Amidst confusion, Faculty Senate asks university for answers
April 6, 2017
For the first time in over 20 years, Santa Clara had a $4.5 million net operating loss in its overall operating budget.
President Fr. Michael Engh S.J. made the announcement about the loss at his annual State of the University address less than a month ago, on Feb. 15, and the effects are already evident across campus.
“Some have even speculated that we face a financial crisis. Others wonder about the possibility of a further budget shortfall,” Engh said during his Feb. 15 address. “For these reasons, the annual budget forum, one week from today, will be a particularly important opportunity to learn more and to ask questions.”
When Campus Recreation suddenly announced a plan to severely cut its hours in a university-wide email on Feb. 14, budgetary concerns came to the forefront of campus conversations. Though Malley Fitness Center hours have since been restored after receiving donations on Santa Clara’s annual Day of Giving, many departments and offices have not been as fortunate.
In an attempt to increase transparency, the University Budget Council held a forum on Feb. 22. Additionally, an upcoming Faculty Senate academic budget forum is planned for April 10.
According to the university’s website, the University Budget Council’s goal is to “develop the annual macro budget in the context of long-range financial planning.” The council is currently led by Chris Shay, interim vice president of finance and administration.
Another key player in the university’s recent budget planning is John Ottoboni, Santa Clara’s general counsel. According to Ottoboni, the Board of Trustees asked him to take a closer look at the details of the budget, while Shay focused on “construction priorities.”
At the university budget forum on Feb. 22, Ottoboni talked about the university’s $4.5 million net operating loss, saying that it resulted from under-performing gift funds in 2016 and a decrease in graduate school enrollment.
“It is important for our community to know where we are and how we got there, in connection not only with the budget but also with all of the construction going on,” Ottoboni said at the forum, referring to the recently completed Edward M. Dowd Art and Art History building, the new Law School building set to be operational in Fall 2017 and the Sobrato family funded STEM complex.
The College of Arts and Sciences had their operating budget cut by 6.7 percent—a total of $137,000—according to Debbie Tahmassebi, dean of the College of Arts and Sciences.
The Leavey School of Business now has an operating budget of zero, meaning there is no budget surplus and they have very little spending flexibility. Various departments are also expected to pull from their gift funds, according to William Sundstrom, an economics professor and the Faculty Senate president-elect.
Gift funds consist of money from donors specifically for the department, and are not normally used for office needs—such as supplies—and other expenses including conferences for faculty.
Over the years each department collects “rainy day money,” their gift fund, but the university has asked the departments to dip into those funds. This will be the case for at least the remainder of this fiscal year, according to Sundstrom.
The business school has experienced a decline in their graduate school enrollment, a complication which in turn affects undergraduate programs due to the university’s “revenue sharing scheme,” Sundstrom said.
If certain amount of graduate school tuition revenue is not met, the departments have to give some of their funds back to the administration. If they surpass the expected revenue, the departments get to keep a cut of the additional funds generated.
“This is part of the reason this has fallen a little bit harder on the business school in some ways,” Sundstrom said. “The reason we have been zeroed out is our different budget model than other undergraduate colleges.”
While many faculty members and department staff are finding it difficult to remain positive in the wake of the cuts, Tahmassebi said her office worked hard to make sure students would not feel the effects.
According to Tahmassebi, the budgetary changes within Arts and Sciences were limited because the budget is mainly composed of faculty and staff salaries, which were not affected. This left very little choice in considering what to cut from the budget.
“We tried to take a look (at) areas where we could cut with minimal impact,” Tahmassebi said.
Tahmassebi mentioned cutting back on funding for recruiting new faculty in addition to common cuts in every department. She noted that “taking stock” of their budget was helpful and only caused the college to make “small changes in behavior.”
This also prompted the college to determine how it could fundraise better, and they are now thinking more creatively about how to support “big projects.”
Because of the widespread confusion, the Faculty Senate has been looking for answers. On Jan. 25, a budget resolution was passed, which “call(ed) upon the acting vice president for finance and administration to provide to the (Faculty Senate Committee) a document, with accompanying tables and charts.”
The Faculty Senate wants to more deeply understand the magnitude and sources of the “current and projected overall budget shortfalls.” As a result of this request, the university is hosting the Faculty Senate Academic Budget Forum on April 10.
“I have very little details, I have a lot of questions,” said Michelle Burnham, chair of the English Department. “My first question is if shortfall is equal to one percent of the total university budget why are we being asked to cut close to seven percent.”
Questions like Burnham’s are not just being asked by faculty and staff, as students seem to have many of their own. Among these questions is how the recent $100 million Sobrato gift and the Sustaining Excellence Initiative relates to the university’s larger budget issue.
Donations like Sobrato’s, which will be used to fund a new STEM facility, are specifically earmarked. The money is donated on the premise that it will be used for something specific, rather than to supplement the university’s overall endowment.
“When they give money they put it in a specific bucket. It’s not up to us to decide what to do with it,” Tahmassebi said. “For example, Malley cuts and the Sobrato gift happened at the same time, but they are unrelated.”
Shay also made an effort to differentiate the University Budget Council from the Sustaining Excellence Initiative. The project is the university’s long-term response to the national trend of escalating costs of higher education, according to co-chair Tom Plante.
Plante said the committee is looking for “creative and thoughtful” ideas to save money and make for a more efficient institution.
According to a school-wide email sent on April 4, the deadline for submitting suggestions to the committee was April 5. The email also gave a projected timeline for the project and answers to common questions mainly concerning timing and its overall purpose.
“The Sustaining Excellence Committee is taking a look at a more strategic discussion associated with what comes two, three, four years out and how we should be aligning our resources with our mission,” Shay said.
While many questions remain about the 2017 university operating budget, the university budget forum mainly addressed the plan for 2018.
While Shay said the budget is balanced for the 2018 fiscal year, Santa Clara community members are still concerned about the short term, immediate effects of the budget cuts.
“We really have to look at the opportunities that are afforded through things like (the) Sustaining Excellence (Initiative),” Shay said. “Because this is not a sustainable model moving forward into the future and all higher education realizes that.”
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