By President Randy J. Dunn
As you read this, we will have reached our “Day 14” official enrollment number for this academic term – and as I write this a few days before that official date, we are predicting that YSU will be down in both actual student headcount and full-time equivalent students by as much as 4 percent.
Many of you know the statistic for YSU that, roughly, every 1 percent drop in enrollment can be equated to about $1 million in lost tuition revenue. While our present Fiscal Year 2014 budget was based on an assumed enrollment decrease of 1 percent (translating to $1 million less tuition than last year) – we’re obviously going to be down something more than that.
Our present funding challenge comes on top of other financial issues we’ve faced over the past few years.
The combination of falling enrollment levels and stagnant state funding has significantly diminished YSU’s revenue base. In just the past two fiscal years, state allocations dropped by more than $8 million, while tuition revenue likewise tumbled by about $8 million (again, due to decreased enrollment over the same period), for a total loss of $16 million.
With the assistance and careful economizing by the university community at large, and some skillful budgetary management, YSU has addressed these revenue decreases through successful efforts to control expenses (e.g., cost of health benefits). Nonetheless, many of these expense reductions have been temporary in nature (e.g., one-time savings from vacant faculty and staff positions). Our ability to continue dancing on the head of a pin with these types of efforts is coming to an end; in fact, for FY 2013, with all the savings generated, we still ended up with an overall budget deficit in the range of $1.9 million.
That can’t continue. We have reached a pretty critical crossroads, and it is imperative that we take some near-term actions to meet our budgetary challenges directly and with increased urgency.
Now as you’ve already heard me say, we are going to reinvigorate efforts to grow enrollment of college-ready students in broad and aggressive ways, while further looking for any reasonable alternative approaches to revenue generation which comport with the university’s mission and values. But for our immediate future, that isn’t going to be sufficient, and some time will need to be allowed for these changes to gain traction and show success. Concurrently, it is vital that we continue to invest in those strategic initiatives to grow the campus and improve our programs and services, all the while continuing to control spending to ensure a balanced budget for this year.
So, I want to take this opportunity to overview some of the steps that are necessary to help stabilize our financial picture right now. This is not meant to shock the campus by any means, but rather to continue building a record of transparency and plain talk in our dealings. Indeed, I believe it is important that we all are fully aware of the situation before us.
Earlier this summer, upon the recommendation of the Budget Development Council, the vice presidents were asked to develop plans that would materially reduce costs across their VP areas by 5, 10 and 15 percent. When it became clear that we would not need to reach the 15 percent threshold in any circumstance, I instructed that level of planning to be put on hold – and for us to concentrate solely on the 5 to 10 percent planning. Numerous key managers have subsequently been pulled in for discussions to assist in this process and draft the plans.
With enrollment numbers now getting finalized, senior administrative and budget staffers will be reviewing and prioritizing these cost-savings plans over the next couple of weeks. Following consultations with numerous individuals and constituencies across campus, I anticipate the completion and release of those plans sometime soon after Sept. 15, with implementation of specific actions to take place as soon as practicable thereafter.
I want any cost reduction actions ultimately taken to have as minimal an impact as possible on our academic programs, student services and people. But it may be impossible to accomplish the necessary savings for FY 2014 without impacting our largest expense category – that being personnel.
We are a human capital enterprise and human resources are the most important ones we have, so I want to protect to the extent possible the effect of pending reduction actions on our people. We all are also cognizant of the disruption that may result in some university operations with such cuts. At the same time, nothing can be taken off the table as we deal with this problem.
Whatever actions ultimately take place, I want those to be clearly communicated to the campus and beyond. I also understand the personal financial difficulties that will be felt by employees if we are forced to enact any cuts in personnel. However, the need to structurally reduce expenses can no longer be avoided to maintain the fiscal health of YSU and get us through this rough patch we’re experiencing.
At this time, NO final decisions have been made, and every potential action will be vetted before ANY steps are announced or taken. I pledge to keep the campus as informed as I am able as we move through this process over the next few weeks.