Thoughts on CEU: CEU should close the Budapest campus

I am going to preface this by saying, I am putting my personal opinions in writing here. No more, no less. I don’t speak for anyone else. My words carry no more weight than anyone else’s who is part of the CEU community. I know this post will piss a lot of good friends and colleagues off. I hope you can forgive me if you are one of these people.

I started writing this series with two interrelated goals. I want to make sure the long term financial health and stability is at the forefront of more people’s mind. I also want to find a way to achieve this financial health without hurting our character and academic prestige in our new situation (which, I am sorry to say, is in Vienna). The first post in my series focused on a possible avenue to achieve this. It discusses a recent innovation in education that has the potential to generate more revenue than a tuition scheme and do so without sacrificing who we are. (If you haven’t read that, please stop reading this and read that first.) The second was a more personal (and, despite having read by more people than the first, probably less of a general interest) post on the consequences of what a good friend called the “academic vandalism of Fidesz and Viktor Orban” also highlighting some of my fears of how the move to Vienna could go terribly wrong for CEU.

There is an ongoing conversation about CEU’s presence in Hungary after the Vienna move. There is one proposal on the table arguing for maximal presence in Hungary. There is a working group put together right now to develop the plan for activities for the Budapest campus. As far as I can tell, there is not a voice on the other side, so for the duration of this blog post, please allow me to be that voice.

There is very little conversation on what the costs of maintaining operations in Budapest are. The proposal on the table does engage in some wishful thinking on where we could maybe get resources for this, but it is as realistic as the magical thinking about the revenue generating abilities we imagined for the alreadz defunct CEU Business School, or for the once overgrown and now deflated School of Public Policy, or, dare I say, our imaginary new tuition generating Viennese programs with which we can grow out of our financial deficits. (The rector, before the crisis, took office with a plan to shrink. That sounded prudent. Whatever happened to that plan?) We don’t have a good track record here so I fear for our future. But even if we accept the arguments made for revenue generation of a Budapest presence, it is not like most of those resources could not be generated in Vienna or put to better use on other projects. Nobody is considering the opportunity costs.

First, every day we remain in Hungary, we validate Viktor Orban’s arguments. He has been going around saying: “What do you mean we kicked CEU out of the country? They are there. Right there. Go down to Nador Street. The sign is on the building. People are going in and coming out. CEU never left Hungary. What CEU said is just a trick to smear the Hungarian government. They are not going anywhere.” And every day we stay in Budapest, Viktor Orban is right, we validate his rhetoric. Our complete existence is made impossible in Hungary, but we remain stubborn, stay and help Viktor Orban make his point. The University is now desperately searching for things to do on the Budapest campus without considering the possibility that maybe we shouldn’t do anything. Maybe we should leave. Seemingly, we are committed to taking a stand saying we are not going anywhere, but are we really taking a stand here? Maybe leaving would be the actual stand.

I understand that people have strong connections to Hungary. I do too. (If you doubt it, then read my previous post on what the Vienna move means to me.) But anyone who believes that a move to Vienna is evitable, if they can avoid commuting, they are really fooling themselves. A better question even, would they be so committed to Hungary if they had to commute back to the Budapest campus from Vienna?

I love our new building. It feels like a second home to me. I do not even go to my office (or, for people who really know me and know I never worked in my office, I also don’t go to the nearby cafes) anymore. I just work in the N13 public spaces because they feel like such a great work environment. I love our classrooms. I even loved teaching 60+ people stats in our 76 seat auditorium, because the room made it feel like a 25 person class. (That was some serious efficiency gain for teaching credits. I’ll never do it again without excessive TA support.) But, I believe, we need to go and make an equally great place, great environment for CEU in Vienna.

The second argument for leaving is financial. We simply cannot afford to maintain a presence on a second full size campus (that we are desperately struggling to fill up with life with things that will also cost money most probably). As far as the finances of the University are concerned, the people who are putting plans together for a tri-campus life with an equal Budapest and Vienna presence often cite the recent generous donation by the founder. If anyone thinks that generous donation is good for anything but putting us back on life support, really needs to check their numeric literacy. (I welcome them in my intro to stats class next year. We start with a basic algebra refresher.) Let’s just say, they need to have serious conversations with the Provost who is responsible for CEU finances. In a phone call we had recently, he was able to put our financial situation in quite real terms. I mean, we will survive it, the situation is not that dire, but… well… see the first post in this series about our long-term financial health. (And maybe also the second on my associated fears.)

