The Humanities as Service Departments: Facing the Budget Logic

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A classic program closure was the 2010 decision of the administration at the State University of New York (SUNY), Albany, to “suspend all new admissions” to French, Italian, Russian, classics, and theater, leaving Spanish as the university’s sole language major. The decision was made “in recognition that there are comparatively fewer students enrolled in these degree programs” (“University”). Faculty members reacted with disbelief that the cuts to the state’s share of the campus budget, significant though they were, required program closure. They also noted the absence of prior notification, consultation, review, or “any hint” of “concern about the programs” (Jaschik).

In contrast, President George M. Philip’s prepared statement asserted that an “extensive consultative process with faculty” had in fact taken place, that the decision was not commentary on the quality of the faculty, and that the university remained committed to the humanities and the arts (“University”). The administration’s blanket denials of faculty accusations were accepted by the media and other outsiders who didn’t have the time or interest to sort through a “he said, she said” conflict. Some Albany faculty members analyzed and critiqued the basis of the closure decision after the closure was announced. Shared governance is not supposed to consist of ex post facto criticism but of joint deliberation leading up to a collaborative decision. Faculty groups, particularly the American Association of University Professors (AAUP), have been seeking “meaningful . . . participation in the budgetary process” for a hundred years—with limited success (Gerber 75–76, 160).

The Albany faculty outcry does seem to have generated a budgetary information meeting for the benefit of interested faculty members. This meeting occurred at a faculty forum two months after the departmental deactivations were announced and seven months after members of the university community began to request full disclosure of the university’s All Funds Budget. Brett Bowles, a French professor, noted that even after a Freedom of Information Law request, the university was disclosing only the state share of the budget, leaving 63% of the total budget in the dark. Bowles also observed that the overall budget had not decreased in step with the state cuts but had remained stable, that the alleged closure savings of somewhat more than $2 million a year were 0.46% of the overall campus budget, and that greater savings could have been obtained with cuts to nonacademic programs. He concluded that the cuts to the language and arts programs were cuts of choice and that senior managers were avoiding full budgetary disclosure because complete data would not have supported the president’s claim that deactivation was a “tragic yet inevitable fiscal necessity” (“Fuzzy Budget Math”).

Bowles was most likely right that these were cuts of choice—though in the continued absence of full financial data we don’t actually know. In another report, he listed a number of departments whose student-faculty ratios were similar enough to suggest the targeting of languages was discretionary (“Humanities Cuts”). It didn’t matter. The administration achieved some salary savings by turning an already consolidated, low-cost languages, literatures, and cultures unit into a service department attached to a small Spanish graduate program. The full professors are gone, and most instruction is delivered by lecturers, who are often the program’s remaining graduate students. Bowles sought and found a new job at Indiana University.

How did SUNY Albany find itself in this situation in which, in violation of well-established shared governance requirements of consultation and disclosure, a respectable research and teaching department was converted into a service unit? As particular programs become candidates for cuts, the faculty and staff members who represent those programs must be brought into the process well in advance of any decision. Yet faculty senates have too often accepted the administrative claim that budgetary data is the administration’s to own and that the administration reveals it at its sole discretion. In my opinion, faculty members have a professional duty to tend their academic program, a duty that is every bit as solemn as the fiduciary duty of a governing board: faculty members are responsible for the academic solvency of the university in the same way that the board is responsible for its fiscal solvency. Unfortunately most tenure-track faculty members do not share this opinion, despite book-length exposés of managerial ascendency over faculty professionals (Burgan; Ginsberg; Gerber) and despite the AAUP’s recent clarification of procedures for program closures that would enable faculty members to fulfill their obligation to maintain academic quality (Faculty Role 4–5, 11–12). Key elements such as a review committee elected by faculty members and that committee’s “access to detailed program, department, and administration-unit budgets” (12) will never be put into practice without case-by-case effort, which requires a broad faculty conviction that governance rights should be shared. I don’t believe this conviction exists in this country.

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But let’s posit a case in which faculty members do insist on full participation and in which, in an unusual twist, a university administration not only accepts the faculty’s academic-fiduciary duty in theory but also implements it in practice. An elected faculty committee has been set up, and it has been told that it will have access to five years of whatever financial data it requests. In their first meeting, what data should the faculty committee request?

The AAUP report stipulates “detailed program, department, and administrative-unit budgets” that allow for “the determination of the financial position of the institution as a whole.” It specifies that these “must precede any discussion of program closures” (Faculty Role 11-12). My basic budget items are these:

1. The campus’s All Funds Budget, both revenues and expenditures
2. The same budget, disaggregated into academic divisions and departments
3. Comparisons of workload-based revenues and expenditures, department by department. This means data on departmental enrollments as well as on majors.

