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More Spin from the Potter Organization
by Silence Dogood

On Thursday evening the online St. Cloud Times had an article about SCSU cutting its budget by 1.7%. This is hardly new news because the administration presented this data at Meet and Confer on September 5, 2013. It’s really nice to see that the St. Cloud Times is on top of things happening on the SCSU campus with such a timely report! I’m not really sure if the Times reported about it but in case they missed it, the St. Cloud State football team defeated Southwest Minnesota State University 49-35 on September 7, 2013.

The reductions to the FY14 budget (which is the current academic year) result from a projected 5% drop in enrollment, as listed in a document presented at the same Meet and Confer, equals $3,140,326 in lost tuition revenue. In the Times article, President Potter is quoted as saying that the “Reductions for 2014-15 might be more significant,” and that “The size of the reductions will be based on enrollment next year.” This might be the first indication of a further decline in enrollment in FY15 and that the reduction due to lost tuition revenue will need to be more than $3,140,326.

Using enrollment data from the MnSCU website, the following Figure shows the FYE enrollment for SCSU from FY07 to FY13.

If the enrollment for FY14 declines by 5% as the administration has predicted AND the enrollment declines by the same 5% for FY15, enrollment will have dropped from its peak in FY09 of 15,096 to 11,780, which corresponds to a drop of 3,316 FYE a decline of 22.0% over the five year period. The plot of FYE enrollment including estimated enrollments for FY14 and FY15 is shown in the following figure.

The trend is clearly disturbing! It is important to note that some have predicted that the decline for FY14 will be bigger than the administration’s prediction of a 5% decline. Using data from the MnSCU website, FYE data for Summer 2012 (1,069) and Fall 2012 (6,366) can be compared with Summer 2013 (1,012) and Fall 2013 (6,017), this comparison shows enrollment dropped 406 FYE which is a decrease of 5.46%. The latest Spring 2014 Weekly Admit Report shows that New Entering Freshman (NEF) and New Entering Transfers (NEF) are down -61 which corresponds to a decrease of -11.0% compared to last year.

In order to have an overall decline of 5% for the year, the Spring 2014 enrollment will have to reverse the current trend and be down by only 4.7%. Some people with knowledge about enrollments think a decline of only 4.7% is just a fantasy of someone in the administration. About the only thing that is certain is that if enrollment does not meet the administration’s projections, additional cuts in expenditures or draw downs of reserves will need to occur.

The size of expenditure cuts, assuming a 5% decline in enrollment, was presented at Meet and Confer on September 5, 2013. The total projected cuts equal $2,861,117. However, no information was presented as to where the cuts would be made nor was a complete summary of the expenditure and revenue budgets for FY 2014 presented.

A document detailing the major units where the cuts will be made was presented at the Budget Advisory Committee Meeting on October 30, 2013.

This document was not presented at Meet and Confer and the FA was not given the opportunity to provide input regarding the relative distribution of the budget cuts and which areas of the budget would be held harmless. Furthermore, five months into the fiscal year, this represents more than 42% of the fiscal year has gone by; no details of the specific cuts to be made or a timeline for implementation of the reductions have been presented. Without knowing details of proposed cuts, the required opportunity for consultation either will not occur or the cuts will be delayed. Delay means the impact of the cuts will be magnified since a 1.72% annual reduction that occurs in six months is a 3.44% reduction.

The SCTimes article quotes President Potter: “We are able to make those reductions largely without negative impact.” It’s nice to believe what your leadership is telling you but before I take his word for it, I’d like to see where the cuts are going to occur and then I’ll decide if there is a negative impact. It’s really hard to believe that with the $14,000,000 in budget cuts from FY10 to FY 11 and the decline in tuition revenue in FY 11, 12 and 13 that there really is $2,861,117 in discretionary expenditures just sitting around waiting to be cut. Taking $2,861,117 out an already lean budget will have significant negative impacts.

It is clear from the Figure that enrollment is, in fact, not down at all seven state except Minnesota State-Mankato, which has stable enrollment as cited by the Times. Metro clearly shows a 1.3 percent increase! Bemidji and Mankato are both down 0.3%, which means their enrollment is essentially unchanged. Without a doubt, Moorhead, Southwest, Winona and SCSU are all down by significant amounts. Moorhead is down 2.7% and their administration has already indicated that retrenchment will occur if not enough faculty members take advantage of early retirement incentives. Moorhead is attempting to reduce their faculty by 10% and their enrollment is down less than half of that for SCSU. The Figure demonstrates that SCSU is down much more significantly than the others and the universities in MnSCU are not facing “similar budget issues.”

Using percentages can sometimes confuse the data when the items being compared are not of similar size. The following Figure shows the FYE declines at each of the seven MnSCU universities.

This figure clearly shows the decline in FYE at SCSU is MUCH larger than at the other sister MnSCU universities. In fact, the decline in FYE at SCSU (-350 FYE) is larger than the sum of the declines at the five other universities experiencing declines (-265)! In light of this data, the statement reported by the SCTimes that “universities in the system are going through similar budget issues” is inaccurate and potentially bordering on irresponsible.

In an email to the faculty on September 19, 2013, Provost Malhotra stated: “When we completed our budget planning for FY14 in April, we planned for an FYE reduction of approximately 4.0%. We are taking the necessary steps to adjust our current FY14 budget for the additional 1.0% enrollment shift, which equals about $620,000. With a total operating budget of more than $210 million, this represents a reduction of about 0.3%.”

The statement that SCSU has an operating budget of $210 million directly contradicts the SCTimes article which states: “The university has a budget of about $150 million.” The difference between $150 million and $210 million is more than a trivial amount. Further the Malhotra memo mentions the need for an unplanned budget reduction of $620,000 when the SCTimes reports SCSU will need to cut $2,861,117. Which is it $620,000 or $2,861,117 in cuts? That is quite a difference. A good reporter might question the difference between the numbers.

In Provost Malhotra’s September email, he also stated “Our organization is healthy, our reserves are stable, and we are confident we can deal with the budget impact in FY14 without any staff cuts or retrenchment.” Provost Malhotra’s assertion has not and can not be independently verified since there are no publicly available financial reports on the status of the FY14 SCSU budget.

The SCTimes article quotes St. Cloud State President Earl Potter that “the budget reductions will probably be made without layoffs. The university is using reserves to help close the deficit.” This is supposed to be reassuring news to the employees at SCSU even though it is currently impossible to make an independent judgment about the financial health of SCSU for the same reason that Provost Malhotra’s assertions can not be verified.

Equally troubling is what appears to be a violation of the Master Agreement if the SCTimes reporter properly quoted President Potter. If the quote is accurate, President Potter has violated Article 23 Retrenchment in the Master Agreement between the IFO and the Board of Trustees, Minnesota State Colleges and Universities.

Article 23 states: “The President shall meet and confer with the Association, in accordance with the provisions of Article 6, at the time the President first considers retrenchment.” At the September 5, 2013 Meet and Confer, President Potter responded, when asked if he was considering retrenchment, that he was not considering retrenchment.

At the Meet and Confer on October 9, 2013, Provost Malhotra (in the absence of President Potter), was asked the same question, he responded that he was not considering retrenchment. The problem is that the SCTimes article quotes President Potter saying “the budget reductions will probably be made without layoffs,” which means that layoffs were, in fact, considered. It is simply not possible to make the qualifying statement “probably” without at least having considered layoffs. This may seem like a small issue but for employees potentially losing their jobs, it is a very big deal.

It is a shame that the SCTimes seems unwilling to investigate issues at SCSU and seems more like a spin doctor for the Potter organization. The SCTimes needs to do better.

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