Faculty members push university to divulge budget cut details
The Santa Clara
April 20, 2017
In the wake of university-wide budget cuts and following a $4.5 million operating loss in the overall budget, the Faculty Senate finally received some of the answers they were seeking.
Wanting more transparency from the administration regarding university finances, the Faculty Senate met in Benson Memorial Center for a budgetary forum on April 10. They discussed the university’s current financial state, budgetary impacts on departments and the role that decreased graduate school enrollment has played in the budget shortage.
Interim Vice President for Finance and Administration Chris Shay opened the forum, saying there were two critical components to address prior to the presentation. He said that according to the board of trustees, the overall budget scheduled to come in on July 1 will be on target. He also said that there would be no faculty layoffs, upholding a promise that university President Fr. Michael Engh, S.J. made last fall.
When it comes to university finances, there are two types of budgets: the consolidated operating budget and the capital budget. The consolidated operating budget includes the education and general fund, designated funds, grant funds and auxiliary funds. The capital budget consists of construction, renewal and improvement funds—such as university facilities, informational technology and auxiliary services.
According to Shay, the university experienced a loss in the consolidated operating budget last year, totaling $4.5 million. However, Shay said that the deficit was “planned,” and there was a proposal to move $8 million from reserve funds in order to cover the loss.
“That was a planned deficit moving forward, and that’s something that we simply can’t do in the future,” Shay said.
Shay also talked about the current projections for the fiscal year 2017, which ends on June 30. He said that according to the mid-year observations, graduate tuition revenue is $7.3 million under budget, and the transfer from gift funds is $6.1 million under budget.
“We make assumptions every year based on who brings dollars to the university for gifts on how many we can convert over to useful dollars for programs,” Shay said. “We have a responsibility to use them for the programs that are intended by the donor, but we also have over time a responsibility to use them in a timely manner.”
Last year, the administration was aware that the money being brought was lower than anticipated, so the expected assumption was lowered to a “more realistic number,” according to Shay.
“We shot high for many years and that was because times were better,” Shay said.
Shay posed several recommendations to avoid another year of operating losses, such as reducing spending in operating expenses and cutting student wages by five percent across all divisions.
He also recommended implementing additional spending reductions in graduate business and engineering schools, increasing transfers from gift funds to the operating budget and not refilling 15 vacant staff positions.
In March 2017, vice presidents across all campus divisions received a preliminary budget for division-level allocations. There were planned expense reductions made in the provost’s division for the fiscal year 2017.
These included a $3.4 million cut from the graduate business and engineering schools and a $1.8 million overall reduction to help offset projected institutional shortfalls, which occurred across all divisions.
“When we face the (fiscal year 2017) shortfall, that’s the realization that our revenues are falling behind budget and if we stay on the same pace as expenses, we’re going to end up with an operating loss,” said Dennis Jacobs, provost and vice president for academic affairs.
Within the provost’s division, the education and general funds support the College of Arts and Sciences, Leavey School of Business, School of Engineering and School of Education and Counseling Psychology.
The School of Law, however, does not fall under that umbrella. It is in a designated fund and pays an overhead of about $5 million back to the campus. According to Jacobs, that money feeds into the education and general fund.
He also said that the School of Law is projecting a budgetary surplus due to an enrollment higher than what was budgeted.
“That’s good news for the Law School, it’s also good news for the university because that means the sort of dividend that comes over to the university is better than expected,” Jacobs said. “So the Law School is not the source of our challenge right now.”
According to Jacobs, the Leavey School of Business and the School of Engineering are two university graduate programs that fell short of their enrollment targets. In the 2014 fiscal year, the School of Engineering’s graduate program made a deliberate decision to raise the target enrollment specifically for the allocation of new resources.
“In the forecast for (2018), the school decided to lower the target,” Jacobs said. “Those were decisions between the dean and myself.”
The graduate business school is in a similar situation, where their actual enrollment is lower than the target enrollment.
“In this year, it’s a very big problem, because that gap is $6 million,” Jacobs said. “What was budgeted at the beginning of the year … is not there.”
However this shortfall was offset by a $1.2 million gift fund transfer. For the 2017 fiscal year, there was a “staggering” $2.7 million targeted spending reduction, which is about nine percent of the business school’s total base operating budget, according to Jacobs.
For the 2018 fiscal year, the expense reductions in the business school’s budget is close to $1.3 million, which is around 4.6 percent of the total base operating budget.
Looking ahead ahead to the 2018 fiscal year budget, which begins on July 1, the goal is to achieve a realistic balanced budget with more conservatively estimated revenues and reduced budgeted expenses. Another goal is to increase undergraduate enrollment for the 2017-2018 academic year by 50 full-time students, according to Jacobs.
“We had to take very targeted actions. We tried to be incredibly mindful, the mission and the role of all forms of education. There are spending reductions across all units—every division has been leaning in to make this happen,” Jacobs said. “We want to come out of this stronger. I know this required sacrifices, believe me, those are greatly appreciated.”
Jacobs also spoke about the Sustaining Excellence Project, which is looking for long-term strategies to increase revenue and spend pre-existing funds more efficiently. According to a timeline on the university’s website, the project should conclude in the fall of 2017. At the forum, however, Jacobs said the impact will not be felt for a few years to come.
“It certainly won’t impact (fiscal year 2017),” Jacobs said. “We’re going to be done in two months—may not even get in place by (fiscal year 2018).”
He mentioned the 2020 Strategic Plan as well, saying he hopes the two projects would lead to a healthy future for Santa Clara.
“We want to make sure that (the past budget) is an apparition that happened in these years, and that we have very solid footing moving forward,” Jacobs said. “We tried … to make sure that this is a full and healthy exchange of ideas and we’re able to share as much information as we know.”
Deans in attendance included Caryn Beck-Dudley of the Leavey School of Business, Sabrina Zirkel of the School of Education and Counseling Psychology, Godfrey Mungal of the Engineering School, Lisa Kloppenberg of the School of Law and Debbie Tahmassebi of the College of Arts and Sciences.
Contact Erin Fox at firstname.lastname@example.org or call (408) 554-4852.