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The Art of Budget Cutting

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Among the things I liked least during my three chancellorships was cutting the university's budget. Yet, it was an activity to which my colleagues and I devoted countless hours. My dislike of budget cutting stemmed primarily from the fact that there were few "good options," and that one's decisions always had a deleterious impact on hard working professionals who cared passionately about the university. Although reducing the budget was always stressful, it was made tolerable by the wonderful colleagues with whom I had the privilege of working.

Early in my leadership journey, I learned several important lessons that served me well throughout my career. First, while everything is important not everything is of equal importance. Second, the greatest source of resources any university has is those it has, not those it anticipates receiving. Third, cutting the budget across the board is a pathway to mediocrity. The bottom line is simple: Cutting a university's budget requires discipline, integrity, courage and a focus on the institution's highest priorities.

During my last chancellorship, at North Carolina Central University, because of reductions in state appropriations, we reduced the university's budget by more than $50 million over a five year period. In addition, there were double digit tuition and fee increases several of those years. Budget cuts combined with tuition and fee increases, wreaked havoc on students and their families, more than two thirds of whom relied on financial aid to attend the university. In fact, the median income for a family of four for NCCU students was approximately $22,000 while the average level of loan of indebtedness for 2011 graduates was more than $25,000.

Recognizing that reducing the university's budget is an art and not a science, as Chancellor I always took the position that my role was to work with members of the executive leadership team to define and articulate the parameters by which we would adjust the university's budget. Maintaining student academic success was always at the top of my priority list. A second priority was to make sure the university met all accreditation and fiscal compliance requirements.

No matter the care with which we approached and executed our budget reduction requirements, there were always faculty and staff who felt their unit had not been treated equitably. Of course, there were chairs and deans who were convinced their departments and colleges should be exempted from having to make any budget cuts whatsoever. After all, as their reasoning went, were it not for popularity of their programs the university's reputation would suffer a major blow. The fervor of their arguments notwithstanding, the fact remained that resources were finite and choices had to be made.

Effective budget reductions should be governed by at least six core principles.

1. Transparency trumps everything. Even though various university constituencies may vehemently disagree with the president's decisions, they deserve to know the rationale for the decisions.

2. The whole of the university is greater than the sum of its parts. No matter how popular a particular program may be or how vocal its faculty and staff, the well-being of the entire university must be preserved.

3. Funds must be preserved for strategic investments that address enrollment stability, growth and institutional effectiveness.

4. Faculty and staff are the university's most important assets and funds to support their development and renewal are essential.

5. Efforts to recognize and celebrate individual, departmental and institutional achievement should not be deferred. While a feast is not necessary, bringing people together for appropriate recognition and reflection builds camaraderie, community and confidence in the future of the institution.

6. The chancellor's office should never be exempt from having to make budget cuts. Shared sacrifice is the most effective way to demonstrate that you feel the pain.

No matter how many times my colleagues and I had to grapple with cutting the budget, it was never a process with which I ever became completely comfortable. After all, every cut impacted some aspects of university operations and the lives of people who contributed to its well-being and responsiveness.