From the issue dated June 6,
2003
http://chronicle.com/weekly/v49/i39/39b01401.htm
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A Steadier State in Hiring for CollegesBy WILLIAM R.
JOHNSON
In state after state, the
business cycle has whipsawed tax revenues, and public universities have suffered
the consequences. At the University of Virginia, for example, the double-digit
percent increases in tax support that were common in the late 1990s have become
double-digit reductions. Although state universities must do the best that they
can with boom-and-bust state support, it's a bit like driving a car by
alternately slamming on the brake and then flooring the accelerator. Yes, you
might get to your destination, but both the car and the passengers fare much
better if you drive the car steadily at a moderate rate of speed.
Cycles
in support for state universities typically induce periodic faculty-hiring
freezes or frenzies that compromise the long-term quality of the institution.
Consider a department that, over the long run, will need to add two or three new
faculty members a year, not to grow but to replace faculty members who leave or
retire. Instead of hiring at a steady pace, trying to hire many faculty members
only in some years costs more money, faculty time, and effortwith results that
are often disappointing. The difficulty of finding and attracting that many
high-quality scholars presents departments with hard choices between
compromising on faculty quality or leaving vacancies unfilled and hiring
temporary faculty members. When the inevitable next hiring freeze arrives, those
temporary hires and positions are the first victims of budget cuts, leaving the
department severely understaffed. Current budgetary incentives are not conducive
to building an exceptional faculty at state universities.
A department's
hiring frenzies typically occur when many other state universities are also
hiring madly, competing for the same desirable faculty members. So, hiring is
allowed just when it is the most difficult and not allowed when the market is
slack and hiring could be the most successful. That suggests that a university
that runs countercyclically -- hiring the most when others are hiring the
least -- has a great advantage. To some extent, many private universities
can do exactly that because their revenue sources are not tied to state
budgets.
Can anything be done to soften the effects of the economic cycle
on public institutions?
First, states could allow public universities to
save legislative appropriations from one fiscal year to the next to build their
own rainy-day funds. In many states, money must be spent in the year that it is
allocated -- otherwise, not only will it be lost, but the next year's
appropriation may be cut. For their part, universities should also permit their
schools, colleges, and other units to save state money from year to
year.
Second, universities could try to build endowments that can support
faculty positions with private donations when state budgets are tight. That is,
admittedly, a formidable task. Administrators worry that if they use private
resources to survive a state-budget squeeze, the legislature will reduce its
long-term level of support. In addition, private money often comes with strings
attached. Donors, and the deans and administrators who court them, want to make
their mark by starting new programs or building new
facilities.
Universities need to convince donors of the need to give
unrestricted money to preserve what the university already has. The argument is
simple: Spending steadily over the long run will buy much more quality than the
same amount of money spent in fits and starts, buffeted by the state budget
cycle. Meanwhile, states need to cooperate and not reduce support for
universities that use private resources when times are tough.
Third, we
could introduce some flexibility into faculty compensation. One reason for
hiring freezes is that a large part of a university's budget is inviolate
-- dedicated to providing irreducible compensation to faculty members whose
jobs are secure. Businesses and corporations use devices like bonuses to reward
employees when times are good, but cut those bonuses -- and thereby the
cost of employee compensation -- in lean years. More public universities
could introduce similar flexibility in compensation, without terminating faculty
members or altering salaries, by varying their contributions to faculty
retirement funds in defined-contribution plans, like TIAA-CREF. Reducing the
contributions in bad years and increasing them in good years would give the
university a cushion of money to maintain hiring at a steady rate.
Of
course, many of my faculty colleagues would vehemently resist any tampering with
their compensation. Institutions would need to create safeguards that ensure
that underpayments in the bad years were indeed made up in the good years. A
university should never be in debt to the faculty. It should start the system in
the good years with an overpayment to the retirement plan that can be drawn
against in the subsequent bad years by underpayments -- but only until the
overpayment is "spent."
Smoothing the hiring cycle, however it is
accomplished, will not only allow state universities to build the quality
faculties they aspire to, but will also benefit undergraduate education. The
boom-and-bust cycle creates overcrowded, understaffed classes in the lean years
and classes taught by temporary faculty members or adjuncts in the fat
years.
On top of that, a stable hiring regime should help the academic
labor market. Today Ph.D.'s with essentially similar credentials who happen to
go "on the market" in different years experience substantial variations in their
career paths. If you go on the market in a bust year, you are likely to spend
the beginning of your academic career in temporary jobs or at a place that is
"wrong" for you. While you may eventually get established in a suitable
tenure-track job, your career has been derailed. This uncertainty, in turn,
makes the pursuit of an academic career even less appealing to bright young
adults, depriving academe of the talent it needs to flourish.
In short,
changing the cyclical nature of hiring has many advantages. The same amount of
taxpayer money, if spent steadily, will buy a much better university
-- whether measured by faculty credentials, research accomplishments, or
the quality of undergraduate education.
William R. Johnson is a
professor of economics at the University of
Virginia.
http://chronicle.com
Section: The Chronicle
Review
Volume 49, Issue 39, Page B14
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Copyright ©
2003 by The Chronicle of Higher Education