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The SCTimes: Community Watchdog Redux?
by Silence Dogood

On February 23, 2015 Laura M. King, Vice Chancellor of Finance and Chief Financial Officer for MnSCU testified before the Ways and Means Committee in the Minnesota House with Chairman Knoblach.

http://www.house.leg.state.mn.us/htv/programa.asp?ls_year=89&event_id=880862

In her testimony relating to the Composite Financial Index (CFI), she stated:

The trends for the universities is concerning.”

Vice Chancellor King also stated that we are:

“very engaged with the campuses from a planning standpoint.”

“On a scale from 1 to 5, we want to be in the 3 range.” (referring to the CFI)

Ms. King later mentioned four MnSCU universities by name—Metropolitan, St. Cloud State University, Southwest, and Mankato. As a result of their poor financial performance they were each being required to produce a “Financial Recovery Plan.”

Later in her testimony, she stated:

“In the case of St. Cloud State, umm…they had operating losses in Fiscal 14…umm. were pretty substantial.”

As shown in budget documents released by the SCSU administration last Fall, SCSU had a deficit of $708,000 for FY14:

In a public Town Hall meeting, President Potter stated that the $708,000 deficit for FY14 was due because of last year’s cold winter requiring an additional expenditure of $700,000 for heat. Clearly, President Potter did not want to mention the $1,200,000 loss on the Coborn’s Plaza Apartments in FY14 and instead wanted to blame the weather for the deficit.

In Laura King’s words, the “operating losses in Fiscal 14…umm. were pretty substantial.” I’m not really sure that anyone familiar with budgets would say that a loss of $708,000 out of a total operating budget of $233,152,000 would be described as substantial—especially when you are required to keep a minimum of 5% of your budget in reserve, which in this case would amount to over $11,600,000.

The following document was released in January 2015, to assist in planning for SCSU’s “Financial Recovery.”

This documents shows a deficit in the Net Operating Income for FY14 totals $11,555,000. Perhaps as Laura King might say, $11,555,000 is “pretty substantial.” The difference between a loss of $708,000 and $11,555,000 is, by anyone’s definition, indeed “pretty substantial!”

It has been said by members of the administration that you have to “understand” that these documents can’t be compared because they contain different information. This is a fairly common trick when someone asks a question that you don’t want to answer; just deflect the question by saying that it’s ‘complicated’ or that they just don’t ‘understand.’ Wouldn’t it be important to have documents that clearly show SCSU’s budget deficit? However, one thing is clear, based on MnSCU’s CFI, SCSU is financially in pretty bad shape. The figure below shows a plot of SCSU’s CFI over time:

The two-year decline from a CFI of 3.58 in FY12 to a value of 0.07 in FY14, is a decline of 3.51 and might be a MnSCU record! Unfortunately, it’s probably not a record that will make it into a University News Release any time soon and those SCTimes’ watchdogs might just think a loss of $11 million in net operating income is a rounding error not worthy of sniffing out.

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