Tools and Resources for Faculty to Fight Austerity
As coeditors of this Academe special issue on revolutionizing higher education budget and finance, we have prepared an information-stuffed “rucksack” to demystify the jargon, assumptions, and practices of financialization on our campuses. It provides individual and collective tools that faculty members, staff, students, and alumni can use to analyze campus finances, challenge austerity practices, and engage in budget activism to build alliances and organize for change locally and statewide.
The rucksack proposes steps toward a long-term organizing strategy, which is key to leveraging power to challenge the distribution of funds and reverse the trend of financialization. It expands on ideas shared by Aimee Loiselle in February 2021 on the Labor and Working-Class History Association Contingent Faculty Committee Blog.
Part 1—Glossary of Key Terms
capital outlay. Money spent to maintain, upgrade, acquire, or repair capital assets; sometimes called capital expenditures. Capital outlays are recorded as liabilities on balance sheets but considered investments, so the accounting is different from that for operational expenses.
deferred compensation. Remuneration received at a later date, including individualized investment plans for top administrators in addition to conventional retirement contributions. A board may allocate hundreds of thousands of dollars a year in deferred compensation, which can be invested tax-free until the time of the payout; for example, the president of Johns Hopkins University received in 2013 $1.6 million in salary, $1.1 million of it in deferred compensation, and $310,000 for serving on the board of directors of T. Rowe Price, while the CEO of that investment firm served on Johns Hopkins’s board of trustees.
“Counting Deferred Compensation"
financialization. The increasing influence of financial advisers and firms over institutional policies and practices, which elevates the financial sector and transfers resources and capital from other areas, like teaching, into the drive for short-term gains.
highest return on investment (HROI). A measurement used in budget models that emphasize capital revenue, evaluating the financial performance relative to the amount of money invested. Return on investment (ROI) is the ratio between net income over a period of time and investment or costs at a particular point in time; a high ROI means the investment’s gains over time compare favorably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments or costs.
incentive-based budgeting (IBB). A current budget model that administrations use to replace the “incremental” budget process (in which a prior year’s budget is carried forward with annual increases or decreases based on costs and resources). IBB is based on anticipating multiyear university changes, mostly to enrollment and tuition, and top priorities, usually financial. It pushes financial responsibility downward onto departments, now called “revenue centers,” which have to track and often generate their own income and determine their own expenditures.