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Old Data and the “Perfect Storm”?
by Silence Dogood

If you look on the MnSCU website for system information, you are taken to the following webpage:

If you click on the link on the left-side of the page for “Accountability,” you are taken to the following webpage:

If you click on the link for “Composite Financial Index” under Other Dashboard Tools, you are taken to the following webpage:

The Composite Financial Index (CFI) is calculated from four component measures: return on net assets, operating margin, primary reserve, and viability. Supposedly, the CFI is a way of measuring the financial health of a university. In essence, the CFI is considered a financial “Stress Test.”

Fiscal Year 2014 ended June 30, 2014. The audited Financial Reports were reviewed by the MnSCU Board of Trustees last November. The question is how long should it take to get the data up on the website. On March 1st, three-fourths of FY 2015 will be complete. Shouldn’t one reasonably expect to see the CFI data for FY 2014 before now?

Certainly, each university knows its CFI. SCSU’s Vice President of Finance and Administration Tammy McGee revealed that SCSU’s CFI in FY 2014 had dropped to 0.07 and that the university was going to be required to submit a “Financial Recovery Plan.”

The Pioneer Press in its online TwinCities.com article “Metro State among worst of MnSCU schools ordered to fix finances” cites that “11 campuses are under heightened scrutiny.” The article goes on to state: “Metro State had a negative 0.08—trailing only Minnesota State College—Southeast Technical.” So apparently someone has access to the CFI data for FY 2014.

The article lists “11 MnSCU institutions will have to submit financial recovery plans because of poor performance on a financial stress test.” The listed MnSCU universities are

Metropolitan State University, St. Paul
Minnesota State University, Mankato
St. Cloud State University
Southwest Minnesota State University, Marshall

Perhaps misery loves company so SCSU at least won’t feel picked on. The following figure shows the enrollments at these four universities for the past eight years:

Enrollment is not complete for FY15 because concurrent enrollment for high school students is still going on. Southwest has the largest concurrent enrollment followed by SCSU and then Mankato. Metro has very little concurrent enrollment so the enrollment numbers may improve a small amount. It is likely that SCSU will see an additional 50 FYE of concurrent enrollment this spring.

Clearly, SCSU’s financial problems originate in a 22.1% enrollment decline since FY10. With the additional concurrent enrollment, the five-year decline drops to 21.8%, which will make everyone feel so much better. None of these universities has enrollment declines anywhere close to those at SCSU. However, enrollment decline is not the only source of financial difficulty for SCSU. Bad decisions such as the Coborn’s Plaza Apartments will have cost SCSU $7,700,000 in the first five years of operation with predicted million dollar a year losses going forward.

Having accurate up-to-date data is not the solution to the problem but it’s a start. However, blaming SCSU’s financial troubles on a “perfect storm,” when it is apparent that the only real storm is happening in St. Cloud is simply sidestepping the decisions that led to the apocalypse SCSU now finds itself. In this case, an apocalypse is defined as having a budget deficit of $9,542,000 for FY15 and being required to cut more than $12,000,000 from the FY 2016 budget. President Potter in saying that the FY15 deficit only amounts to a 5% cut is trivializing that there will be between 100-125 fewer employees on campus next fall. Unfortunately, those cuts may not be enough to stop the financial hemorrhaging and next year the budget will have to be reduced again.

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