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Why Biddy Can't Show Us The Money

Loyal reader PC recently wrote in commenting about Biddy’s article in the Chronicle last week. He noted that last year’s financial plan for the University documented a net operating surplus of $22 million, but that the cost of adopting financial aid policies that mirrored Harvard’s would only be $17 million. So why can’t Biddy afford it?

The problem with the $22 million figure is that it represents the net operating revenue for the entire university—including Weill Cornell—and does not represent the funds that could conceivably be used for financial aid. As of January, Cornell is only projecting a net $2 million surplus for the Ithaca campus this academic year. And a lot of that $2 million is already “owned” by individual budget units across the University.

It’s very easy to forget that the University’s finances do not operate as a giant pot of money swishing around. Money from the Medical School can’t suddenly find itself paying for a Human Ecology student’s financial aid.

The only place where extra money for financial aid can come from is the Provost’s discretionary budget (which is documented as “general purpose allocations” on pages 54 and 55 of the 2006-2007 financial plan). A lot of this money goes back to individual colleges depending on enrollment levels; the bulk of the rest gets divided up between research dollars that the provost doles out, expenditures for buildings and support services, special academic programs (like the Institute for the Social Sciences, which really needs a more attractive website) and yes, financial aid.

So if we assume that the University can’t make any spending cutbacks on support services and building expenditures, the only source of additional financial aid for the University is the special research and faculty programs that the provost supports.

Now, if the University really wanted to do so, it could cut back on supporting new, exciting research programs and spend more money on financial aid. But as I argued last week, right now Cornell doesn’t think it is in its best interest to do so. And I suspect that this position will not change unless some of Cornell’s peer institutions (e.g. Northwestern, Carnegie Mellon, Michigan) make changes to their financial aid policies and start attracting more students away from Cornell. But I suspect every provost is hoping that nobody else makes this move.

We should all brush up on our game theory.

But, of course, this is no reason not to go out and donate money to our alma mater. The University needs additional resources not only to provide students with a world-class education, but to also invest in the research and outreach activities which will allow for future life-saving breakthroughs in science, technology, medicine, and government.

Matthew Nagowski | Posted on May 03, 2007 (#)

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