Budget Update FAQs/PPT [1/24/14]
January 24, 2014
1. Why are we coming to the campus?
The campus needs to continue to be engaged in the dialogue about the finances of this institution and the state. The University leadership has worked during the fall semester to determine what will be required in order to sustain a level budget for Fiscal Year 2015.
2. What are some of the updates and/or issues regarding the FY'15 budget?
The University Professionals of Illinois (UPI) and the University have successfully negotiated a three year contract that provides much needed financial relief over the next three years. We extend our appreciation to the union for their continued leadership during these challenging times.
The Illinois State Legislature passed a pension reform package that was signed into law in December 2013. This reform has serious implications for our employees. We will continue to monitor the progress of the law as it is tested in the court system. While the long-term ramifications for higher education are unknown, at this point, the law does not include a cost shift to the universities.
Enrollment continues to be a concern. Our overall fall enrollment was down 4.1 percent from the previous year. However, our fall-to-spring retention rate has recovered to a better level than previous years. We project that it will be nearly 90 percent, compared to 82 percent in Spring 2013. This is a terrific turnaround and reflects that our retention programs are having an impact. We expect that this will also improve our overall fall retention rate.
3. How much will need to be cut in order to sustain a level budget in FY15?
I have asked the vice presidents to cut approximately $2 million of the FY'15 budget to ensure that we are being fiscally responsible so that we will continue to meet our payroll and other obligations.
The reductions by division are listed here. In most cases the reductions will be made through attrition (as employees resign, retire, or transfer and are not replaced):
President's Office: $26,000
Provost & Academic Affairs: $1.5 million
Student Services: $109,000
Administrative Services: $250,000
Advancement & Public Services: $33,000
Quad Cities: $33,000
4. Why are cuts necessary?
We continue to be in the midst of a financial crisis in higher education. From declining state resources and delays in state reimbursements, to a decrease in the number of high school students, we must continue to remain focused on our priorities. While our current financial situation does appear slightly better compared to previous years, major challenges continue to exist. As of today, the state owes WIU $29.2 million for appropriations and $5.9 million for MAP funds. Higher education continues to experience more than a decade of state reductions and unfunded mandates. Western's state appropriation has been reduced 13 percent ($7.8 million) in the last four years. During this same time period, the University's overall expenses have increased by 8 percent. Our tuition rate has increased 61 percent in eight years (18 percent over four years). High school enrollments have declined and there is increasing pressure on our efforts to recruit new students.
FY15 will bring more financial challenges. Reductions must be made to protect our future, and the reductions do have an impact on our operations. This year will be no different as we must consider eliminating more positions through attrition and by not filling open positions. In every case, the leadership team considers the impact to both the institution and the employees.
5. Is there any indication that the situation is improving/will improve?
The state has passed pension reform, which may alleviate some of the state's financial difficulties. However, higher education administrators have been told that the next several years will still be difficult.
At Western, we can look at our students as indicators of improvement. The percentage of new first-time freshmen in good academic standing or semester honors after their first semesters has increased to 78 percent this past fall, compared to 70 percent in Fall 2013. Additionally, we have seen a significant decrease in students being referred to Student Judicial Programs. Finally, the yield rate for our veteran students has increased to 70 percent (from 50 percent). These are strong indicators that Western is making the necessary adjustments to increase academic quality, student success, and retention.
The leadership team continues to monitor all aspects of our financial operations. We will continue to study several areas of our campus that may have opportunities for efficiency improvements or that have redundancy. These studies will help the campus ensure that we are utilizing our resources wisely.
6. What if circumstances change or beyond FY15?
The plans that have been outlined should allow Western to continue to operate "as is" through Fiscal Year 2015. Should we experience further enrollment declines, further reductions in our state appropriation or further financial mandates from the state, we will again come together and determine how the University will handle the impacts of these adjustments. We must all remember the financial situation we currently face is not a one-year problem. While we have a better control of the growth of our costs, we still expect the overall financial outlook to remain strained into the next several years. It is always our hope to protect our employees from the impact of any reductions. However, as you can see that is becoming more and more difficult.
The PowerPoint presentation from the Jan. 23 budget presentation is available as a PDF at http://tinyurl.com/l55uu89. The three-year projections are based on level state appropriations.