One Trustee’s Thoughts on an Open Budget

The following appeared in late 1988, during Ben Novak’s first term as a Penn State trustee.


By Ben Novak, Class of 1965

Dear Members of the Penn State University Community:

It has now been almost half a year since I was elected to the Penn State Board of Trustees. I have been to two meetings of the Board, and have had the chance to talk to many of its members. It has not been long enough to learn everything, but it has been long enough to observe some of it, and to begin to share it with you.

There is an issue before the Board of Trustees in which I would like to invite you to participate. It is the issue of an open budget. I feel that many individuals in the University community can contribute their experience, insight and thought to its resolution. And I feel that in the process we could become a better University.

For I was not elected to sit up there on the Board of Trustees alone. I want all of you to sit up there with me. This idea is really important to me, and it is at the heart of why I ran for the Board in the first place. Please permit me, then, to digress a little to explain what I mean.

I believe that you and I—students, alumni, townspeople, faculty, administrators, staff and Board of Trustees—are part of a very special kind of community—a University community. And the essence of that community is that we help each other to think.

Thinking is what a University community is all about. When important issues arise in other communities, people usually try to go off alone to think them out privately. But a University community is different, because here we try to talk to each other with depth and civility and find the best answer together.

The way a University community does that, I believe, is by you and I putting our personal experiences, thoughts and insights out to each other, not as “already formed opinions,” but as a way of testing the sense of what our minds have done to a subject. Each of us needs to see whether what we are thinking makes sense. If I can put my thoughts out to you, you can incorporate my experiences into your own thinking, and you in turn can critique my thoughts and offer back to me your experiences to incorporate into my own. We can both grow.

This is the very life of a real University and the greatness of the Penn State experience. For the essence of Penn State is, above all else, a common search by each of us for “the best sense of things.” Tackling issues at Penn State should be just like football, Joe Paterno style: ”We’re No. 1!” when each of us helps the other to put forth his or her best.

So I will put out my thoughts to you in the best traditions of Penn State:

My ideas on the subject of an open budget began many years ago as a Penn State student and student body president. I recall bits and pieces of conversations and meetings where Penn State administrators talked about the status of Penn State as both a private institution and at the same time as The State University. Penn State wanted, they felt, to have the best of both worlds.

As a blue and white Penn Stater, I thought that this was a pretty good idea. If there were two worlds—i.e., public and private—it was my hope that Penn State should try to have the best of both.

When I was elected Trustee last spring, this approach was on my mind. It seemed sensible that there could be advantages in keeping the budget closed and confidential. If there were real advantages in this policy, then most Penn Staters would easily understand why one could be for a closed budget.

But while my standard of judgment has not changed (i.e., are there real advantages to Penn State?), my answer to the question of an open budget has begun to alter due to several experiences. Let me share them with you.

The first experience was the discussion of the tuition increase at the Trustees’ meeting last July. The students did a very excellent job of raising the issue to the Board. Christine Henke, the student Trustee, made a most impressive presentation of the arguments for not raising tuition for the twenty-first straight year.

The administration, however, had presented the proposed increase with no alternatives. The issue came to the Board with no policy choices. The administration did not present any facts or choices to show what would have to be cut in other programs if the tuition increase were not approved. In other words, the Board was only given the choice of approving the budget with the tuition increase or not approving the budget at all. There was no chance for the Board to weigh the value of a policy of lower tuition against what would be lost if tuition were not increased.

It is true that President Jordan pointed out that if the tuition were not increased, $19.3 million dollars of other “important” programs would have to be cut. But the President did not specify what programs would be cut. So the Board members were left with a situation of “shooting in the dark,” without any idea of what programs would be announced in tomorrow’s headlines as being cut if the tuition increase were not adopted.

It occurred to me that this was not a situation conducive to meaningful policy consideration at a real University. Leaving all other considerations aside, it simply was not possible to engage in a meaningful discussion of the tuition increase policy without having the budget figures in front of the Board in order to see which existing programs would have to be cut unless the tuition were increased.

Concurrent with the experience of watching the tuition discussion was another experience which was equally important. Prior to being elected to the Board, I had the vague idea that the Board had a lot more information than the general public and that it, therefore, was considering matters known to it from the confidential budget which were not available to the general public. One of the eye-opening experiences of being elected to the Board is that most Board members are not given any more information about the budget than the public. The budget is as closed to the Board members as it is to you.

Let me tell you a story about this. One of the things that the Board was asked to especially approve in the new budget was an increase of $49,000 for Black Incentive Grants and Black Achievement Awards. It was explained that there are special funds paid to black students solely on the basis of color of skin, without reference to financial need, for achieving certain grade point averages. Black students, we were told, are paid $550 per year for getting grades over 2.50 g.p.a. And $1,100 per year for getting over a 2.75 g.p.a. No other minority students or students of any other color, no matter how needy, receive this special benefit.