There are two costs associated with the maintenance of operations in Budapest. Everyone talks about one of these, the cost of the actual operations. But there is another big ticket item that economists dub the opportunity cost (or the cost of not spending these resources somewhere else). To put it bluntly, I strongly believe that CEU would be better served putting the value of the real-estate portfolio back into the endowment (and to do this while real-estate prices are so high in Budapest). If the money is in the endowment, that increases our annual yield, it gives us more money every year to operate. Maybe the pressure to charge tuition would not be so large then. Maybe we could remain that place that is open to everyone if you are smart, hard working and ambitious (even if you do not have access to loans or do not come from money).

I understand CEU wants to maintain some of their non-academic staff in Budapest as a cost cutting measure. (Staff in Vienna will be expensive.) I am all for it. Let’s rent office space somewhere for them. We don’t need to have these offices in some of the most expensive real-estate in Budapest.

What makes this proposition quite painful is that such a wholesale departure, commitment to give up the downtown campus, means that our departure is final. But what were we expecting? That we can pack up Vienna and move back? Or that we miraculously could afford to operate two equal campuses in the future? (Check how that worked last time.) I understand that our new (social science PhD) mayor is now suddenly very welcoming but how does that help us when Fidesz, as they seemingly take a step, or two, back from their usual institutional annihilation march, don’t you all find it curious that the already negotiated treaty, the only thing needed to ensure CEU’s existence as an American university in Hungary is, at least to date, is still not signed by Viktor Orban?

I love our new buildings as much as anyone. But in my decade and a half at CEU, we already toyed with the idea, once, that we get out of the real-estate and move to another location. If we can ever afford to come back to Budapest (and the situation is such that we are welcomed back with no risk of a single election swiftly changing that), we can find a new home for CEU in Budapest. It is not like this possibility was not on the table before (although, I remember people didn’t like it too much then either, but that is beside the point).

Finally, and maybe most importantly, CEU should pursue all legal means against the Hungarian Government to get compensation for our damages. Recouping some of the expenses of this move will definitely help in putting the University back on a more solid financial footing. (This was costly. While our less than stellar financial performance pre-date the crisis, it is not unrelated to the costs endured with the move either.) I am not a lawyer. I don’t know how this works. But some avenue must be available to, at least, financially remedy the wrongs done to CEU. Sure, Fidesz will tell the Hungarian people that we are stealing their money, but that is not true. They stole the Hungarian people’s money when they, defying all rule of law, kicked CEU out of the country. Taking legal action against the Hungarian government will certainly make our relationship to Hungary more contentious. If that happens, we would need to worry about the safety of our real-estate, the safety of our staff and the safety of our students (something that has not been an issue so far). I don’t believe we could take legal action while we operate a campus in Budapest.

Of course, there are arguments for maintaining a strong presence in Hungary as well. The academic arguments are strong. At times very strong. Take for example the Baby Lab tied to the Cognitive Science department who run developmental panel studies of many many children, all in Hungary. Such academic operations need not be shut down, but they also do not require a whole campus. (Considering the Baby Lab used to operate out of a completely different building on the other side of the Danube for years, I do not think this argument is controversial.) Multiple departments have a closer tie to Hungary and CEE in general. I understand that they worry about moving out of this region. But it is not like we have much of a choice here. With faculty replacements down the road, these units will diversify. In the mean time, I am sure there is no doubt in anyone’s mind that if one wants to study what they focus on, CEU is the place to be in Budapest or Vienna. I would argue that we should not leave our academic roots in Hungary, we should, in fact, up our Hungarian societal outreach. We should build on the many Hungarians on CEU’s faculty to do this. Research on Hungary should persist. We should remain parts of the academic networks. I certainly hope to keep my position on the board of the Hungarian Political Science Association. I hope Zsolt Enyedi (the person who, if he got this far, is probably quite unhappy with me right now) and I will continue to collect public opinion data after each parliamentary election to ensure we stay part of the international network of election studies that make great electoral comparative research possible. But we do not need to keep our old campus to do this. Such activities, in most cases, can be coordinated out of a modest office and in most cases directly out of the Vienna campus.

