Budgetary Learned Helplessness
I usually write about K-12 schooling but an interesting thing happened this last week in higher education. The thing happened to me, and the story is helpful for anyone working in public higher education.
I was on a call with Dan Greenstein, the Chancellor of the Pennsylvania State System of Higher Education (PASSHE). My university is part of that system.
The system is Pennsylvania’s equivalent to the California State University system, or what are called ‘land grant’ systems elsewhere. Our system gets more state funding and is therefore a less expensive option for working class people all over the state.
Bottom line of the Chancellor’s remarks is that the PASSHE system is in deep financial trouble.
Six of the universities are insolvent and will face restructuring. Enrollments have been down. Many of them haven’t come back from the cuts put in place after the 2008 financial crisis. Tuition price point has risen so as to make us less competitive with private-publics like Temple and Pitt. The covid crisis is making all this much worse.
The universities in the worst shape are integrating with one another through affiliation. Faculty will most likely be retrenched. (My university isn’t in trouble but it affects us.)
The chancellor said he thinks the system will survive but he doesn’t know in what form it’ll survive.
Revenue vs. cost solutions
In a previous town hall, I asked him his position on the Pennsylvania Promise legislation. This legislation was equivalent to New York’s excelsior legislation that helps students whose families make less than a combined $100,000 with tuition.
It seemed to me that legislation helping students with costs associated with higher education would increase enrollments and help the system.
Greenstein said he prefers “cost side” solutions rather than “revenue side” solutions for a number of reasons, including the political situation in PA state politics. Republicans are actively trying to cut public higher education, not help it.
The response sounds wonky but I think it basically means that he prefers to cut budgets and eliminate costs rather than provision budgets through increasing revenues. Apparently the chancellor agreed with Republicans, at least in his vision: he preferred cutting to provisioning.
That was last year. He was talking about the system’s financial issues back then. In this townhall Greenstein struck a much more dire tone.
Complimentary Currencies: A Creative Solution
Those following the Modern Money Network and Nathan Tankus will be familiar with their proposal for Unis, or a complimentary currency that universities issue for themselves.
Unis will be issued as “University Payment Anticipation Notes.” Unis will have value as circulating money by virtue of the university’s willingness to accept them in later payments. What is more, the Federal Reserve can assist universities by extending its current purchasing support for Munis to Unis, guaranteeing that Unis, too, always clear at par.
Imagine: As a result of massive revenue losses and projected cuts in state support, Mid-Sized Regional Public University (MSRPU) faces a $150 million shortfall for FY2020-2021. Instead of waiting around for state and federal legislators to take action, and to avoid having to resort to drastic measures like furloughs, hiring freezes, or financial exigency in the meantime, MSRPU announces its plan to issue 150 million (or more) of its own Unis, which it guarantees to accept for all university payments — from tuition and fees to rent — across all university-owned real estate and every university cafeteria. Finally, to clinch the Uni’s universal acceptability, MSRPU petitions the Federal Reserve to backstop its credit with full purchasing support for Unis in accordance with its already existing statutory authority. Voila: Financial autonomy and local prosperity in the midst of a global meltdown.
The idea isn’t crazy. I’d seen Benjamin Wilson’s work on this and it’s pretty impressive. Wilson is an economics professor that uses a complimentary currency as a project in his classes. Students earn the currency through certain forms of labor and can trade it for things in the class. Other research from the MMN argues that it easily scales up as a creative option for austerity in crisis.
There are examples of complimentary currencies. The small city of Telino, WA has started its own complimentary currency in the crisis. Mayor Wayne Fournier describes the situation on Odd Lots. It’s a little out there but it’s helping his people make it through this difficult time.
Learned Helplessness
At the town hall with Chancellor Greenstein, I asked him whether he’d heard of the complimentary currency proposal and whether he’d be open to considering it as an option in the crisis.
He told me the same thing he told me a year ago. He wants to do cost side solutions rather than revenue side solutions, specifically because he wants to reduce the price point of tuition. I was left with a number of questions.
Wouldn’t reduced costs in the system lead to lower costs for students? Is the Uni proposal a revenue-side proposal? Does the Chancellor value austerity over provisioning as an approach to budget crisis? Why wouldn’t he use the same creativity as Mayor Fournier?
The least charitable interpretation of the response is that Greenstein is a neoliberal technocrat that intentionally wants to cut the systems’ resources because he thinks that’s the best option. A more charitable interpretation is that the Uni proposal is a provisions-based approach rather than an austerity approach, and Greenstein isn’t accustomed to thinking in ways outside the austerity paradigm.
Using that more charitable interpretation, I think this is a sort of budgetary learned helplessness. There are options. There are strategies, tactics, and things to experiment with. But leaders don’t consider those options.
It’s as though these institutional leaders are in a room with a door, want to leave the room, but think the door is locked. They don’t open the door because they think it’s locked. It’s not locked but they’re so accustomed to thinking of the door as locked that it wouldn’t make sense to even try opening it.