A look at the data: It’s the overall SU budget that matters!

The administration is to be commended for the prompt release of data requested by the Senate Agenda Committee to prepare the SU community properly for serious discussion about its collective fiscal future at the March 3 University Senate special meeting on the budget.

Preoccupation with proposed changes to the university benefits package has allowed discussion to drift from the key issue: the unsustainability of the structure of the overall budget itself.

While overall benefits costs do not appear to be increasing at a rapid rate (see below), other costs in the budget are. The debt load of the university, the discount rate on tuition, financial aid costs, and the growth in the number and costs of senior-level, non-academic administrators all show sustained meaningful increases. Overall debt has more than doubled in the last decade. The discount rate and financial aid are rising steadily. In 2000, the discount rate was 33 percent. It is now 38.3 percent or higher. (Most knowledgeable analysts warn that a discount rate around 40 percent is dangerously high, a tipping point from which institutions seldom recover.) In 2000, SU was budgeting $129 million in inflation-adjusted dollars for financial aid. The figure now is $211 million.(1) Finally, the number of higher-level, non-academic administrators, shown in the chart below, has also increased significantly.(2) Adding all categories together, the number of senior, non-academic administrators has increased 72 percent during roughly the last decade.

Position	86-87	97-98	08-09
Directors	204	288	518
Deans	48	56	72
Vice-presidents	18	13	28
Chancellor/Vice-chancellor	6	8	9

(We also suspect, and knowledgeable insiders agree, that spending on athletics has grown at an unsustainable pace. We can get no reliable data, however, to test that question rigorously.)

Other measures also reflect this disconcerting trend. If you measure debt as a percent of all expenses, the figure was 28.1 percent in 2000. By 2009, the same figure was 36.2 percent. Financial aid constituted 20.9 percent of expenses in 2000. Today the figure is 24.1 percent. In 2000, the endowment in inflation adjusted dollars was $1.27 billion. It is now about $750 million, a drop noticeably greater than the recent market decline. Put another way, the ratio of the endowment to total university expenses has dropped from 2:1 to 1:1 since 2000.

To us, the picture in the data is clear: To close the stated $30 million budget gap at SU, we have to start with the structural problems in the budget itself, not with what we pay in benefits to our employees.

For the past several months, the administration consistently has offered the rationale that the growth in university benefit costs is the key unsustainable dimension of the budget. The data released on Feb. 25, however, show that over the past decade there has been virtually no growth in overall benefit costs as a percentage of payroll or as a percentage of the total university budget. For example, over the last decade, overall benefit costs as a percentage of the total budget have fluctuated between 12.3 and 13.0 percent.

True, the data do demonstrate that one specific component of benefit costs – health care – has risen sharply (141 percent) over the past decade, but this is just one component among many in the total cost of fringe benefits. No doubt, any effective attempt going forward to narrow and close the structural budget gap will require steps to cope with the continued high rate of increase projected for future health expenditures. But this prudential judgment calls into question the proposed benefits change, which increases the university’s exposure in this very area by adding $600,000 of new health care costs to cover just 100 opposite-sex domestic partners who simply voluntarily choose not to get married. Moreover, the estimate of 100 is likely to be low and the costs therefore significantly underestimated in precisely the one area that we do know is out of control.

The meeting on March 3, then, puts our attention about our collective financial future precisely where it should have been all along and precisely where it should be now – on the structure, sustainability and management of the university’s overall budget.

Bob McClureChapple Family Professor of Citizenship and Democracy

Jeff StonecashMaxwell Professor of Political Science

1. These data are taken from the annual financial reports prepared by the university and available at: comptroller.syr.edu/comptroller/uploads//2009%20Annual%20Report.pdf.
2. Data used later in this letter come from the information recently released to the senate by the administration.
3. This chart is based on a simple count of individuals with the corresponding titles who were listed in the university telephone directory for each of the designated years. Anyone listed as a dean (assistant, associate or dean) was counted, as was anyone with the title of director, vice-president or vice-chancellor. These data, then, represent a rough approximation of the exact state of affairs.

Published on March 1, 2010 at 12:00 pm