What pains me the most in writing this is realizing how much our friends and colleagues, the social scientists at Hungarian universities and research institutes will lose if we move the library away. Whatever office is left of CEU should include a reading room, access to all of our electronic resources and a way to request book transfers. This is the least we can do.

Our Hungarian accreditation is up in 2022. The University is already trying to figure out how we could keep enough Hungarian employees to maintain Hungarian accreditation, but also have these people teach in Vienna. Any outcome of this is hardly an ideal scheme. Our romantic ties to Budapest will fade with time. New faculty will have no connection to Budapest. What will remain is  CEU that we all want to see successful both academically, financially and as the beacon of freedom where the future leaders, societal investors and social scientists are trained. Let’s make sure that we make the right decisions now to ensure we can continue doing what we do, in Vienna, under the best of conditions.

 

Thoughts on CEU: What I lose with the Vienna move.

In my previous blog post on how to generate more revenue for CEU than a tuition scheme ever could (and do so without selling out our principle), I promised that this is only the beginning of a series. I also mentioned that I will, soon, write more about how “the CEU2025 plan […] (with generous help from the Hungarian government) will destroy everything that made CEU a great place to work for me.” This is going to be a very personal post and, really, nobody should care about this (in fact, if you have not done so yet, read the previous post even instead of this one). But I do want to lay out, in print, what gloomy future I see in the current transformations and our CEU2025 plan. This post is about how all these things affect me and only me. Others’ opinions may vary.

Let’s take stock at what CEU offered me. It allowed me to (1) be at home, in Budapest (in one of the nicest parts of the city), while (2) working in a mostly American academic environment, at a (3) prestigious institution where (4) we only have to work with the most ambitious students who decided to get a graduate degree. (5) We have a manageable teaching load in line with the research focus of the institution. We have time to do research. CEU (6) offered us a salary that is kind of sort of competitive with the Western world (where all of us coming to CEU – at least in the past decade) would have been looking for jobs) that, factoring in cost of living, allowed for an upper-middle class life. So let’s take this point by point in no particular order.

Budapest (1): CEU is leaving Budapest for the most part. A commute is impractical, to say the least. My wife and I decided not to do it. CEU will be going through incredible changes. I do want to be present to shape this change. But this comes at a cost. I am losing the closeness of my family and my home. I worked hard to move back from the US after 10 years of college there. Now I leave not by my own choosing. (I am not the only one who left the country because of a lack of appropriate jobs around that pay anything, so my personal tragedy is hardly unique. But this still feels a little different than economic migration.) Personally, my living arrangements are (were) ideal in Budapest as I live in a separate and individual apartment in a larger housing unit that my parents built for our entire family. Not counting a short pause between the death of my great grandmother (at a 101 years of age) in 2009 and the birth of my daughter in 2016, we have been a four generation household for most of my adult life. With the Vienna move I will have to leave this (or commute which, while considered perfectly normal for academic families in Germany, is brutal for someone who has different conceptions of normal like myself). My rent goes from practically 0 to whatever it will be. (Probably around 1500 EUR.) I have no equity in the existing real-estate. I guess I will always have a nice place to come back to if I ever want to spend a weekend or a few weeks in Budapest. I also lose free, instant and on demand child care. While others may prefer not having their family so close, losing that for me is incredibly difficult.

Graduate Only (4): To become a university in Austria, we had to accredit two undergraduate programs (and I understand, as I am part of the team putting it together, plans for more are on the way). One of these two programs is PPE (Politics, Philosophy and Economics) where my department, the department of political science contributes greatly. So we will now have to teach undergraduate students. During my graduate work at the University of Nebraska-Lincoln, between 2002 and 2006, I taught undergraduates in the US. On average, this was a course a semester (or, while I was still an MA student, equivalent number of discussion sections for large lectures of freshman level Intro to American Politics or Intro to International Relations offered by a professor). My own courses included Public Issues in American Politics; Elections, Parties and Interest Groups; and Polls, Politics and Public Opinion. During my temporary appointments at CEU (2007-2008) I taught a course a semester at ELTE. Courses included Intro to Political Science and an adoption of the Public Issues class I taught in the US. I enjoyed teaching undergrads at the time, but to do this well is a lot of work. I don’t feel I have the experience to do this anymore. Working with graduate students, the expectations of an instructor change. I am sure I could get back into it, but it will be a transition and, let’s face it, from the perspective of prestige, it will be a downgrade. In sum, this is not ideal but teaching undergraduates is certainly not the end of the world.

