Econ 321: Economics of Reed College
Fall 2009
Assignment #1
Due: Wednesday, September 16

Much of the reading for this week focuses broadly on "productivity." Are colleges efficient in the sense of producing their output a minimum cost? Some authors have argued very strongly that they are not, and that this is why tuition has been rising rapidly in real terms for decades.

For this assignment, you are the president of Reed College and have been charged by the Board of Trustees with cutting costs in order to moderate tuition increases and increase financial aid in response to the economic downturn. Most of Reed's costs are personnel costs, so it comes down to cutting positions from the faculty and staff. The numbers wonks have calculated that the necessary budget cuts will require a reduction of 8 staff positions and 5 faculty positions relative to 2008-09. Although it is possible that these positions could be recovered someday, you should think of them as permanent cuts because the Board anticipates that tuition hikes will need to be moderate in the future as the academic market becomes more competitive. Because this is a situation of financial exigency, you need not worry about whether faculty have tenure or not; make the cuts where productive efficiency suggests they will hurt the least.

Your assignment is to decide which departments (both academic and administrative) get the cuts (and how many are cut in each department), and to justify these cuts. You should submit your assignment by Wednesday 6pm in the form of a one-page email attachment (.doc or .pdf) containing a list with justifications. In Thursday's class, students will be selected to present and defend their decisions.

Information on the distribution of faculty, student units, and thesis loads are on pages 4 through 21 of the Compendium. Older versions of the Compendium are available online for historical versions of these tables, especially the table on page 10. (These are only available on the campus network, not from off campus.) Note that the number of "Total FTE" shown in the table on page 10 for a year may vary from the "Standard" due to temporary visiting positions allocated to deal with departmental overenrollments or to faculty on sabbatical or leave but not replaced. There is also spreadsheet online showing the change in staff positions (as listed in the Reed phone directory) between 1988 and 2007. (Your staff cuts should assume a starting point of the 2006-07 positions listed in this spreadsheet.)