At the July Board meeting many members of the Board—and many administrators—privately expressed surprise that such a program even existed at Penn State. After that meeting many other people asked me about this program.

As a new Trustee, I had been told that any questions concerning the University should be directed to the Board Secretary who would promptly answer them. So, on August 9th I wrote to inquire about how much money had been given to this program since its inception.

One would think that a Trustee would be able to get the specific figures on how much has been paid out to a single program. However, to this date, I have received no reply. At the September 15th meeting of the Board, the Board Secretary told me that I would have to talk to Lloyd Huck, the Chairman of the Board. When I did see him, he explained that whether I would get the information on that question would be addressed at the November meeting of the Board when the Committee on Open Budget gave its report.

So, two months after I requested the figures on a single program, I still do not know what they are.

Now these experiences have caused me to lean in favor of an open budget. With that in mind, I have taken the further step of asking many people—faculty, staff, alumni, townspeople, administrators and students—what objections they would have to a fully open, line-item budget, and, more importantly, why. For I am not interested in “counting heads” for or against, but in finding out what different minds have really thought about the issue, and what experiences they have had which have caused them to think one way or the other.

To date, I have only heard one serious argument presented against the idea of a fully open, line-item budget. That argument is over the issue of whether or not individual salaries ought to be made public.

My unscientific sampling of faculty members, administrators and townspeople show them to be about equally divided in their arguments about disclosing individual salary information.

Many people, mostly deans, department heads and administrators, argue that disclosing individual faculty salaries would seriously harm recruitment efforts for new, top-drawer faculty, and would seriously hurt feelings and embarrass individuals in various departments and colleges if individual faculty members’ salaries were to be disclosed.

This seems like a very important argument and one whose consequences must be seriously considered. Certainly, we do not want Penn State to be hampered in hiring the best people. And, just as certainly, we do not want to hurt many faculty members who would be embarrassed if their relative salaries were made known.

To discuss this I sought out a faculty member whose opinion I regard very highly, and whom I also know to be highly regarded within his field. This is what he related to me.

He was in a department which, until a few years ago, made known all salaries of faculty in the department. His experience was that the openness worked very well. Most faculty are mature enough to realize that others will receive greater or lesser salaries because of their academic reputation, or their status, or because of demand in their particular field. Within his department, he recounted, the openness about salaries had been very conducive to working closely with one another.

However, he said, a few years ago the dean had insisted on a change of policy. The new policy had come down that all salaries were to be kept strictly secret. The professor had felt that this had not had a healthy effect.

When I asked why, this is what he explained. When salaries are secret, he said, there is a great temptation and opportunity for the department head or the dean to reward favorites, or to punish people who did not always agree with them. With strictly secret salaries, this could be done by a dean or department head such that only the person who was a favorite, or the one to be punished, would know of the use of the salary schedule in this fashion.

This can breed a lot of mistrust, he said. In such a situation, a dean or department head could get away with such favoritism without ever being subject to censure by this colleagues and peers since the salary increases could be kept strictly secret.

I discussed this with a member of another department who confirmed that upon being hired he was told not only to keep his salary strictly secret, but that he would be severely reprimanded if the department head ever discovered that any other person knew what that faculty member’s salary was.

It is hard to imagine that any Penn State department head or dean would ever abuse his or her power over salaries. But one certainly must consider that a secret budget will pose a temptation for those in charge of salaries to reward favorites and punish critics of their favorite ideas. Unfortunately, even when salary increases are not abused, many people fear that they may be, and the existence of a closed, secret budget encourages such fears.

If our goal is to make and keep Penn State as a real University of the highest excellence, it would seem that we should not build into its structure the power to discourage the openness of all of the members of the University community. The temptation for someone in power to try to silence those who criticize their pet projects or to reward friends is just to much for ordinary human nature to resist all the time. Only openness in each department and college would seem to offer any check on such an abuse, should such a thing ever arise. God forbid, at Penn State.

In my discussions so far, the objection to open salaries has been the only objection that has been seriously made to a completely open, line-item budget. However, I have heard other positive arguments in favor of an open budget.

One experience has been in talking with Legislators. One prominent Legislator in Harrisburg has confirmed that many other Legislators do react negatively to the University’s insistence on a closed budget while still claiming to be The State University. This Legislator has told me that, in his opinion, opening the budget would help Penn State very much.

I also spoke to a former Legislator who said the opposite. He recounted that while he was in the Legislature, he recalled no feeling against Penn State because of its closed budget. He qualified this by saying that he could only speak of the past, and was not aware of whether that feeling had changed in the present. However, he added that the issue of an open budget was only a matter of time; eventually, he held, it had to be made public.