The teaching load (5): This I worry about. As we move to an institution that is all graduate school and research to one that also focuses on undergraduate education, the teaching load may also increase. This is especially true in light of the financial position of the university (which I wrote about last time). Most of the plans circulating wish to add the undergraduate education without increasing the number of professors or pushing the undergraduate teaching on PhD students (which would not be a bad idea in my opinion). Some suggestions included the restructuring of PhD education in a way to eliminate teaching mostly or entirely. Either way, I fear, the teaching load will have to increase or the American Character (2) of the program that is strongly focused on teaching our PhD students will suffer. I don’t want to make this post about the relative merits of having or not having PhD courses, but let’s just say I believe a shift here would affect the political science program negatively and I personally don’t like it. In other respects we will continue to work as an American university. Most of this we certainly will not lose. In fact, if the parts of the University that were the most “Hungarian” (and I don’t just mean the canteen) could become a little less “Hungarian” and that would be an upgrade.

Salary (6): CEU proposed to raise salaries of assistant professors 25%, Associates 20% and Full 15%. (I fall in the latter category due to my very recent promotion. I even wondered if asking for promotion now was a mistake. But I think CEU would have managed to even it all out with the raise I got (or would have gotten next year) with the promotion. So I am going to believe it is a wash.) Austrian taxes are quite a bit higher than Hungarian taxes (so are the services, I guess – this certainly is a plus). But the cost of living adjustment is 50%. Housing price differential is 80% (which, as you see above will hit me particularly hard). Given my personal situation, I do not think I can maintain my current quality of life short of a 100% raise. And that I will certainly not get.

The University leadership is framing this issue the following way. We are told that Austrian academic salaries are actually comparable to (as in, not much higher than) our current salaries, hence the modest raise. Of course, anyone who knows anyone at the University of Vienna knows that these numbers are only half-truths. They are salary floors, possibly the ones in the union contracts. The reality is, in the words of one University of Vienna colleague, these sums are only made by people who have never been in a competitive situation in their lives. They got their PhD here and moved up the ranks. They never negotiated. Nobody at CEU got their professorships this way. The person also added that “I make a heck of a lot more than those numbers”. The fact is that actual salaries, especially of competitive people we believe we are, and especially in Vienna, are quite a bit higher. I am going to give leadership the benefit of the doubt that they simply do not know this. But they are also in a difficult position. (See the previous post on CEU finances.) But the framing still bothers me. Speaking of frames, I also heard the following pitch from the CEU Vienna office. If I had the opportunity to go teach at Columbia, could I still expect the school to provide my CEU quality of life where I can easily live in the best area of Budapest (so best area of Manhattan)? Of course not. (When I heard this pitch in the Vienna transition office, I was not there to complain about salaries and I have done nothing of this sort. I was asking if they know about the specific registration times for schools because I do not want to get there and not have access to the public education system. I don’t know if it is muscle memory, but I still got this pitch. I am going to let everyone figure out what is wrong with this analogy. The list could have its own post. And, sure, fair enough. Let’s accept that Columbia frame.)

