“Could or should the administration have anticipated a crisis like this? Arguably, yes, since there was a major, worldwide financial crisis beginning in 2008, to which the university was, of course, not immune,” Duggan says.
On October 14, President Assanis and John Cochran, chair of the Board of Trustees, sent to the university community a lengthy letter, entitled “Ensuring Transparency.” This was evidently their response to an unfulfilled attempt at entering into negotiations with the AAUP-UD faculty union, which had insisted on the administration’s transparency about university finances as a precondition for renegotiating yet again the contract with the faculty that had just been renegotiated in July. The administration refused to do so, and instead issued this letter with a new website which is full of facts and figures. Here I wish to address only one issue which stands out amidst all these numbers.
These days, the budget of the university is ordinarily on the order of $1.3 billion. According to the “Overall Financial Summary” appended to the letter, in FY17-19 the university earned surpluses of $78, $57 and $27 million in those years, respectively, totaling $162 million—a sum close to one of the many estimated deficits for last spring and this year (which range upwards to $288 million). What happened to such surpluses? Were they put into some kind of “rainy day” fund, a piggy bank, the endowment or what? If one examines the IRS 990 forms which the administration is required to submit annually, the surpluses for FY16-18 were similar ($56, $60 and $54 million, totaling $170 million). In short, since its inception in 2016, the Assanis administration could have put away either $162 or $170 million for a situation like this.
Could or should the administration have anticipated a crisis like this? Arguably, yes, since there was a major, worldwide financial crisis beginning in 2008, to which the university was, of course, not immune. If one examines the 990 Forms submitted to the IRS for FY 2006-08, one finds that the university reaped a total surplus of $199 million in three years. The crash of 2008 caused a deficit of $66 million. The administration of President Patrick Harker (2007-15) responded by steeply increasing out-of-state tuition (and abolishing reduced graduate tuition for Delawareans), and between 2009 and 2015 produced a total surplus of $572 million. Again, where did all that money go? If one adds the first three profitable years of the Assanis administration, that’s over $730 million in a decade. Where did it all go? If it was not put into some kind of rainy-day fund, why not? And why are the non-unionized employees of the university, including the generally not well-paid staff, being forced to take salary and wage cuts now at the same percentage as the exceptionally well-paid, but arguably insouciant upper administration, who are apparently accountable only to the Board of Trustees?
The upper administration and Board of Trustees, not faculty and staff, clearly are responsible for the lack of putting the budget surpluses into a fund that could be used for foreseeable budget crises like the one we are in now, and so it is they who should remedy their failure of fiduciary stewardship in a way that spares the faculty and staff.
Lawrence G. Duggan Professor of History
Lawrence G. Duggan is a professor of history at the university. His opinions are his own. He may be reached at email@example.com.
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