Other unanticipated expenses have included overtime payments, which came to $650,000 last year.

Coming along with KSG’s faculty growth were expensive overhead costs for administrative staff and physical space.

While outside donations fund new centers and research within KSG, they rarely fully cover the overhead costs associated with such projects—which can include everything from equipment to electric bills.

According to Newman, the school is left to make up the difference.

These expenses become particularly problematic because program administrators often predict unrealistically low costs for staffing and equipment to encourage the school to approve their requests, Hogan says.

Hogan says that underestimating overhead costs is a problem that is “built into the culture” at KSG.

“People in this institution constantly underestimate what the real overhead costs are, because there are all kinds of incentives to underestimate,” Hogan says.

When the school was small, he says, its dean could raise money to offset unanticipated overhead costs, a solution that has become infeasible.

“When you get bigger it gets harder and harder, and eventually you have to change what you’re doing,” Hogan says.

‘Smaller is Beautiful’

Despite reductions in research funding, faculty at the school say that KSG will remain academically competitive.

“I don’t expect it to have any significant effect at all,” says John W. Thomas, a lecturer in public policy. “I think the school will certainly maintain its place academically.”

Although expansion will not proceed as it has over the past decade, Hogan says that “even absent a budget deficit problem I would not have expected the growth to continue.”

Ramsey Professor of Political Economy Richard J. Zeckhauser ’62 says he sees the deficit as something of a blessing in disguise that will allow the school to “prune selectively.”

“I’m one of the smaller is beautiful sort of people,” he said. “The school will be stronger if it pays more attention to what its central mission is. It would strengthen our intellectual offerings and prevent us from getting too diffuse.”