I am not here to complain about my future salary, but there is a lot to complain about. I care about CEU’s financial health so I am holding myself back here. But I would be lying if I said this is not an important item on that list of things made worse by the transition to Vienna. And this will come at other costs. While I may be committed to CEU, not everyone will be. Some of the best people will certainly leave. With these salaries, with the higher Austrian cost of living, with the undergrads our ability to recruit the best faculty to replace them will certainly diminish. The quality of research output will go down. We will have a harder time competing for grant money also because we are not anymore in that difficult region of post-communist CEE where you want collaborators from on your team but often have a difficult time finding people who can maximally contribute. CEU was always an obvious choice. All of this means rankings will go down, that means we will have a more difficult time recruiting the best scholars for our grad programs, best researchers for our PhD (and post-docs) and that means we will have an even more difficult time recruiting the best faculty and the cycle perpetuates with the potential to seriously hurt the prestige (3) of CEU. In essence, we need to put a break on this downward spiral that the university is certainly in danger of getting into. Without financial health, we have little to no abilities to do this. (This is why I wrote the first post in this series and this is why that was the first. But watch out for more posts on the subject.) I can say this much, I am giving CEU many years to show that this pessimistic outlook of the future is not our path. And I will work every moment of every day to put breaks on this downward spiral before I am going to let my commitment to CEU wane. And I know that there are many people who think the same way. This is why CEU will continue to be a great place to work, a great place for students and a great place to be, in general.

Thoughts on CEU: Would Income Share Agreements Work for Us?

CEU is going through an incredible transformation. We are moving countries and we are facing new challenges. CEU leadership laid out a plan that is referred to as CEU2025. I plan to write about what I am about to say in an itemized list but my broad conclusion after looking at the CEU2025 plan is that it (with generous help from the Hungarian government) will destroy everything that made CEU a great place to work for me. (Others’ opinions may vary, but as far as I am concerned, this is how I see it.)

I have made a promise to myself that, despite more regular solicitations, I will stay at CEU and see all this through. I will try to contribute to the best of my ability. But in the process, my main goal will be to ensure this negative foreshadow of the CEU2025 future does not come to fruition. Next fall I will give up the on-demand baby sitting just one floor below where my parents live and move to Vienna because I believe that will be the best place where I can contribute to making an Austrian CEU an even greater place to be both for us, the faculty, and, most importantly, for our students.

These blog posts under the “Thoughts on CEU” series will be in this spirit. Hopefully they can contribute to a conversation on how CEU could thrive despite its new challenges.

To begin the series, we have to talk about something none of us want to talk about. CEU, despite recent recapitalization of the endowment and additional money for the Vienna transition (and maybe also cash for a permanent campus in Vienna), is not in good financial shape. It is fair to say most people on campus are not honest about this fact. Even the ones who may have been concerned before are now fooling themselves with this recapitalization. We, the faculty, do not have on demand access to accurate and up to date information about our yields, endowments, budget, but I can cite a conversation with the Rector here (from before our “little local troubles” started) we are not in good shape and the current influx of capital only puts us on life support, giving us a chance to get back on our feet and not be doomed in the long run.

To combat the problem, CEU2025 proposes to collect 3000 EUR tuition even from people who previously received a full ride. (Note that CEU2025 was only a few slides and the proposals are, of course, fluid. That is exactly why I am putting these thoughts out in the open.) Above, I mentioned that I have a long list that makes CEU a great place to be (and in my next post I will itemize). Here’s the first one: we have excellent and ambitious students many of whom had no opportunities elsewhere because they cannot afford it.

This tuition move puts CEU outside of the reach of some of our best students. Cost of living increases in Budapest (mostly due to steeply increasing real-estate prices) of the past 6-8 years have already put a strain on low income families’ ability to send their kids (and sometimes spouses, mothers and fathers) to CEU. Add Vienna cost of living ,which is around 50% more than in Budapest (with housing prices 80% higher) along with this hint of 3000 EUR tuition certainly puts us out of the reach of our traditional demographic of students who cannot afford a Western education. CEU, traditionally, was the jumping board to a Western education for much of the post-communist region. By the time I joined CEU in 2006, the West was directly accessible to many, but not to everyone. If we lose this demographic, I wonder who will come to CEU? This, of course, calls for a longer conversation but I do not believe that the appropriate market research has been done to answer it. If it has been done, I haven’t seen it. So, for now, lets just say that if we trade ambitious people who had no other opportunities for well off people who had no other opportunities, CEU’s reputation will certainly suffer (not to mention its academic staff).

But maybe there is an appropriate way to handle this without charging tuition. A few months ago a 50+ year old idea dating back to Milton Friedman’s book Capitalism and Freedom received quite a bit of attention in the news: Income Share Agreements. Agreements that a student can attend a University for free and in exchange they will share a certain percentage of their income for a certain amount of years. NPR’s Planet Money described it as a University buying stock in a student they train. They literally financially invest in the student’s future success.

