A budget update: the road ahead

Dear colleagues,

The pandemic has constrained many things, and one of them is our budget. You have a stake in our decisions, so I have tried to keep you apprised of our fiscal state. In April of this very strange year, I asked how you’d recommend we prioritize budget cuts, and later I shared with you how we planned to cut spending. 

Now I write to update you on our spending adjustments and how we are preparing for the future.

This year, the College of Arts and Sciences had to cut about 7.7% from its budget. Furloughs and temporary pay reductions accounted for 2.7%, and our portion of campus budget cuts was 4.8%. The rest we have planned to come from incentivized retirements of tenured and tenure-track faculty. I had three guiding principles in making this choice. The first was no layoffs; the second was no additional pay reductions; the third was our actions had to leave us poised to come out of this crisis stronger than we went into it. 

As I noted in July, our choices are very limited. We have an inflexible, brittle budget that can’t readily absorb even a relatively small cut. Here’s a rough scale of the problem: 

The campus incurred unexpected costs and revenue losses of about $69 million in the spring when we had to close the campus, and the 2021 fiscal year budget includes an additional ~$96.6 million revenue reduction (about 10.4%) from the previous year. The 2020 annual academic general fund for all colleges at CU Boulder is $342 million, and the College of Arts and Sciences spends about half of that, $170 million.

At the core is a critical fact: The college budget is primarily salaries. Tenured and tenure track faculty salaries are 49% of our budget; graduate student salaries and tuition remission accounts for 19% of budget, and instructor salaries compose 7% of budget. Staff salaries are 11%, so salaries plus tuition remission account for 86% of our spending. Operating expenses and pass-throughs to departments like DAICR and Academic Program Allocations (former fees) account for remaining 14%. 

The fact that our budget is mostly devoted to salaries means that when we must cut our spending, reducing salary costs is the only large lever we have to pull. As it happens, the pandemic hit at a time when the Baby Boom generation is retiring. About 30% of our tenured faculty are over the age of 65. To meet a 4.8% budget reduction, which is about $10 million (with benefits budget included), with retirements alone, about 60 tenure-track professors would need to volunteer to retire. We are nearing that goal today.

What would we do if we didn’t have this retirement lever? Our rigid budget doesn’t leave much option other than program elimination. If we faced a future funding shortfall similar to or larger than this year’s, we would need to take actions like eliminating about three medium-sized departments or disbanding the college and reforming it with fewer faculty from many units.

This is a lever of absolute last resort and is one we would pull only in the most-dire circumstances and only after consulting with the college’s faculty and staff. 

Meanwhile, we are obliged to prepare for the future, to gain budget flexibility so that we are not forced to face such choices. To do this, we propose to rebalance the ratio of tenure-track faculty to instructors. Currently, that ratio, by head count, is 3.3:1 (TTT to instructors). Reducing tenure-track faculty by 50 and adding 25 instructors would yield a new ratio of 2.8:1. Accounting for related savings, making this move would free $6.2 million annually. 

What would we do with these savings? Rather than reinvesting in tenure-track positions, we should invest in more flexible ways than we now do. This would mean investing in more staff, infrastructure, better support for research and creative work, travel, an “excellent new ideas” fund, faculty retention and the like. With somewhat smaller ranks of tenured faculty, we would be able to better support the faculty, staff and students we have.

We must envision the College of Arts and Sciences of the future, five to 50 years from now. That college should better support its tenured faculty and teaching professors. It should also be nimbler—fiscally and programmatically—better able to withstand the inevitable economic downturns and better able to invest in great new ideas.

To a great extent, realizing this vision will require a culture change, a close examination of our values and a critical analysis of how we can best translate those values into action. It will require the discipline, knowledge and skill that we foster in a liberal-arts education.

On Dec. 15 at 4:30 p.m., I’ll hold a Zoom discussion on the budget. To join this meeting, please use this link. 

The future starts now. We intend to emerge from the pandemic stronger and better positioned for the challenges ahead. And with your continued support and help, we will.

Sincerely,

James W.C. White
Interim Dean

This message was originally sent as an email to all faculty and staff on Dec. 2, 2020.