Cash Flow and Financial Exigency in Post-Pandemic Higher Ed

Some of my UW-Milwaukee colleagues were surprised to learn that in the face of the current financial crisis, our chancellor had halted his recently announced (March 2) Voluntary Separation Incentive Program. VSIP had been designed to reduce ongoing payroll obligations in light of diminishing enrollments by offering qualifying faculty half an academic year’s salary to retire at the end of the current academic year. Voices of reason like Wisconsin AAUP Wisconsin president Nick Fleisher explained the decision as motivated by a need to reduce cash flow in the pandemic crisis. Which does sound, well, reasonable.

But as the economic toll of this crisis mounts (and forecasters begin to predict conditions akin to the Great Depression in the face of nearly 10 million unemployment claims in the past two weeks), one might wonder whether there could be another explanation for UWM’s abrupt cancellation of its early retirement program.

Given the increased likelihood of campuses declaring financial emergencies in the face of the almost certain drops in enrollment in the face of a possible economic depression, perhaps the decision to cancel the VSIP program was made for other, more fiscally savvy reasons. Because if UWM (like other universities) finds it necessary to declare financial exigency, they would be legally authorized to reduce their salary load through closing programs and releasing tenured faculty–without paying the 50% premium promised by the VSIP.

In other words, while halting the VSIP buyout would indeed help with short-term cash flow, this decision could very well be motivated not by a desire to reduce voluntary early retirements but by the realization that a likely declaration of financial exigency would allow UWM (or any university) to reduce its payroll by involuntary separation of tenured and tenure-track faculty, thereby helping with both short-term and long-term cash flow. While it would not be necessary to declare a financial emergency in order to dismiss or not renew precarious faculty (who are both increasingly vulnerable and comparatively affordable in a post-COVID environment), the most attractive source of savings to a university administration needing to drastically cut its budget would come from getting tenured and tenure-track faculty off of the payroll.

To be clear, nobody in the UWM administration has talked publicly about declaring financial emergency.  But an article in yesterday’s Wisconsin State Journal (on the financial impact of the current pandemic on UW-Madison) quoted this dire forecast from Chancellor Becky Blank: “‘My expectation is there’s going to be a number of schools going out of business as a result of this,’ she said, adding that she hoped none of the closures were within the University of Wisconsin System.”

And in an email subject to Wisconsin’s Public Records Law, UWM Chancellor Mark Mone responded to my urging that he privately and publicly oppose any declaration of financial exigency at our university, writing that such a decision is “not a subjective matter: if the cash flow isn’t there, it isn’t there.” Although Chancellor Mone went on to reiterate the need to protect and defend the integrity of UWM, the seeming reduction of the decision to declare financial exigency to a question of “cash flow” should be worrisome not only for my colleagues at UWM but for faculty at all but the most elite public and private universities across the US.

The battle to preserve higher education in the US must be waged on multiple fronts. We must fight to protect the most vulnerable among us (precarious faculty, students, non-academic staff) in the short and long term. But we must also fight to preserve the conditions of tenure and employment security that have protected the academic freedom and pursuit of knowledge that have been the hallmarks of higher education in the US.

Sadly there are too few organized bargaining units on college campuses. But before universities use “cash flow” as a reason to declare financial exigency and fire faculty and staff, we need to work together to offer other, undoubtedly difficult, solutions.  Unlike previous attacks on the university under the false flag of neoliberal austerity, the coming post-pandemic economic crisis is real (although there are a range of non-neoliberal approaches to this crisis that should be on the table).

One such approach might be to streamline the managerial university, to shed managers and administrators rather than faculty or academic programs.  Another approach might have to include substantive campus-wide furloughs to reduce payroll by 5-10% across the board.  And another solution might be, yes, voluntary incentives for faculty to take early retirement, which might cost a little more in the short term but provide a more rationalized and humane approach to reducing payroll in the long term.

There are undoubtedly other solutions that might be pursued. If you’ve got ideas on how to preserve higher ed in the US, now is the time to share them. And now is also the time to remain vigilant.  We must keep pressure on university administrators and government officials to make sure that whatever drastic changes might need to be made are done with the full participation and collaboration of shared academic governance and the long-term needs of the citizenry.


About rgrusin

I direct the Center for 21st Century Studies and am Distinguished Professor of English at University of Wisconsin-Milwaukee.
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2 Responses to Cash Flow and Financial Exigency in Post-Pandemic Higher Ed

  1. Pingback: Thursday Doesn’t Even Start Links | Gerry Canavan

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