract then (after processing by the university bureaucracy) to start work in late summer 2009. As I mentioned, this was under a grant that I'm responsible for. I suppose the Doc might say that I'm prostituting myself -- following the example of college presidents? -- by having this grant, but let him.

Even the secretary I mentioned wasn't just hired off the street the day before classes began. We intentionally left the position open for most of the summer to save money, but started looking for someone with the requisite qualifications for the Fall, when there would be hundreds of students coming in for information. The person started, under contract, just as the financial crisis began. As I said, the person was needed.

A case can be made that academia is hiring too many non-instructional personnel -- often at the demand of students, I might add -- but referring to a complicated study that doesn't even mention the word "recession", and claiming that this is proof of underhanded behavior by colleges, is simply vicious and stupid.

Overlook said...
This comment has been removed by the author.
Daniel L. Bennett said...
This comment has been removed by the author.
Daniel L. Bennett said...

Please see this CCAP working paper that discusses administrative bloat in higher ed.

Capeman: the number of clerical workers (secretaries) in higher ed has remained relatively constant over the past 20 years and is not driving the large increases in administrative jobs that we have observed. Please see this report for more trends in higher ed staffing.

Overlook said...

Capeman... hmm... or is it sciencedoc? Ha! It's both: capeman = sciencedoc. How 'bout that!

We had to put up with "sciencedoc" from Jul. '07 thru Mar. '08. Then sciencedoc went silent during the month of April '08. In May '08, his first comment was made under the moniker "capeman".

We wonder what "capedoc" thinks of the efficacy of Sunitinab + Aveo 951 in stage 4 (clear cell) Renal Cell Carcinoma. [Apparently Interleukin - 2 has fallen out of favor and is being replaced by "targeted" therapies such as Vascular Endothelial Growth Factor (VEGF) Receptor Inhibitors]. Isn't it amazing that when the lesion has been denied oxygen it triggers on angiogenesis and releases VEGF's? How can angiogenesis be halted while concurrently starving the lesion of oxygen and therefore limit its growth to 2 cm (depending on when the lesion is discovered?) Can you provide any insight "capedoc"?

Finally, one of the individuals we have identified as possibly being "capedoc", takes full credit for what used to be a highly prestigious award that is not deserved in any way.

capeman said...

Just for the record, I'm flattered by the attention, but I'm not Al Gore, nor Barack Obama, and I know next to nothing about renal cell carcinoma. Sorry to disappoint you.

Overlook said...


Thanks for the info.

Before you started posting comments as "capeman", you did post comments as "sciencedoc".

Would you agree that is a true statement?