Inflation and Budgets | Confessions of a Community College Dean

Everyone loves word problems …


So here’s a good one.

“State funding has been flat for years. Local funding is also flat. Tuition increases are capped at 2 percent. Enrollment is down. Inflation is running at 8 percent. How do you prevent devastating after-inflation cuts in your employees’ salaries? Show your work.”

It’s not easy.

Admittedly, it’s not the best word problem. I was always partial to the ones with embedded jokes in them. (“A train leaves Chicago heading north at 45 miles per hour. How long before the train is submerged in Lake Michigan?”) But it’s a stumper in its own right.

Multiyear contracts can make bursts of inflation particularly difficult if the timing is wrong. But even when the expiration date is right, it’s hard to get legislatures to fund appropriations in keeping with inflation. They don’t want to risk the political fallout of a potential tax increase.

Most community colleges don’t have significant endowment earnings factored into their operating budgets. (Even if they did, the market is having a rough year.) Typically, the bulk of operating budgets comes from a combination of student tuition/fees and state/local/public aid. The exact mechanisms vary by state—some have tax levies, some have “districts,” some don’t have local funding at all—but the core blend of tuition plus public aid is standard.

So I’ll draw on the collective wisdom of my wise and worldly readers for this one.

Is there a reasonably realistic and elegant solution to the word problem? I can be reached on Twitter (@deandad) or via email at deandad (at) gmail (dot) com.

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