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		The Impact of the Economic Recession on Higher Education and Approaches to Budget Cuts for Residence Life Departments By Jeff Doyle, Director of Residence Life, Appalachian State University A Primer on Higher Education’s Challenge in an Economic Recession Unless you hibernate for the winter, you probably are aware that most of the world is in one of the deepest economic recessions of the past century. Although mini-recessions did occur in the United States in the early 1990’s and early 2000’s, the size of this recession is expected to be much greater, and many people are comparing this recession to the Great Depression of the 1930’s. The impact of this recession has already led to the re-emergence of some words in higher education that we have not heard for a number of years – layoffs, furloughs, travel restrictions, and budget cuts. However, as one of two longest lasting institutions in the United States (the other being the church), higher education has certainly weathered its fair share of depressions. As our Director of Counseling so commonly waxes, “The best predictor of future behavior is past behavior.” Thus, by having an awareness of what has happened to higher education in past recessions we can hopefully have a better idea of what may happen to higher education in the current recession. The purpose of this article is to provide an overview of the impact of an economic recession on higher education and then to recommend some approaches residence life departments can make in response to the budget cuts. The Cliffs Notes version of what to do in times of budget cuts is really quite simple. We can either increase our revenue or decrease our spending. Most student affairs administrators are in no position to raise money, so we spend most of our time cutting budgets. However, it is worth briefly exploring the revenue side of a recession. I am going to focus on public universities because this is where approximately 75% of college students are enrolled. The majority of funding for public higher education comes from the state, not the federal government. The federal government, in case you are interested, invests the majority of its higher education funding in grants, loans, and tax benefits for students and parents of students. But the state, on the other hand, gives universities, on average, approximately 25% of its budget, by far the largest percentage that most universities receive. Most articles about budget cuts at public institutions are linked to decreases in state appropriations. Thus the question: why are states cutting funding to higher education when they should know how important higher education is to the state? There are several reasons for this and I will highlight two of most significant. First, states make money through taxes, usually sales, income, corporate, and additional taxes on tobacco and alcohol. During a recession, most of these taxes decrease because people buy less consumable items, less people are employed, and businesses struggle to make money. In short, the state has less revenue to give away and unlike the federal government, most states have to maintain a balanced budget. The second reason higher education is often cut more significantly in state budgets is that universities are different than any of the other major expenses in state budgets. The other big expenses in state budgets include Medicaid, the K-12 school system, transportation, and public welfare. These expenses are considered more important in the eyes of most Americans and they also have one more thing in common – none of them have alternate sources of significant revenue. In other words, higher education is the only area of most state’s budgets that has another revenue stream, called tuition, and therefore can survive with less state support. Budget cuts to K-12, transportation, and other state priorities typically lead directly to layoffs. However, budget cuts to higher education are not an automatic layoff trigger. Instead, higher education can increase tuition or donations to increase the revenue stream. Unfortunately, raising money from donors and spending from endowments are revenue streams that typically decrease during recessions due to challenges with fundraising and endowments that don’t earn much, if any, money. Thus, the only way for most public universities to increase their revenue stream when budget cuts occur is to raise tuition. This may sound antithetical, that during the times when our nation most needs higher education, higher education makes it harder to attend. However, hopefully this article has helped you understand that unless colleges and universities are going to cut budgets, their only way to make up for the lost revenue from the state is to raise the cost to students. Most people outside of higher education, when faced with the choice of increasing tuition and or making budget cuts to higher education choose the latter. This is not to say that you will not see tuition increase more in the coming years than it has in the past few years. Unless state legislatures pass laws limiting tuition increases, most universities will attempt to raise tuition significantly to make up for lost state revenue. However, in a climate of increasing distrust of higher education, the resultant tuition increases will probably be much less than universities need to make up for decreased state funding, private giving, and endowment earnings. Thus, in a nutshell, we can see that because of the challenges of increasing revenue there is going to be a lot of budget cutting in the next few years. With that in mind, I will now offer several ways residence life departments can be proactive in the face of looming budget cuts. Strategies for Approaching Budget Cuts Almost all universities use a system of budgeting that has been used for years and considered antiquated. This budgeting system, called incremental budgeting, results in departments receiving the same amount of money they received the previous year. Departments can request incremental additions to the budget each year but most never have their standard sum challenged. However, in a rapidly changing culture, incremental budgeting does not maximize strategic and innovative thinking. One approach to budgeting that can be very helpful during budget cuts is zero-based budgeting. In zero-based budgeting, the department rebuilds the entire department using the total budgeted amount. For example, Residence Life at Appalachian used zero-based budgeting this fall to re-examine our staffing structure and ultimately add an additional full-time staff position. When we stopped thinking about our existing expenses, we were able to focus on priorities. We discovered out-of-state tuition waivers for graduate students and undergraduate desk assistants allocated to all full-time staff were staffing areas that were expensive and not essential. If necessary, we could have reduced