University as a business

This is Joseph

François Furstenberg has comments on cuts at Johns Hopkins, including the high pay of leadership. The whole thing is worth reading but I wanted to highlight a couple of things:

Then there is the issue of deferred compensation for top executives. According to the university’s latest audit, total liabilities related to deferred compensation amounted to over $130 million — or $30 million more than the institution will save by suspending contributions to its thousands of employee retirement accounts this year.

While a handful of top administrators will take a modest pay cut this year, the university has not said whether any of its executives will forfeit the sums accumulated in their deferred-compensation plans. I assume they won’t. There is a searing irony in the fact that these well-paid officers may keep their lucrative deferred-compensation packages even as staff and faculty sacrifice the value in their retirement funds — which are deferred compensation on a far more modest level. Altogether, these practices do not paint a portrait of an institution with robust mechanisms of oversight and accountability.

And the speed of the university being in crisis:

How does a university with a $6-billion endowment and $10 billion in assets suddenly find itself in a solvency crisis? How is one of the country’s top research universities reduced, just a month after moving classes online, to freezing its employees’ retirement accounts? 

This brings up, in my view, a deeply philosophical question about the role of Universities. If they are just tax advantaged businesses then the deep subsidization of these institutions needs to be carefully considered. If they are enduring institutions intended to last for the long term then isn't the point of the endowment to weather storms?

This fits into another post I read lately from Matt Reed:

Adjunct classes cost less than they take in; in business terms, they’re profit centers. The highest-paid faculty cost more than they generate; in business terms, they’re loss centers. By state administrative code, we have to eliminate the profit centers to protect the loss centers. In business terms, that’s backward. But those are the rules. 

This is an insane framing, but I think that was his point.  Obviously the tenured faculty also contribute to reputation and mission. But the point is that a business engaging in cuts would have very different rules and the consequences would be quite different. Imagine a University closing in year 3 or 4 (!!) of a professional program. The cost to students would be . . . severe. Similarly, reputation and integrity are why you can't be a "premium" student with an automatic high grade.

This is a challenging time for everyone and it is a good time to reflect on the social role that we ascribe to universities. This does not mean that I want to disrupt it -- disruption is a great plan for things that can fail or fall apart without huge consequences. Is anybody seriously considering disrupting the police or military?

But there is a real question about the priorities of our academic environment and how we move forward in a word where we start being asked to be more like a business. To me, the real question is why? Just to enrich people with an MBA?