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Unclear on the concept

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“It’s frustrating to see the only folks who are being funded are due to court orders, but we really don’t want to do our business that way,” said ISU President Larry Dietz. “It’s very difficult to run any of the universities for essentially a third of the year not knowing what your budget is going to be. We often hear, ‘Why don’t you run the university like a business?’ Well, I don’t know any business that doesn’t know what its revenue stream will be.”

President Dietz has obviously never met a business owner facing some unexpectedly tough (or good) times.

Consumer tastes change, economic climates change, people make mistakes, and sometimes stuff just comes down out of the blue.

posted by Rich Miller
Tuesday, Nov 3, 15 @ 8:57 am

Comments

Clearly the ISU President a bureaucrat who has never had to face meeting payroll obligations out his pocket. You know, with money that is not granted to him from the Government and its taxpayers.

Sir, I would hope your business school has a better understanding of the real world than you do.

Comment by LarryMullholland Tuesday, Nov 3, 15 @ 9:08 am
Let’s not play “gotcha” with this one; it is a valid point that the Universities ought to be given their appropriations not least because it is difficult to plan when they don’t know what the state might be paying for.

If there is a real problem with the comment, it is that it does nothing to challenge the mistaken but prevlalent notion that businessmen should be put in charge of everything. They shouldn’t be.

Comment by History Prof Tuesday, Nov 3, 15 @ 9:11 am
Government organizations and business organizations are remarkably different in their operational approaches. Governments are open systems which are impacted by daily changes, and must accommodate all citizens regardless of their ability to pay for those services. So - a budget is necessary for these organizations in order to determine how many citizens and under what conditions they can be served. A court order can upend a government organization’s operations at any time. An influx of new citizens, or a flood of poor economic news can upend a government organization. Governments operate top-down in planning, but must respond to bottom-up changes during the budgetary year.

The purpose of a government is to SERVE.

Businesses are closed systems. If you cannot pay for their services and goods - you are out. Businesses have to be profitable. They don’t have to grow if it is not profitable. They don’t have to evolve if it is not profitable.

The purpose of a business is to EARN A PROFIT and build an organization.

Governor Rauner has made millions buying up businesses, squeezing profits out of them regardless of outcome, then throwing them away if they don’t survive. He has no experience running a government. It seems that every day we see how mismatched Bruce Rauner is with what he does know, and what he needs to know to govern.

The purpose of Bruce Rauner’s career is to MILK A PROFIT out of existing businesses.

So it is incredibly frustrating to see Bruce Rauner turn Illinois government into a giant mess, incapable of serving Illinoisans. He is a complete disaster as a governor.

Comment by VanillaMan Tuesday, Nov 3, 15 @ 9:14 am
As a university employee, I agree with the sentiment that the State should actually pay what they agree to appropriate.

That said, this was clearly coming, so no one associated with the State university system should be surprised. A little contingency planning can go a long way (although not all the way, to be fair) toward easing the crunch.

Comment by thunderspirit Tuesday, Nov 3, 15 @ 9:16 am
ISU is a public non-profit institution. They are supposed to serve the people of Illinois. That limits the “run like a business” model. Do the police and fire departments run at a profit?

Comment by DuPage Tuesday, Nov 3, 15 @ 9:16 am
Public universities are not like private businesses, nor should they be. There is a larger point to be made, however. Public entities are supposed to be somewhat immune to the ups and downs of the economy, shifting public opinion, etc. Those factors affect private industry by definition, and that means that uncertainty there is baked into the equation.

We should at least try to provide a degree of certainty to organizations focused on public health, education and safety. Those are the backbone of our society and should not be used for political gain. What’s happening now is that our elected officials are purposely injecting uncertainty and fear into what should be our most sacrosanct institutions.

Comment by Snucka Tuesday, Nov 3, 15 @ 9:22 am
I get what he is saying. He just says it poorly. Basically, he is trapped by a deadbeat state that won’t pay it’s bills. How are you supposed to forecast years into the future when a large source of revenue could be nothing, 50%, 75%, 100%, 110%(?) of what it is supposed to be today. And then there is the fear that if you criticize the government (governor), your university will have to pay some sort of political price. Stinks to have a powerful position in a state university. Because in reality, there is absolutely nothing you can do.

