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Albany Law School to fire tenured faculty based on merit evaluations?

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That seems to be at least a strong possibility, from a reading of the documents made available here, by the Albany Law School chapter of the AAUP (this chapter came into existence two months ago).

In his message [Chair of the Board of Trustees Daniel] Nolan stated that “relevant financial circumstances facing the School require a headcount reduction, including faculty.” Enclosed with his message were criteria — under the headings “teaching,” “scholarship,” and “service” — that Mr. Nolan said the administration had proposed to use “in considering faculty reductions.” . . . Faculty sources have further reported that [Dean Penny Andrews has] stated both privately and publicly that terminations of faculty appointments would be effected without regard to whether the appointments were non-tenure track, probationary for tenure, or tenured.

The chapter claims both that the school has not demonstrated that it is facing a bona fide financial emergency (“exigency” in the jargon of higher ed force reductions), or that any tenured faculty should be dismissed for incompetence.

This isn’t an area that I know much about, but I’m unclear what legal relevance, if any, these arguments have. As far as I’m aware Albany isn’t under any obligation to follow AAUP standards in these matters (The AAUP takes the position that tenure-track faculty and other permanent faculty should only be fired upon the showing of a genuine financial emergency that can’t be dealt with by other means, and that, in the case of such an emergency, untenured faculty should always be let go before any tenured faculty, who should only lose their jobs either for “incompetence,” or, in the case of a financial emergency, if firing all the untenured faculty isn’t enough.)

In this case the AAUP standards seem to be merely precatory, as lawyers say, which means that the only cost Albany incurs by ignoring them is reputational, assuming of course that the school follows whatever procedures it’s contractually obligated to follow when firing employees. (Update: A three year old version of the school’s faculty handbook says tenured faculty can be fired only for cause or financial exigency. See Appendix B at 14).

But that reputational cost could be quite considerable, if the school were to go so far as to fire tenure-track and especially tenured faculty because it’s in such severe financial straits (Ex post facto rationalizations that such people were fired as a result of “merit” evaluations are likely to ring hollow).

A school is likely to go to great lengths to avoid the bad publicity such a move would produce, by firing lower-level staff, offering buyouts to senior faculty, cutting faculty salaries, and taking every step short of the most radical possible interventions, which are, in ascending order of radicalism, firing tenure track faculty, opening a Holiday Inn Express where the library used to be, and not giving top administrators greater than COL raises this year.

So just how bad are things at Albany? Here’s a quick look at the school’s financial picture.

In FY2010 the school had an operating surplus of $3.3 million on total revenues of just under $35 million. (Salary and benefits for all employees made up 52.6% of operating expenses, which is actually on the low side for a law school — this figure is typically in the 60% to 70% range).

In FY2011 the school’s operating surplus increased to nearly $4.9 million, as revenues went up by 3% while employee compensation remained flat.

In FY2012, employee compensation actually declined by more than $600,000, and revenues exceeded expenses by $3.45 million.

As of July 2012, the school reported that it had $90.46 million in assets and $24.1 million in liabilities.

This does not look like much of a financial emergency, subject to a couple of caveats:

(1) July 2012 was 19 months ago, and things have been going very badly for law schools since then.

(2) Tuition revenue declined between FY2009 and FY2012, from $30.1 million to $28.8 million, and will probably be a million or two lower than that in FY2014. This is a function of declining enrollment. After a massive run up over the previous eight years, during which time it nearly doubled, tuition increased fairly modestly from $39,050 to $43,248 over this four-year stretch. More problematically, applications to the school fell in half over the last two years.

Year Applications Matriculants

2009: 2215, 255

2010: 2572, 236

2011: 2153, 235

2012: 1771, 196

2013: 1193, 187

The school has reduced the median LSAT of the entering class from 155 in 2009 (63.9 percentile) to 152 (52.2). It has not, apparently, increased its tuition discounting practices, as slightly less than two-thirds of each class continues to pay sticker price, while around one third of the class continues to get an average of 50% off sticker tuition.

Perhaps there’s more here than meets the eye, but I’ve looked at a lot of law school budgetary situations in the last few months, and Albany’s appears to be, if anything, healthier (relatively speaking of course) than average. So why is the school apparently on the verge of firing a bunch of faculty, including, perhaps, tenured faculty? Perhaps someone inside the school can shed more light on the situation (any communications will be treated in strict confidence).

Update: A comment from ichininosan has inspired me to to look more critically at Albany’s financials. It turns out the OP’s back of the envelope calculation understates the school’s current financial problems. Thanks in large part to Kent Syverud’s efforts, the ABA Section on Legal Education now provides much more transparent data on a number of matters, including law school enrollments. Looking at this data, it’s possible to calculate quite precisely how much nominal tuition (pre discounts) Albany is getting in FY2014 from full-time JD students, part-time students, and non-JD students. The answer is $25,148,712. But we must take into account that the school is likely to have around 50 fewer students this fall, as the “normal” sized entering class of 2011 is replaced with another small class (the fact that Albany’s dean and board are acting so aggressively indicates that applications are continuing their steep recent decline). Assuming the school raises tuition by $1,000 (the average over the past five years), Albany will be down another $1.6 million in gross tuition revenue. Thus tuition revenue (pre discounts) will have fallen from just under $29 million in FY2012 to around $23.5 million in FY2015. Indeed, in constant dollars tuition revenue will have fallen by 30% between FY2009 and FY2015 — and tuition revenue represents about 85% of the school’s operating revenue. That would seem, given its current overall budget, to put the school a couple of million dollars in the red, which is obviously a problem for a free-standing institution that doesn’t have a central administration to bail it out. And of course there’s no way of knowing if the decline in demand for law school admissions has hit bottom yet.

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