these expenses in response to budget cuts. However, we were able to reduce these expenses and add an additional full-time staff member without spending any additional money. Although zero-based budgeting can be threatening to existing staff and programs, the results of it can be phased in over time as existing staff leave or programs end. Another approach to budget cuts is what I call “strategic alignment.” This approach begins by identifying all the activities a department does in a given year. In residence life, this might include staff selection, training, RA programming, Hall Council funding, learning communities, etc. Depending on the depth to which you are willing to go, you can come up with anywhere from 10-50 significant activities. The next step is to revisit your mission, vision, core values, and strategic initiatives. If you don’t have these statements, you may want to begin the process of developing them. Housing and Residence Life at Appalachian is currently going through a strategic planning process in which all departmental student and full-time staff members were given the opportunity to offer feedback on these important documents. In addition, other benchmark housing and residence life departments were examined for best practices. The next step is to have a small representative team of about 6-10 people review the summarized information and draft statements of mission (organizational purpose), vision (desired image of the future), core values (how staff treat each other and students), core assets (key departmental strengths), and strategic initiatives (3-7 specific goals that align with the other statements). These documents together serve as a strategic plan. Once these documents are in place, take your list of activities and evaluate them for their relevance to the strategic plan. Those activities which are not essential to the functioning of the department should be examined for budget cuts. For example, residence life at Appalachian runs an annual Human Potential Retreat, a weekend leadership conference for residential students not serving in any leadership roles. However, the Center for Student Involvement and Leadership also sponsors multiple leadership retreats every year that attract a wide diversity of students. Residence Life decided the value of the Human Potential Retreat, which costs over $120/student, was not important enough to continue. Instead, Residence Life plans to more effectively market other campus leadership conferences to residence hall students. In short, a budget-cutting era is a great time to carefully examine all existing practices for relevance to departmental priorities. Everything we do is probably beneficial, but it is time to identify the most cost-effective and important priorities. A third approach to budget cuts is one that often has to be made at the director level – practice budget transparency. Every year I white out individual staff member’s salaries and then give my staff the entire residence life budget. I ask them to think about what they would like to add to the budget for next year. I encourage them to think outside-the-box and come up with innovative ideas that are accompanied by cost estimates. We usually get some great ideas that many of us would like to implement. The next step is for my staff to identify what parts of our existing budget will we cut in order to implement these new ideas. Obviously, this does not go over as happily as creating new programs. However, there are several research articles that have identified budgeting as one of the areas where new professionals in student affairs have the least experience. I want to help my staff learn how to make the tough decisions they will be faced with as they progress up the organizational hierarchy. Thus, we fret and struggle to identify areas that could receive less funding in order to implement our new ideas. This difficult process ultimately results in our staff really studying how much money each of our existing programs needs, not wants, to be successful. For example, this past year we added additional money for graduate assistant selection, a process residence life coordinates for the entire student affairs division. In order to add these funds, we recognized that most hall councils were not spending more than 60-75% of their allocated funds. In order to maximize the use of these funds, we removed approximately a third of hall council funds and used some of these funds for the division-wide graduate assistant selection. We placed the remainder of the funds in an account that all hall councils could access by completing a simple programming grant application. In short, the hall councils that were most active in planning activities requiring funding were rewarded by access to additional funding for their activities. There are many other strategies to maximize existing resources and reduce expenditures in residence life. For example, many housing departments employ hall desk staff members who do very little beyond monitoring student egress and distributing building equipment. These staff members are often underutilized and they could be of assistance in creating flyers, collecting survey assessment data from students, or doing web-based research on other institutions. Another money-saver used at Appalachian is to give each residence hall their programming money for the year in August. However, if buildings have not spent half of their money by the end of the first semester, the most important semester for student retention and success, they lose the funds that should have been spent on their residents. These funds can be either saved or allocated to other areas that have demonstrated a need and ability to spend wisely. There is one final point to consider with regards to approach budget cuts. Many people use economic recessions as a time for doom-and-gloom predictions about the future. There is very little any of us can do to pull our nation and world out of the recession. What we can change, however, is our attitude toward this recession. While I do not deny the gravity of our current economic realities, I refuse to put on a sour-face and live in fear of the future. Instead, I find it motivating to remind myself and my staff that we are living in an exciting time, a time when we get to revisit our organization’s priorities and align them with what we believe is most important for our students. In other words, the budget crisis is a tool we can use to make our departments stronger and more visionary. Let’s make it happen! About the Author Jeff Doyle is the Director of Residence Life at Appalachian State University. Jeff is also an adjunct graduate faculty member in the Higher Education Master’s Program, where he teaches courses in college finance and readings in higher education. Jeff previously served as the Assistant Vice-President for student affairs at Shenandoah University. He has a Ph.D., M.Ed., and B.A. from the University of Virginia.