Comment by Ducky LaMoore Tuesday, Nov 3, 15 @ 9:24 am
He has come in with the VC mentality. Slash costs regardless of consequence. He can’t comprehend the macroeconomic effects of doing so, only the stand alone effects on the budget. Reduce costs and there’s more profit or in the case of government, less need for revenue. He doesn’t get that putting people out of work because they can’t afford childcare will hurt revenues, or that slashing wages and benefits will sink businesses that rely on those people to patronize them. Never mind the fact that the purpose of government is to improve the lives of its citizens, not operate as cheaply as possible.

Comment by Me too Tuesday, Nov 3, 15 @ 9:25 am
In order to implement the idea that a government should be run like a business, you have to fundamentally transform it from an organization that serves all citizens to an organization that only serves citizens deemed worthy to be served. Citizenship is no longer worth what it once was. It is more important to be a taxpayer, than a citizen.

Therefore, the needy are cut out. They can’t pay. Governments have to be stripped from serving citizens who cannot find help elsewhere. Governments will only provide services to taxpayers.

To run a government like a business means your citizenship has become worthless. You cashed it out.

Worse, to run a government like a business means expecting a government to have a business relationship with taxpayers, similar to what customers have with businesses. Yet governments are a monopoly. Governments simply cannot meet customer expectations, partly because they don’t have to.

Losing your citizenship to a government ran like a business shortchanges you as a citizen, and as a taxpayer. You lose both ways. You see a fragmentation of our society, lose an organization which serves you because of your citizenship, then get crappy customer service to boot.

If anything, seeing Bruce Rauner implode as leader of a state government should be a teachable moment for Illinoisans who value their citizenship, cherish their communities and find value in serving one another.

Comment by VanillaMan Tuesday, Nov 3, 15 @ 9:26 am
I can’t tell you the number of voters I talked with who voted for Rauner because he would run government like a business.

Well folks, that’s what he’s doing. Similar to Rauner’s failed businesses, if a community college, childcare provider, etc. can’t meet their payroll, then Rauner says “see ya later.”

Unfortunately, a lot of people think this is just fine. Then, when they need that service, they say: “Where’s mine?”

Comment by Facing the abyss Tuesday, Nov 3, 15 @ 9:26 am
Give Dietz a break. He can’t do some things that business can. He can’t borrow money from a bank. He can’t “save” money for a rainy day (it’s a not for profit univeristy) If the university has a reserve of cash, the state will cut its funding. (It’s a double edged sword.) Dietz also can’t ramp up production or close the plant for a month. There are lots of things he can’t do because universities ARE NOT BUSINESSES!

The state universities are public goods, and they need to be treated as such.

The state used to give all the money up front and let the universities make reasonable plans. Then the state started the cash flow crunch, which made running the university very difficult. Now without knowing when or how much the universities will get, it makes it nearly impossible to plan and run the university.

Comment by A Priori Tuesday, Nov 3, 15 @ 9:27 am
I believe ISU was one of the Illinois universities that did not get a credit downgrade. That suggests it has done a good job managing resources. Public universities have been facing budget cuts and give backs for over a decade. I think it is valid to complain that a state supported university is not getting state support at all right now.

Comment by DeKalb Guy Tuesday, Nov 3, 15 @ 9:30 am
Saying that government should be run like a business is IMO comparable to saying that you should treat your spouse exactly the same way you would treat your kids, or your parents, or some other family member. They are different relationships with different dynamics, obligations and expectations and the same “rules” can’t be applied to both.

Comment by Secret Square Tuesday, Nov 3, 15 @ 9:32 am
“The purpose of Bruce Rauner’s career is to MILK A PROFIT out of existing businesses.”
This is exactly what he is doing to IL. He wants business(s) to take over the State government to make a profit. He wants bust state unions to turn employees into individual contractors (with no raises + no benefits).