The list focuses on getting complete budgets to faculty members so that the workload and revenue contributions of every type of professor can be seen and compared. The purpose of item 2 is to show income and expenditures on the departmental scale where shrinkage or closure is generally discussed. SUNY Albany’s administration used this kind of data to claim that ending all language majors except Spanish (plus Theater) would save over $2 million a year. But they did not disclose these data. In my experience, budget officials try to keep budgets as general or high-level as possible, such that departmental workload and resources cannot be compared.

The purpose of item 3 is to assess claims that a department runs a loss or does not pay for itself. The assessment requires instructional workload data and not just head counts. That is, it requires enrollment data. Debates about the value of various disciplines are overly focused on the number of majors, but the number of majors gives an incomplete picture of a department’s activity.

It’s easiest to explain through an illustration, and I reproduce a table from my book Unmaking the Public University that summarized this kind of data. For brevity’s sake I’ve limited the summary to divisions, since the main point here is the structure of the data.

As I pointed out in the book, headline statements about faculty productivity always focus on the right-hand half of the table. At research universities, science, technology, engineering, and mathematics (STEM) disciplines have vastly greater research revenues than other types of disciplines (column 5): the science and engineering total is more than thirty times greater than the combined total of the arts, humanities, and social sciences (I think of them anagramically as SASH).

The left-hand side of the table calculates income earned through teaching. These revenue summaries were calculated by using nonpublic data on overall student enrollments for each department in the division in question. For example, a sociology department gets credit for teaching economics, history, and psychology majors who enroll in sociology courses. When all their taught students are combined, SASH disciplines generate twice the teaching revenue of the STEM disciplines.

Administrators often focus on column 7, which shows aggregated per-faculty revenue generation. It supports the stereotype that STEM faculty members carry the revenue load for SASH faculty members. SUNY Albany managers may well have used this kind of (incomplete) data to conclude that language majors should be closed in the name of fiscal discipline.

But faculty members need the full data set; it will allow them to calculate the revenues and expenditures tied to their actual activities. In the SASH disciplines, faculty members earn revenues mainly through instruction. At large public colleges and universities like the one represented in the table, these revenues can overshadow teaching revenues in the STEM disciplines. They derive from the tuition and state funding attached to the students a department teaches—not just the majors, the total enrollments.

Faculty members need to be able to compare the revenues a unit generates through its overall instructional workload with the funds it has on hand to expend. Whether enrollment money comes from the state, student tuition, university endowment interest, gifts, or some other source, it is distributed to a given department through the campus’s central administration. Central administrations collect enrollment money from many sources and then distribute varying proportions of it among departments. They do not, as a rule, give a department the same revenue that its workload earns. Some departments get more instructional revenue than what they earn through their teaching, and some get less.

This variation can be seen in the calculation in column 4—the “ratio of actual to earned revenues.” The engineering division received twice the instructional revenues that it earned through its teaching workload. Arts and humanities got somewhat less than half.

One major implication of this asymmetry is that the SASH disciplines are cross-subsidizing the STEM disciplines, in contrast to the usual stereotype of the soft subjects’ being unable to pay their way (Newfield, “Ending”). My point here is that faculty members cannot agree or disagree with administrative claims about departmental solvency without the data they need to compare revenues and expenditures.

It is possible that the SUNY Albany Department of Languages, Literatures, and Cultures could have used workload revenue and expenditures data to prove its fiscal solvency. If the department was running in the red, it could have used these data to come up with a plan to improve revenues or to justify its specific losses in terms of its larger service to the university. But the faculty members seem not to have had access to workload materials—only to numbers of majors, which are featured in Bowles’s analyses. Thus it would seem that because the administration preserved its monopoly on relevant financial information it won an argument that didn’t take place.

If workload information is withheld, faculty bodies should put the burden of proof on the administration that a department, particularly in the humanities, is losing money. I realize that there are many low-enrollment language departments, that some arts and humanities enrollments may have shifted to STEM fields since the table’s data was collected (majors have shifted), and that the case in my table is not necessarily representative. None of this affects the methodological point, which is that academic standards for the evidence required for a valid decision are far higher than those for politics, public relations, or, regrettably, much administration. Universities should use academic standards for evidence in their decision making about department closures.

However the workload details may vary, language and literature programs are very cheap. They are conducted by faculty members whose research is generally self-funded and therefore largely free to the university. Their teaching has been massified and adjuncted over several decades. Their students receive a fraction of the institutional investment received by STEM students, although both kinds of students pay the same or similar tuition. Leaving aside the longer-term struggle for budgetary equity that will need to be joined sooner rather than later, expanding shared governance to shared data would put humanities faculty members in a position to show that their departments are worth more even in financial terms than the limited investments their institutions have generally made in them.

