Friday, April 30, 2010

Your Values & Your Cuts - An Educational View

As school districts, state & local governments figure out how to balance their budgets, many things are getting cut. It could be called hindsight to say save a little in good times and the cuts are less severe in bad times. However, politicians often seem to miss that message.

Going forward, there are tough choices to make about where we cut. Individuals have made these decisions with personal and household budgets. Now the government organizations have to step up. While there will always be people to lobby against cuts to their programs, I alwys think back to one simple question--If not this program, where would you make the cuts?

Individuals within large groups rarely step up to answer this challenge. Their focus is to save their favorite programs. In reality, the save also requires a method to reduce costs in some other area. When forced to choose, that choice says a lot about what you value more.

These decisions are often messy in misaligned industries. My definition of a misaligned industry is one where the customer that gets the service has a very limited or indirect association with the source of revenue/payment. Public schools have issues because funding comes from taxes and other government funds that loosely link to the student. In contrast, private schools have a more direct link of payment from the students' families. State & local governments also get taxes to fund their services, but rarely would an individual or family use all of the services of government. Some will be important to a family while others will go unused.

How do I link cuts to values? Some activities will never be valued by the majority, but the outcomes of those services ultimately lead to a better situation for all. I don't know people that are excited to pay taxes. Nevertheless, without taxes coming in, the government cannot provide their other services. For example, I would always take care of the potholes along the routes I travel. Places where I rarely travel would be at the bottom of the pothole repair list. I think pothole repair has a better priority list than where I drive.

Bringing all this back to real world examples...governments are always looking for businesses to add jobs within their state/local borders. Businesses often have interest in things like transportation, quality of workforce and housing, and tax benefits. When we cut things that negatively impact these business interests are we giving our municipalities a slow acting poison pill?

Public education budgets are being cut around the country. What does it mean relative to those businesses that are considering relocation? Don’t move or move to a place where the areas that were cut are not that important to you/your business.

I am sure that we will revisit this later as people react to cuts…because some folks get active when their valued programs are cut. Do you?

Thursday, April 8, 2010

Closing Words on College Cash-ketball 2010

There was pleny of excitement as college basketball pools around the country went bad this spring. There was also talk of all the deserving teams that did not make the field of 64+1. Now there is considerable chatter about expanding the field to 96 teams. With the emergence of the Butler University there were comparisons to the movie Hoosiers and the role of the small school in the big tournament.

This is where I would like to say two things.

1. Good for Butler

and to the schools that didn't make the field of 64+1...

2. You reap what you sow. Deal with it!

Here's why. Butler is a school of less than 5000 students. Their licensing revenue more than doubled to $85k last year. Due to this year's performance that number will grow significantly. Duke spends more on one player's expenses than Butler does on all of theirs. I am not bashing the big guys, but I am giving credit to a small school that seems to have gotten the most bang for their basketball bucks. The catch is that the big schools are less ikely to play small schools that are on the rise. Too much to lose if they don't win and not enough to gain if they do win. The best recent example is Gonzaga University. They have improved their program to a level that recognizes them as a big time small basketball school. The catch is that good teams will meet them in tournaments or possbily at neutral sites, but rarely do they go to Gonzaga (where the 'Zags would potentially make more profit.)

On the 2nd point, teams from big conferences get more TV money, more exposure, and greater NCAA money even when they don't make the tournament. For example, St. John's finishes last in the Big East. Because 8 teams from the Big East made the NCAA tournament, every team in that league gets a cut of that money. This doesn't even count that all 5 teams that didn't make the NCAA tourney, played in the NIT. More moeny to share. When you have the conference advantage to get exposure and money, it helps with recruiting. If you cannot win after taking those advantages along with the visibility that allows you to cut favorable deals when you do play smaller schools, YOU DON'T DESERVE TO GO TO THE NCAAs!

The Most Profitable NCAA Tournament Teams - CNBC

...and if all that didn't convince you that this is really about money, this link is my last try to quantify how much it IS about the $$$. Thanks to Darren Rovell for much of the linkage that puts the money behind the sport into perspective.