12/7/2009 Budget cuts

Fact Checker here.

First, I was interested to see that the biology department has had to cut ten percent, more than $200,000. This would suggest to me the entire department operates on a budget somewhere over $2 million.

Just last week, in an excellent series, the Chronicle pointed out the athletic department had so far cut five percent. And we also learned about the $3.7 million annual salary for the basketball coach.

Fact Checker gives you the facts. You tell me if they are out of whack.

Now, let's look at the main thrust of the article.

Thank you, Chronicle, for digging up this information about the weekend Trustee meeting. It affects us all -- and is far more important than the only official news release about the meeting. So much for transparency.

That release covered a new masters program, which will initially embrace only 25 students. The news release, needless to say, pointed to this as an academic highlight, neglecting Provost Lange's frank admission to the Academic Council on May 7th that we'll see a proliferation of these new masters programs as "a way to enhance revenue."

Fact Checker does want to comment on one of The Chronicle numbers, which stated the budget was $2.12 billion last year.

I believe that you will find -- and believe me this stuff is hard to ferret out of The Allen Building and if I am ever wrong, I acknowledge errors immediately -- that subsequent to the announcement of that figure, Duke adopted a new accounting standard that trimmed the original number to $1.91 billion. The change involved the treatment of student financial aid, it doesn't make any difference, and it is only confusing to discuss it any more here.

The current year is "flat," which is to say we are spending just as much as last year.

Loyal readers will recall that the budget we are discussing -- like the fiscal crisis itself -- only involves the educational mission of Duke. Our separately budgeted Health System -- with revenue from patients seeking treatment -- had a PROFIT (oh they called it a surplus) of $220,300,000 last academic year!

Loyal readers, I want to remind everyone of President Brodhead's clear declaration of what must occur with the education budget. In a March 1, 2009 letter to all stakeholders, he stated:

"....over the next several years we will have to adjust to the reality that Duke’s budget, instead of growing steadily, will have to be approximately $125 million smaller than it is today."

This pledge was subsequently refined to embrace three full years of phasing in cuts: the current 2009-2010, 2010-2011 and 2011-2012. By the 2012-2013 academic year, we'd have hit target.

The impact can only be understand if you remember that Duke's education budget has been growing at compounded rate of 9 percent a year (another statistic from Mr Brodhead, quoted in the current issue of Duke magazine and generally not heard).

So if the good times had continued to roll, and all of us were assuming they would, Duke's budget starting July 1, 2013, would have hit approximately $2.69 billion. In fact, the cut Mr Brodhead envisioned gives us only $1.79 billion to spend.

How is that for perspective!

We are also seeing that the expectation that we will have to cut $125 million is too optimistic. We'll hear more about that after we get the half year financial results, as discussed in the Chronicle article. That would be a first: in the past Duke has steadfastly refused to disclose anything but annual figures.

✔Good luck on exams.

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