To close budget gap, university should consider deficit spending

In his recent letter to Stanford employees (Stanford Report, Dec. 3, 2008), the provost states that the university's response to the current national and global economic downturn requires us to eliminate as much as $100 million from the $800 million general funds budget over the next two years.

These are draconian cuts when applied in the short term. As an example, consider the case of the science and engineering libraries. The total science and engineering libraries budget is approximately $10 million, for which a 15 percent cut would amount to $1.5 million. The budget is made up of approximately $8 million for collections (15 percent cut = $1.2 million); approximately $2 million for staffing (15 percent cut = $300,000); and maybe $100,000 for expendable supplies. Thus there is no way of effecting these cuts without impacting the collections. But it may be argued that the libraries are an essential long-term infrastructure investment for scholarship. To hack away at this investment in the short term is undermining Stanford's long-term base for leadership. By insisting on short-term cuts, we are sacrificing our collective long-term interest to short-term accounting. I'm sure there are similar arguments to be made about other units of the university.

I write to suggest that there may be alternative business models the university should consider. Since universities evolve on a time scale measured in decades rather than years, a decision to re-normalize (i.e., shrink) the university's budget should be spread out over a number of years. This can be done by deficit spending or, put another way, by borrowing the money. Admittedly this will cost extra over the longer term. On the other hand, it will buy us time in making decisions about cutting back on vital functions such as faculty hiring and retention and in what to discard in library collections, etc. It will have the advantage of limiting the short-term damage and also for allowing for adjustments if there are improvements in the national and global economy over the coming years.

Sebastian Doniach

Professor, Applied Physics and Physics