How Can I Avoid Your Definition of a Crisis?

How Can I Avoid Your Definition of a Crisis?

  

This week I stumbled upon Chapter 5: Responding to Extraordinary Financial Difficulties and the necessary actions needed to avoid the r-word, retrenchment.  Retrenchment is the result of a financial crisis that, when serious enough, can threaten the survival of the institution (Goldstein, 2005).  Although retrenchment can be avoided, there are unique circumstances that can impact a university on a catastrophic scale, which include: extreme physical disaster, major population shifts, and large decreases in state and federal funding.  Retrenchment typically includes a systematic, or haphazard elimination of major portions of an institution’s programs and activities (Goldstein, 2005).  As extreme as these circumstances sound, retrenchment isn’t as rare as one would hope.  A simple google search proved an article indicating that Southern Illinois University (SIU) is currently in a stage of retrenchment, according to the university president Randy Dunn.  Since 2010, state funding for Illinois public higher-education institutions has declined 17 percent.  While this drop is significant, Illinois Governor Bruce Rauner has proposed slashing that funding by another 31.5 percent this year alone (Graham, 2015).  Legislators have managed to cut that number down to 8 percent.  This state of retrenchment proves to be turbulent waters to navigate for Dunn, who is in his first year as president of the SIU system and acting chancellor to the Carbondale campus.  How can retrenchment be avoided?  Here is a list, provided by our text, of some short-term and long-term strategies to avoid retrenchment:

Short Term Strategies: ·      Reducing Expenses ·      Increasing Revenues ·      Managing Faculty/Staff ·      Fewer Classes/Larger Sections

Long-Term Strategies: ·    Actively Monitor Academic Programs ·    Changes in Staffing Patterns ·    Early Retirement and Buyouts ·    Redefine Guidelines for Retirement

Early retirement and buyouts was listed as a means of avoiding retrenchment in the long term, but Goldstein explains in Chapter 5 that some financial crises, college and university officials consider the prospect of terminating faculty and staff as a way to relieve financial distress (2005).  In an ideal situation, officials can respond through means other than termination, however, sometimes the magnitude of the reductions that must be accomplished within a very short period makes it unavoidable (Goldstein, 2005).  This period is only in absence of Financial Exigency is defined as “an imminent financial crisis which threatens the survival of the institution as a whole and which cannot be alleviated by less drastic means” (Brown, 1976).  The definition is helpful but can be difficult to apply due to differing interpretations of what constitutes an imminent financial crisis (Goldstein, 2005). 

Although these moments of financial crises are rare, they are more often prevalent in the world of higher education than one would think.   The importance of detailed planning to avoid retrenchment is made clear in our text and should be a necessary component of the budgeting process.

REFERENCES:

Brown Jr., Ralph S., "Financial Exigency," Bulletin of the American Association of University Professors 62 (1976), 5-19.

Goldstein, L., & Meisinger, R. (2005). Chapter 5: Responding to Extraordinary Financial Difficulties. In College & university budgeting: An introduction for faculty and academic administrators (3rd ed.). Washington, DC: NACUBO/National Association of College & University Business Officers.

Graham, S. (2015, September 24). Dunn: Era of Retrenchment Has Begun. Retrieved December 5, 2015, from http://thesouthern. com/news/local/siu/dunn-era-of-retrenchment-has-begun/article_55bd6fa0-cfb9-51d1-993b-ea9e93572bff.html