You’ve just been selected as the new dean of Acme Law School

This is a test. This is only a test.

Acme Law School is part of the main campus of a state university. State appropriations make up a very small part of the campus budget — less than 5% — and this figure is expected to go to zero within a few years. So for fiscal purposes the university is almost a fully self-funded entity, meaning that any academic unit that spends more than it generates in revenue is to that extent being cross-subsidized by the rest of the university.

ALS currently generates $25 million per year in revenue. Nearly 95% of this revenue comes from a combination of tuition and gift income (gift income is made up of about 80% endowment revenue and 20% annual unrestricted gifts). The rest comes from grants and miscellaneous sources such as building rentals.

Revenue sources appear to be nearly maximized for the time being, although some marginal enhancement may be possible via other degree programs, having law faculty teach summer undergraduate courses, and the like.

ALS currently spends $30 million in direct expenses. About two-thirds of this is made up of payroll, while the rest is comprised of operations and maintenance.

Currently, ALS’s parent university nominally charges about $5 million to the school for its share of indirect university expenses: that is, for university-wide expenses that are not incurred directly by any academic unit (central administration, health and recreation facilities, etc.). This is a nominal charge, because obviously ALS isn’t paying anything close to its direct expenses, so its nominal share of university-wide expenses isn’t being paid by the school.

You have just been named dean. Naturally, when you negotiated your offer, you asked the central administration to guarantee that the school’s current level of subsidization would not be reduced. Naturally, the central administration refused to do so.

You took the job anyway because you like a challenge. What should you do, given that law school applications have declined by 40% over the past five years, although there are some signs of potential stabilization?

(1) Try to convince the faculty that it would be prudent to try to reduce the budget deficit gradually over the next few years, even though, given constraints on revenue increases, this course of action would require quite a bit of somewhat to very painful cost-cutting.

(2) Do whatever you can to protect the status quo. Don’t give anything back until they take it from you. Conduct business as usual as much as possible, i.e., replace departing faculty members with new hires, maintain at least COL increases in regard to law school spending, and so forth.

(3) Who says 2/7 unsuited is a busted hand? Play loose aggressive! Maintaining the status quo is for suckers. Press for a couple or three new lines for maximal synergy in areas of strength and/or to shore up areas of weakness, or both. Start a new center or initiative or three. Build a monorail. The more you have, the more you’ll be able to keep when they start taking things away.

It’s pretty easy to anticipate which of these strategies will be most palatable to the faculty. And it’s far from clear, from a purely self-interested point of view, which makes the most sense for either individual members of the faculty, or the ambitious new dean (The answer will turn in large part on how inattentive/tolerant the central administration will be, which is always hard to predict, on the seniority and tenure status of individual faculty members etc.)

Of course you could really complicate this picture by considering things like what would be best for the students and staff, but let’s not go crazy. Things are complicated enough as it is.