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Faculty members must also recognize that the issue of a department’s institutional value now goes beyond the question of its profit and loss. This further evaluation applies to managers and faculty members alike, but for different reasons. Managers are looking not just for break-even points but also for comparative returns on investment. The upshot is that language and literature departments can avoid losses or even make money, and their administration can still want to shut them down.

One important example comes from England, where accounting management is more aggressive than it is in the United States: the closure of the Department of Philosophy at Middlesex University in London in 2010, which led to the group departure of the faculty to another university. This is an interesting case because the shuttered department was so prominent. Philosophy at Middlesex had a special national niche in Continental philosophy:

[It] was ranked a very impressive 14th out of all philosophy submissions, the highest of all post-1992 universities and, apparently, the highest ranking of any of Middlesex’s departments. It has a very large MA programme and previously received funding from the Arts and Humanities Research Council for a major research project. By any public standard it is a success story. (Wolff)

The department’s entrepreneurial strength was impressive. Seven philosophers generated £1 million in extramural humanities grants in six years. Why would a university shut its highest ranked department, a department that was ironically succeeding in terms of academic capitalism?

A member of the department, Peter Osborne, has written a blow-by-blow account of the negotiations that led to the shutdown (see Alliez and Osborne). In this account, the administration said the department was being shut for purely financial reasons. When the department members reviewed the administration’s sustainability spreadsheets, they found that they were not running a loss—though their profits were greatly reduced by one item, a mandatory contribution to central university expenses. This contribution was a tax or rent, and the university managers set it at 55% of departmental revenues. Philosophy was able to pay its rent. But the calculation meant that the department could not run in the black unless it could cover all its staff and teaching expenses on 45% of its actual revenues. Whether it was profitable or not in a particular year, its administrative rent branded it a low-income unit.

One could criticize the high level of administrative rent as an autocratic confiscation that defined the Philosophy Department as low-income in order to justify administrative bloat. Osborne does a good job of this in his paper:

What justifies the cost of “central services” at Middlesex University being 55% of its income? Nobody knows. De facto, it represents an ongoing expansion of administration, management and consultancy. The university accounts show that £3.5 million was spent on “consultants and external advisors” in 2008–09 alone. And whilst the number of academic staff has been falling for several years, that of “administrative” staff (which includes managers) has been increasing: in 2009, the ratio was 733 academic to 860 administrators; and the number of managerial staff earning in excess of £100,000 each year almost doubled. It is hard to avoid the impression of the takeover of the university by a self-serving managerial elite, dedicated primarily to its own enrichment as a “control-class.”

But during the closure negotiation, the Philosophy Department did not say these kinds of things. Instead its members showed that the unit was profitable and was in fact paying the assigned rent to its administration. Osborne recounts:

The university’s argument for unsustainability shifted to there being a “lack of balance” between the group’s component activities (in a group of less than 8 staff). The point being that, for the University, low-income activities could only be justified as necessary conditions of higher income activities.

This last phrase is the crucial one. Philosophy beat back its managers on the question of its explicit costs. It was covering those, even with the very high rent. But it lost out on implicit or opportunity cost. Management was asking, “What is the return on an investment (ROI) in philosophy compared with that of another program that we’re not funding in order to fund philosophy?” If we closed philosophy, management was asking, and gave its money to, for example, business economics, would we have a higher return on our investment? What is the opportunity cost of not investing philosophy’s money in business economics?

The same type of calculation may well have been made at Albany. For the reasons I suggested earlier, French and Italian probably were solvent on the basis of overall workload or student turnover. But just saying that explicit costs were covered doesn’t address the implicit opportunity costs of not giving $2,000,000 to, for example, the Center (now College) of Nanoscale Science and Engineering just because that money has always gone to languages. The prevailing theory in managerial circles is that ROI will be much higher in engineering than in French. In the era of financialized universities, technoscience ROI is both a desired revenue stream and a crucial political bona fides. What could humanities faculty members do in response to this argument? If administrations allocate resources according to their perception of potential investment returns, then faculty members must contest current perceptions of returns in the technosciences. This contesting will be harder and more conflictual than asking to maintain modest humanities base budgets, but I’m afraid the time has come to do it.

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In the business world, high ROI comes from the pricing power tied to a completed product, generally based on a quasi-monopolistic or dominant market position. ROI is calculated on an all-costs basis, which requires that development costs and other long-term investments in the product to be deducted from the sales revenues themselves, in order to get an accurate estimate of the return.