Now, that sounds like CEU to me. We pride ourselves in our students, in training the future leaders of the entire region. We have students who are mayors of capitals, ministers, EU administrators. We believe in our students. So instead of charging them tuition, why not invest in them?

There are many nuances of how these income share agreements work to go through in such a blog post. But let me highlight some of the most important ones. CEU is not trying to generate that much revenue per student. So we could keep the income share quite low. Purdue University’s program asked 15% for 8 years from someone who worked in food science. (Purdue University also varied the percent depending on the person’s major, but this is a non-issue at CEU.) We can probably do much better keeping the percent at a non-scary number. Say, 5% would sound OK to me. Our tuition are nowhere near Purdue’s (though maybe neither is the projected income of our students, not sure). I guess we can keep the time longer if need be. The 8 years was 8 years while a person was in employment or was seeking employment. If someone wanted to get out of the labor force and make money traveling around the world busking, that did not count. (They could do it and pause their 8 years.) On the other hand if someone was laid off and was searching for their next job, that counted towards the 8 years. There were protections in place for the students. If they became mega-millionaires. They still only had to pay back 2.5x the cost of their tuition (a tuition that, with such a program in place, CEU could totally raise without a bad conscience). The amount the school expected back was capped.

Such an arrangement would allow our historical demographic access to CEU, especially if CEU provided some need based housing and scholarships to offset Vienna’s relatively high cost of living. It would put CEU in the world of cutting edge outside the box thinking, innovative solutions true to who we are and who we inspire to be. And there are other benefits. First, CEU received strong criticism for its “neo-liberal” behavior from an internal activist group. While I share the group’s concerns, I worry about their numeric literacy. If their goal was to just blow the endowment over the next decade or two, then I do not share these goals. If they thought figuring the numbers out is not their job, I do not find their propositions constructive. Maybe they were just, like so many at CEU, ignorant about our financial situation. This strategy is one that even such a radical group and the people whose job is to look after the financial health of the University could (maybe even should) agree on. Also, let’s say such a program is launched and the 10 or so years (whatever it will be) is up for the first students. The University, at this time, will have a strong personal but also contractual relationship with this student. We would have a great ability to communicate with them, find them if we lose track of them (because we would have the ability to collect more information from them even in the age of GDPR and use this information for staying in contact). So why not ask them to keep contributing? Not everyone will, but in the spirit of CEU’s mission, they may just chose to target CEU (or its future students) with their philanthropy. They are used to paying 5% of their income to CEU. Why not just keep doing that (and get a tax write off)? Maybe these people will be the ones who put CEU in their will and 75 years down the road, the benefits will multiply.

There is just one major complication this is all pointing to. In the past I have often asked why CEU doesn’t offer student loans for tuition or housing ourselves. The response was always, we simply cannot. We don’t have the ability to track students from a 130 countries to get our money back. That is true. But you know who else doesn’t have that ability? NOBODY! None of the financial institutions operate in all countries effectively. Some may decide to take on such a task but it will cost us, or it will cost the student dearly with heavy interest. The reality is that CEU is in the best position to administer such a program. We are used to offering education, even for free to students. Let’s keep doing that with deferred income. We do not have the ability to go after anyone in every corner of the world, but we have the ability to put a list on our website of the former students who defaulted on their obligations. (Not something we should take lightly, but this ability is a stronger enforcement mechanism than what anyone will have. One’s reputation is important.) Will some people default? Sure. Will it be such a large percent to declare the project a failure? Maybe I have too much faith in people but I sincerely do not believe so. I know this is an experiment, but what we lose if we, in the spirit of CEU2025, start charging tuition of everyone (or just about) is quite clear. The potential for gain with this alternative structure may be greater than anyone could predict today outperforming any tuition scheme we may put in place. So why not try it? If it fails completely, we can go back to a more traditional structure.

NOTE: Many of the ideas presented here come from the above linked NPR Planet Money Podcast and the Freakonomics interview with Purdue President (and almost Republican US Presidential contender) Mitch Daniels.