Lieutenant Governor Single has spoken out in favor of an open budget for similar reasons: 1) it would help Penn State with the Legislature; and 2) it is ab issue, like divestment, which will inevitably have to happen.

Again, the standard remains the same: What is best for Penn State? In light of these comments on the issue of whether a closed budget is good for Penn State, the tendency is to choose to open the budget.

I have also sought out administrators and other Board members as to why all other aspects of the budget should not be made public on a line-item basis. While many administrators in Old Main oppose this, they do not cite a single area or category in which they feel the release of full budget data on a line-item basis would hurt Penn State.

They have argued that the University budget is huge and complex, and that the release of it on a line-item basis would allow individuals to take things out of context and blow them up to make the University look bad.

Frankly, however, I have not been impressed by this argument. I shall offer three reasons why.

First, this argument assumes that there are members of the University community who would do such things in bad faith.If there are such, it seems to me that people of good faith will quickly set them straight with the facts if they are available. It seems elementary that only the true facts would be at issue, and these must be open to all members of the University community. At a real University, men and women of good faith will draw the best conclusions based upon true and open facts.

Second, I am inclined to regard the complexity argument against an open budget as specious. There are many huge and complex budgets which are completely open, such as the State College Borough budget, and even the State budget. One does not hear of people embarrassing officials by taking budget line-items out of context. Indeed, I have not met anyone, other than John Brutzman, who ever reads the State College budget, despite its openness, availability and complexity.

The third reason that I do not take the complexity of argument seriously is a recent series of articles in the Collegian and a comment made by the University Budget Officer.

On August 29th the Collegian printed a Forum article by students discussing the tuition increase. Thereafter, Paul Althouse, the University Budget Officer, wrote a response. The gist of Mr. Althouse’s response was essentially that the students were right about the figures they used, but that they had used the wrong figures. It seems that the students had based their analysis on the University’s total operating budget, rather than the University’s general funds budget. The figures came out much differently, Mr. Althouse showed, if one used the other budget. Mr. Althouse, after making this point, then concluded:

“The misinterpretation on the part of the (student) authors of the column is understandable, in that the University’s budget is large and very complex. It also demonstrates that substantial care and understanding need to be exercised in analyzing the budget—a fact that should not be lost on the University community in discussing the open budget issue.”

The Budget Officer’s statement should not, indeed, be lost on the University community. A large and complex budget does need substantial care and understanding to be analyzed. But the conclusion that suggests itself to my mind is that with a closed budget, no one, not even the members of the Board of Trustees, has any opportunity to analyze the budget. Whoever controls the facts controls all policy and decisions. With a closed budget, only the administration has the facts. Any attempt to analyze the facts can be met with new facts which are available only to one party.

It would seem to me that Penn State is a University community capable of intelligently handling the discussion of a complex budget if it were completely open. To say that the University community is not capable of discussing a complex subject requiring “care and understanding” does not suggest a very high opinion of Penn Staters. The University Budget Officer’s and the students’ articles seem to be in perfect accord with the kind of analysis, correction and clarification which would occur if all the budget figures were open.

I have tried to lay out for the University community the thoughts and experiences which have begun forming my thinking on this important issue facing Penn State.

I invite you to join me in discussing the open budget. At issue is not only the budget, but also what kind of community we are. Can we discuss an issue with depth and civility so that each of us grows? Can we discuss this issue with so much mutual respect that even other members of the Board of Trustees would join in our discussion?

The Chairman of the Board of Trustees has appointed a select committee of Trustees and administrators who are making up a report and recommendation to present to the Board of Trustees at its November 10th meeting. If past history is any guide, we will not be offered more than one recommendation. Again if past history is any guide, we will have no choice but to accept the report of this select committee or nothing at all.

However, this does not have to be the way it always goes. We possess a University community composed of outstanding minds and community oriented people. It is not easy for any one of us to find all the information and experiences alone. But if we each share our own fragmentary ideas, experiences and insights, and subject ourselves to the gentle correction of our colleagues, we can put together a whole picture. We can make thought count.

As I said earlier, I was not elected to sit on the Board of Trustees as an individual alone. I want you to sit up there with me. We can do that if you share your thoughts and experiences with me, and with the whole University community. Then all of our thoughts can be formed together, and they can include all of our experiences and all our best insights. Then when I speak on this issue at Board meetings, I will be able to voice the thoughts and experiences and insights of all of us, and not merely my own.

Penn State can be the greatest University in America, if at Penn State we respect one another, and value one another’s mind and friendship. I invite each member of the community to share his or her mind, and to help in forming each of our individual minds in friendship and trust.

After all, we are Penn State.

Ben Novak is a State College attorney and a member of Penn State’s Board of Trustees.