Universities, in contrast, conduct mostly basic research, which loses money: research is a pure cost, which is why corporations in the era of shareholder dominance spend 80% of their R and D funds on product development (“Table 4-3”). Universities also conduct applied research, but that has a money-losing profile. Most R and D spending in the United States is actually product development, which has eventual returns that can be traced back to the development process. Only 8% of academic R and D is development, and universities do not retain these products and sales to use to calculate an ROI on their research investments (Chapter 5).

In the past few decades, research universities have come up with two main work-arounds for the problem that they aren’t profitable and never will be. One is to patent research results and count royalties as returns on research investment. This strategy doesn’t make a very good case for big ROI on STEM research: royalties are a small fraction of R and D contracts and grant revenues, and only a fraction of that money returns to the institution as profit. I calculated that mid-2000s net royalty returns on research expenditures were less than 1% for the top patenters among research universities (Unmaking 344–45). The argument for patenting ROI has enormous ideological and institutional inertia, as it symbolically places the university on the side of profitable free enterprise. It thus carries on despite the fact that you couldn’t run university research on its patent revenues for more than a few days a year.

The second strategy that universities use to exaggerate their ROI is to ignore their institutional subsidies for extramural research. Federal contracts and grants are counted as income rather than as taxpayer investments that would need to be returned with interest in a market enterprise system. (The battle to account for federal taxpayers as investors in R and D was fought and lost long ago.) STEM faculty members knock themselves out getting these grants—funding rates by most federal programs are at all-time lows—but the funding agencies do not cover the full costs of research. Universities must therefore make up the difference, which usually comes to about 20% of the grant total (Newfield,“How Can Public Universities”; COGR Costing Committee). Universities get that money from endowment or other fund interest or, in larger amounts, from state allocations and student tuition. This means that French majors at SUNY Albany (and at nearly all other research universities) are paying into institutional funds that go to STEM research rather than to SASH instruction or research. In the process, they are supplying the dark pool that artificially elevates STEM ROI.

The actual subsidy situation is different. Once the research of STEM fields has led, after much postuniversity effort, to a product, it may generate enormous positive revenues, but for a private firm rather than for the university. At the university, which performs basic and applied R and D, the ostensible moneymakers are busy losing money. Their annual deficits are in stark contrast to SASH fields, especially the social sciences and business components, which teach large numbers of students without much labor-intensive craft training. The senior managers at ASU, like everywhere else, keep the university solvent by taking the SASH surpluses on the right and using them to fill the STEM budget holes on the left.

The conclusion here is that STEM profits depend on SASH subsidies. Ignoring subsidies artificially elevates ROI.

This exaggerated or speculative future ROI should not be used to shift money out of SASH and into STEM—from French and classics to the Albany nanocenter, for example. My best guess, however, is that this shifting is exactly what happened in Albany. A high-powered, well-connected, and demanding technology unit joined with other leading departments and faculty members to convince a beleaguered administration that it would lose future ROI if it could not make a paradigm shift in its cost structure. Modest real and significant symbolic capital can be achieved by converting unspectacular humanities departments into service units. (The cautionary tale here, however, appeared when the nanocenter later dumped the Albany campus to become a campus on its own, with a direct line to state allocations [Mosher; Hitchcock]).

Symbolic capital is not to be sneezed at: the nanocenter helped put SUNY Albany on the political and corporate map. Subsidized and speculative STEM ROI connects campuses to powerful companies and executives, which has a long-term value. But these payoffs are not the actual revenues that are generally promised. More important, they are generated not by STEM in isolation but by the liberal arts university as a whole. Faculty members need to be in a position to show the intellectual and revenue contributions from the SASH disciplines and demonstrate that the work of the SASH disciplines is wrongly seen as low-income or an outright revenue drain.

We should fund the development of humanities research infrastructure through a multiyear rebalancing of today’s unsustainable and unjust cross-subsidies. (This rebalancing would also involve restructuring federal funding, which mostly goes to corporations rather than to universities.) But we aren’t ready for that step yet. Only a few faculty members are doing consistent work on this topic, and they are not generally supported by their senate leaderships or by their colleagues.

To begin, faculty bodies need to collect the budgetary data that will make visible the contributions that all disciplines are making to the university, with or without their consent. After some initial conflict, this process should unite rather than divide: while SASH faculty members are starved for both research and teaching resources, STEM faculty members are seeing declining real federal R and D funding, on the excuse that STEM research is lucrative and can therefore pay for itself. The budgetary secrecy and the ensuing fictions of the financialized university are hurting knowledge creation in every field. Tenure-track faculty members have generally consented to the adjuncting of most instruction. Perhaps as humanities tenured faculty members become de facto service teachers, we will draw the line.