This afternoon at 1:38 pm, SCSU President Earl Potter sent this email to “FacultyStaffAll”:
From: President’s Office
Sent: Thursday, August 28, 2014 1:38 PM
To: FacultyStaffAll
Subject: University budget updateAugust 28, 2014
To the campus community,
As we’ve all gathered for the initial events of the new academic year, I hope you have been as inspired as I have been to hear the stories of our new and returning students who seek to advance their educations with St. Cloud State. Their stories about why they chose St. Cloud State or their outstanding summer internships make my day and I hope yours. We continue to be diligent in advancing our mission and vision!
Mixed with the enthusiasm over the start of school has been the serious work of analyzing our financial challenges, work that has been ongoing throughout the spring and summer. Over the summer, the size of the financial gap we have briefly discussed at convocation and elsewhere has become much clearer. Vice President for Finance and Administration Tammy McGee has shared with employee bargaining units and other constituent groups that there is a shortfall in our FY ’15 budget estimated between $8-$10 million.
To effectively address the shortfall, we are developing a two-to three-year work out plan in which we will consider all financial strategies available to us as we seek to balance our budget and right our financial situation.
There are several reasons for the shortfall, but the primary driver behind the structural imbalance and financial results is due to the last three years of lower enrollment. In addition, during the same period, the number of faculty and staff on the payroll has remained constant. As I write this, we anticipate a tuition revenue decrease with a projected decline in enrollment of between 4 and 5% this fall.
Thus, today we are announcing the implementation of a flexible hiring freeze as one financial management tool to bring our income and expenditures into alignment. We anticipate that this flexible hiring freeze will last at least through this fiscal year and perhaps beyond. In addition, 5% of all non-personnel budgets will be held back until the spring semester enrollment numbers are known; and use of potential FY ’14 carry-forward balances will be confirmed upon the completion of our fiscal year-end audit scheduled to be done by the end of October.
The flexible hiring freeze will apply to all positions except for those positions that are fully externally funded by contracts and grants. The freeze also does not include student employment or graduate assistantships at this time. We are calling it a “flexible” hiring freeze because we recognize that there are some positions that absolutely must be filled. We will consider the following guiding principles when determining which vacancies may be filled:
How directly does the position impact our core mission?
How does the position contribute to:
- Enrollment growth, student persistence and/or student success?
- Strategic cultivation of new programs?
- Fundraising and revenue generation?
- Ensuring compliance with applicable laws, policies, accreditation standards and bargaining agreements?
- Ensuring the health and safety of faculty, staff and students?
- What is the potential for significant disruption of an essential administrative/support function if the position is not filled?
- What alternative solutions have been considered?
More information about the flexible hiring freeze process is available on the Human Resources website at www.stcloudstate.edu/humanresources
I understand that there may be feelings of anxiety and uncertainty over this information. I want to assure you that we will engage you throughout this process seeking input relative to potential cost savings or revenue growth ideas. We will communicate regularly and transparently about steps that we are taking to reduce our expenses while also investing in growth opportunities. It is clear we need to realign our university’s cost structure. All budget management strategies will be exhausted before considering layoffs and retrenchment. We are not considering layoffs or retrenchment at this time.
Together we must work to meet the challenges facing SCSU. We are committed to the following:
- Work with bargaining unit leadership to identify different ways of doing our work so that we can meet our commitments to our students, our community and each other, while functioning at a staffing level that is consistent with our funding;
- Work with our academic programs on new program development, including certificate and non-degree programs, and fast track development so that we can introduce them into the student marketplace as quickly as possible;
- Continue to consult with student leaders about budget issues and ways in which we can minimize the impact on students;
- Work with our faculty to develop approaches for rapid new program development that maintains our academic integrity and governance processes but at the same time continues to promote the creativity of our faculty colleagues and provides them space to experiment and be responsive to the dynamic workforce needs of our state and region.
While there is agreement that we need to implement a flexible hiring freeze, it is also clear that we cannot cut our way out of this situation. Our future viability lies in enrollment growth through strategic academic program development. We will aggressively pursue new program opportunities and expansions where strong student and market demand exists and that align with our current academic program strengths. In addition, we will continue to invest in student recruitment and retention strategies to build strategic enrollment growth over time. Student recruitment and student success is everyone’s business. As these growth strategies become clearer and begin to take root, it is imperative that during this time we continue to remain vigilant and exercise fiscal discipline to ensure our forward progress.
On a final note, I have been incredibly encouraged over the last two weeks, as we have shared our financial reality, in how you have responded to this news. So many of you have essentially said, “OK, good to know … time to roll up our sleeves and get to work. We can figure this one out.” St. Cloud State University is a strong organization with talented faculty and staff dedicated to providing an incredible education and experiences to our students. It is with that spirit we will work together to determine how we live into the future. Thank you all for your commitment and dedication.
Earl H. Potter
President
This email must’ve surprised the faculty. I wouldn’t be surprised if it surprised the entire campus. I wrote this post in late June about the announced budget cuts at the time. Here’s what I wrote:
St. Cloud State just announced that they’ll have to cut their operating budget by $3,600,000. That’s due in part to their declining enrollment and the glut of empty dorm rooms. According to SCSU’s own budget documents, they’ll be over 1,000 students short of full capacity. In fact, they’re mothballing one dormitory entirely.
In today’s email to the campus, President Potter announced “that there is a shortfall in our FY ’15 budget estimated between $8-$10 million.” It’s important to note that that’s based on “a projected decline in enrollment of between 4 and 5% this fall.”
It’s important to note that the administration’s initial projection for enrollment during the spring semester was for a 3.3% decline. If the enrollment decline is 5%, that means the University’s initial projection was off by 50%. (3.3% X 1.5 = 4.95%)
If the shortfall is $10,000,000, not $3,600,000, then the administration’s initial estimation was off by more than 175%.
This is worth inspecting:
All budget management strategies will be exhausted before considering layoffs and retrenchment. We are not considering layoffs or retrenchment at this time.
St. Cloud State wouldn’t be in this predicament if they hadn’t made some serious financial mistakes, starting with the contract with the Wedum Foundation. SCSU has lost $6,400,000 in the 4 years since the apartments have opened. It’s quite the coincidence that that’s the size of the gap between the initial shortfall projection and the shortfall projection that President Potter announced this afternoon.
Last spring, President Potter told the St. Cloud Times Editorial Board that he considered the contract with the Wedum Foundation as a great success. Based on these numbers, it’s impossible to think that SCSU won’t attempt to renegotiate that contract.
I’ve got to think that the thing that the faculty is most worried about are retrenchments. It’s likely that they’re upset with SCSU’s declining enrollment, too.
Two years ago, then-Provost Devinder Malhotra brushed off SCSU’s enrollment declines as part of the University’s “right-sizing”. Last spring, the St. Cloud Times wrote that SCSU’s enrollment had dropped by 1.3%. Obviously, that 1.3% decline wasn’t calculated in terms of FYE enrollment, which is the type of enrollment that’s used for budgeting.
President Potter tried painting the rosiest picture imaginable last year. This year, he doesn’t have a choice. Enrollment has dropped too far. The revenue shortfalls have lasted too long. Now it’s time to pay the piper.
Technorati: Earl Potter, Devinder Malhotra, Budget Cuts, Declining Enrollment, Retrenchment, St. Cloud State, Wedum Founation
