Wednesday, December 8, 2010

Funding Cuts

From Dead Dad:

Of course, that refers only to general college reserves. It’s also common for various programs to have reserves of their own, earmarked for specific purposes. The college foundation might have reserves dedicated for certain scholarship awards. Some grant-funded programs will have reserves for specific functions and only for those functions. (In the context of multiyear grants, for example, it’s common to have ‘carryover’ of excess funds from one fiscal year to the next. That’s frequently allowed, but that doesn’t give license to transfer the extra grant money to the general college budget.) In cases like those, money comes with strings attached, and violating the terms of the money involves forfeiting the money. You can’t just move it around.

This lack of flexibility actually highlights one of the difficult issues with cuts in grants. If grants are cut by 10%, you don't have the discretation to eliminate 10% of the ongoing projects to make sure that the rest are successful. In the same sense, going after indirects to try and make up these losses would lead to the defunding of other operations.

The modern university budget looks remarkably inflexible to me, which makes planning for adverse financial circumstances appear to be extremely tricky. Not only do you have to cut but what you can cut can be remarkably constrained. This can lead to very poor optics (where something that looks non-essential is fully funded whereas a core operation simply lacks funding).

It is a tough place to be in!


  1. Perhaps I'm confused here, but the bit you're quoting doesn't make sense to me. If our group has a research grant, the money is intended for our research not for the university in general. The university is administering the grant, and gets 1/3 of the $ as "overhead" that they can spend on whatever I want. The other 2/3 is for our research. Sure, they can't take those 2/3 and spend it on something else, but I don't see it as "inflexibility." I don't think anyone would want to give a grant to our research group if they thought the university could take the money and spend it on the French department or the football team or whatever.

  2. Agreed. What I was aiming for was the idea that this makes it hard to do a top down reworking of the school's finances (i.e. looking at all of the money coming in and deciding how it would be best spent). In a lot of ways that is a strength of the academic system (i.e. it would be bad to change it) but it does mean that administrators often have surprisingly few options for implementing cuts.

    But I think that this is (on net) a good thing for the university system; just that it means we should be sympathetic to Deans who are dealing with budget issues.