Comment by Mama Tuesday, Nov 3, 15 @ 9:34 am
@ LarryMullHolland. I don’t think this is a helpful comment. The public universities in Illinois have been asked for years to do more with less. They have adopted an array of business-like practices such as zero-based budgeting, using part-time / contingent labor (adjunct faculty), and are experiencing unprecedented competition from online providers of education. Keep in mind that the government provides less than 50% of the funding to operate. Hence, each public university is competing by recruiting tuition dollars, even though it is not structured to do so. And now, without warning, the university is expected to deliver its services with a 25-35% reduction in its expected revenues. This is actually more of a reduction than most businesses every experience in a single year. I would actually say that the state universities are doing a great job of operating despite the fact that the state proactively taking actions to undermine them. Universities are very much part of the real world, and your comment reveals that you don’t know much about how universities work.

Comment by Scamp640 Tuesday, Nov 3, 15 @ 9:36 am
How can any of the public universities, given current circumstances, operate in any sensible fashion? The GA was looking at an 8% cut, and rauner wanted a 30% cut (w no rhyme or reason). If there is no budget til january, you have to double the cut over six months, to achieve the same result. The damage will last for years.

Comment by Langhorne Tuesday, Nov 3, 15 @ 9:37 am
I agree, President Dietz should get a break here. Public universities are held to a higher standard than a private business as well as a higher level of scrutiny (ask his predessessor). If he fails, he’s front-page news.

Comment by Facing the abyss Tuesday, Nov 3, 15 @ 9:37 am
My sister in law was a professor at a public university. She’s now a professor at a private university. She wonders if she is ever going to see a dime of the money she paid into the state pension system–never mind what the state matched. She feels lucky she could get out while she could still earn enough to set aside money and someday be able to retire.

Comment by Cheryl44 Tuesday, Nov 3, 15 @ 9:39 am
This morning on NPR:

http://wuis.org/post/give-donation-ask-naming-rights

****
Although this happened in another state, it seems to be the trend now in many areas, and one that troubles me with Rauner’s recent announcement of how he’s going to change education. However, the “naming rights” issue can easily be applied to other areas of philanthropy as well. And, this is no reason/excuse for legislators or executives to decide, “Well, if someone else will take care of the problem…” to abdicate the significant role of servant leadership (that should be) inherent in our governmental systems. Because, when the “problem(s)” are no longer “trendy”, it is far too easy for the large donors to walk away. After all, hasn’t Rauner done that with the Y he and his wife’s names are on? I guess his personal purse strings are also tied shut until the “budget” is passed.

Comment by Anon221 Tuesday, Nov 3, 15 @ 9:40 am
http://www.ymcachicago.org/programs/teen-reach-program

Comment by Anon221 Tuesday, Nov 3, 15 @ 9:55 am
http://harvardmagazine.com/2015/01/balanced-budget-benefits-battle

Comment by lost in the weeds Tuesday, Nov 3, 15 @ 10:07 am
Clearly the ISU President a bureaucrat who has never had to face meeting payroll obligations out his pocket. You know, with money that is not granted to him from the Government and its taxpayers.

Sir, I would hope your business school has a better understanding of the real world than you do.

So, you want the ISU president to run ISU like the budget is his money? Run roughshod over every public servant there, pull their contract rights, fire at will based on his personal discretion? Shut down publically funded programs he feels aren’t profitable? Decide that no one needs to play any music, or study any arts, or become an expert in a field of study he thinks is unworthy?

You want the ISU president to strip away your rights as a citizen funding a public university and do as he pleases?

We are a democracy. This is a public institution. It serves all Illinoisans. It has a rich history of success attracting students from around the world. You want it run like a flea market operation?

You have no idea what you are suggesting.

Comment by VanillaMan Tuesday, Nov 3, 15 @ 10:07 am
In the last decade it has become de rigeur for almost everyone in leadership in government and education to say “we are running it more like a business,” often without any clue what that might be.

Comment by walker Tuesday, Nov 3, 15 @ 10:13 am
thunderspirit - Tuesday, Nov 3, 15 @ 9:16 am:

As a university employee, I agree with the sentiment that the State should actually pay what they agree to appropriate.

They haven’t agreed. Period. To appropriate anything.

