Scarcity and Choice the School's Term Paper

Therefore a system of priority needs to be developed. The top priority -- and therefore the minimum amount of cuts -- goes to the areas that are the most essential to the basic function of the school. The most important is Instructional. There is likely only limited flexibility in this aspect of the budget, as many instructors are on contract. There may be some flexibility to initiate a cut in the range of $4 million (15%) by reducing the number of courses taught by part-time and other non-contract instructors. Another essential program is the fringe benefits. These are likely to be in union contracts -- they can be negotiated downward at a later date when the current contract expires but they are likely fixed for the coming year. Likewise, operations contracts limit the degree of flexibility the school has with regard to maintenance. A $1 million cut here is symbolic as much as anything else -- anything more could result in safety violations or other such issues that would be costly in the long run.

The second level of priority reflects activities that are non-essential but contribute to revenues. Athletics contributes to donations, academic support, activities and student aid all help to attract students to the campus. All of these face cuts, but athletics and student aid are the largest components. These should be reduced. Student aid costs almost as much as instruction -- this program should be cut dramatically and replaced with efforts to bring in students who can afford the full ride, including students from overseas. For a school of 10,000 students, our current student aid funding is $2,200 per student, which is altogether too high. Some students will be grandfathered in with respect to their aid, but the amount of that aid will be reduced. Marginal athletic programs can be eliminated and minor cuts can be made to the major programs that are tied to alumni support. The latter category of program is essentially revenue neutral, while the former programs are a drag on expenses and of limited interest to the campus as a whole.

The final category of expense consists of non-essential expenses that are not related to the core mission of the university. Expenses in this category should receive the steepest cuts. Auxiliary enterprises falls into this category and should be nearly eliminated as a result. Research is necessary to attract faculty but for the time being only ongoing research will continue to receive funding. If the budget shortfall persists, the school will have to re-evaluate whether it wants to continue with a research model or if it wants to shift to more of a liberal arts model, where instructors are not obligated to produce regular research papers. The new budget that results from these cuts, based on fixed costs and priority, is as follows:

New Budget

Request

Allocation…