Guess whose jobs don’t get cut when university endowments shrink?

After the stock market’s disastrous downturn in fall 2008, four academics and researchers decided to analyze how financial shocks to endowments affect university operations.

The working paper, “Why I Lost My Secretary: The Effect of Endowment Shocks on University Operations,” was prepared for the National Bureau of Economic Research, where two of the authors are research associates.

Using 1986-2008 data from 200 doctoral universities, including the University of Minnesota, the team found predictable and not-so-predictable reactions to seesawing investments. It’s important to note that the data from the after-effects of the 2008 crash were not available.

The last negative shock analyzed in the study was the tech bust in 2002, which was “half as bad” as the 2008 crash, according to co-author Jeffrey Brown, professor of finance at University of Illinois (Champaign-Urbana).

"Anybody who works in a university knows that as a result of the recent crisis, it seemed like a natural question for us to figure out," Brown said. "We realized there wasn’t a whole lot written about this," at least from the economic standpoint.

The study’s authors didn't perform a university-by-university analysis, so it's not possible to break out how one university in particular responded, he said.

Just about everybody feels the pain, except ...
These findings stand out to me even though they might not surprise the rank and file in higher education:

• Universities with the largest negative shocks to their endowments were more likely to cut support staff and maintenance staff but not administrators.

• Less-selective institutions cut spending on tenure-system faculty while increasing salaries for adjuncts and instructors.

• Universities that invested in hedge funds or other risky assets made larger cuts to tenure-system faculty and secretarial staff.

• More-selective universities reduced student financial aid for the first fall semester after the decline and they accepted fewer freshmen.

Go figure. Nearly everyone but a university’s administrators was more likely to feel the pain of a decline in the endowment’s value. I asked Brown why administrators were spared.

http://www.minnpost.com/nextdegree/2010/04/29/17740/guess_whose_jobs_don%E2%80%99t_get_cut_when_university_endowments_shrink

While I applaud the study as evidence that this is true in our age and should be discussed, the premise is similar to asking if the Sun is hot.

Nothing new in that. The main message is that the adminsitrators are not accountable for their failures.

Universities with the largest negative shocks to their endowments were more likely to cut support staff and maintenance staff but not administrators.

The Kansas City Missouri School District is closing half its schools and laying off teachers and staff. But not once have I heard about administrators being fired. And you have to wonder, with half the schools and teachers/staff, why keep the same number of administrators?

You can always count on administrators to look out for themselves first and foremost...

...is that of the number of people available to fulfill duties X vs duties Y.

Freshman Composition may be taught by 10 or more lecturers at various levels. How many CFO's are in a university? One I would imagine. If you cut one of the former there are still 9 instructors to share teaching duties. If you cut one of the latter there is nobody left to do the CFO job (or the Dean or the President yada yada)

I do know that in business the complaint is often "they cut 40 workers and only two managers", and the same holds true there. Redundant managres certainly exist especially in large companies, but not usually in as great a number as people performing front level tasks. If a factory has ten welders and one VP of Engineering how likely is it the VP will be able to be cut compared to a welder or two? The only way you can cut an incumbent who holds a unique job is if that unique job is not necessary. It's much more viable to cut a percentage of large numbers of people who do the same job, as you still retain some people capable of perforning the tasks involved.

More germane, I wonder how many sports coaches lost jobs? Probably fewer than admins I'd guess.

Oh but we'll hire back some of you part-time. "I gots me a bonus for my balance sheet twiddly doo dance!"

Fine Arts and P. E. got it, too. Education is taking hits everywhere right now. :(

Class sizes have about doubled in the last few years. Try teaching 45 students at a time and staying sane, all the while. Good fucking luck. It's a big fuck you to teachers and a big fuck you to our future.

But the future doesn't matter; we've got wars to fight! We can't stop fighting now!

Administrative bloat is a real problem in colleges of all sizes.

Staffers go first. In fact, some universities cut staff just because they're paranoid and afraid that if they don't cut staff now, they will not be able to balance their budgets in the future!