Comment by anon Tuesday, Nov 3, 15 @ 10:13 am
ISU and other public universities are more like businesses than say, state agencies. They have some control over tuition & fees, fundraising, debt, and controlling costs etc., that state agencies do not have.

Comment by justacitizen Tuesday, Nov 3, 15 @ 10:16 am
A public university gets revenue from three primary sources: tuition, alumni and corporate donations, and the state. So it has no contingency plan in case the state faucet dries up. Haven’t thought if what programs, activities (including athletics), and maintenance projects would need to be trimmed. Sound planning to me.

Comment by Bogey Golfer Tuesday, Nov 3, 15 @ 10:34 am
Just one more reason considered when sending our kids to out of state public universities. Such a good feeling when in those states to see the public support—financial and pride– for the universities. They are held up as examples of what these states offer for the future of their up and coming citizens. Unlike Illinois, who looks at our universities as drains on the taxpayer, apparently. It’s amazing that University of Illinois has as good a reputation that it does but I fear that may be falling.

Comment by AnonymousOne Tuesday, Nov 3, 15 @ 10:41 am
With much respect to Larry Dietz, who is a good leader for ISU. Have met the man, and he is much respected within the university community.

But he’s got a blind spot, and it is prevalent throughout the university community statewide.

The academics run the educational programs. Period. Each of our 4 year state universities have a service/support staff for talking care of the universities (IMO, they are small cities), and many of these people are extremely knowledgeable and very capable in the areas they work.

They are so capable that in many cases (certainly at both ISU and UI-Urbana/Champaign) they create and teach to outside entities (such as fire departments, municipalities, health departments, etc., etc.)

These training course and seminars are fantastic. If you are a unit of local government and you had to purchase these courses, you could be talking some serious money ($5k-$10k at a pop) each time. But from the university, they are free. Fantastic opportunity for the units of local government.

But there’s the bad part. These folks who provide the training as part of these external training aren’t “academics” - they just have to do the work in real life.

They can’t (at least so far) be part of the educational training for the very students at the university where they work. The professionals haven’t been ‘invited’ to teach by the academics, because the professionals (and they are professionals!) don’t have the academic credentials. Like I said, all they have to do is to get the work done - which apparently doesn’t count in the academic world.

I can give you example after example after example of this.

Where this is going is really simple. If you as a university are not making full use of the resources available to you to accomplish your basic job (educating students), don’t be too surprised if there is not a vast outpouring of sympathy for your current budget woes.

Again, with much respect to President Dietz, but the statewide University system needs to change the way they are doing business.

Sometimes you got to get a wakeup call.

Comment by Judgment Day Tuesday, Nov 3, 15 @ 10:57 am
Agreed, Dietz could have stated his case more clearly. But he’s correct in suggesting that the universities (and MAP students for that matter)should not be subjected to this “no budget at all” insanity. So while our Governor (as he said yesterday) is travelin’ the country to recruit new businesses, he’s turned the lights out on higher education. Wonder if those new businesses coming our way will be looking for educated workers?

Comment by Columbo Tuesday, Nov 3, 15 @ 11:06 am
== They haven’t agreed. Period. To appropriate anything. ==

True.

And in previous years, when appropriations *have* been made, they are often made short of the appropriated amount. Which was the root of my remark.

Comment by thunderspirit Tuesday, Nov 3, 15 @ 11:13 am
==Well, I don’t know any business that doesn’t know what its revenue stream will be==

Said no business owner ever.

Comment by Formerly Known As... Tuesday, Nov 3, 15 @ 11:16 am
Under last year’s unbalanced budget, many orgs didn’t know what their budget was going to be until January. ==Almost== half the year!

The state’s $ probs are not new.

Most orgs relying on the state for funding developed contingency plans for possible $ cuts, late payments, forced layoffs or other problems years ago.

Comment by Formerly Known As... Tuesday, Nov 3, 15 @ 11:34 am
JUDGEMENT DAY’s comment above is spot on.

The Academics are paid quite well as they enjoy offering their collective theory in the classroom yet often have so little ability or experience in the actual application of the theory they profess.

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Comment by business credit builders Wednesday, Nov 4, 15 @ 10:28 am