State of the Budget, FY 2010-11
TO: Faculty, Staff and Administrators
FROM: Thayne M. McCulloh
SUBJ: State of the Budget, FY 2010-11
DATE: March 3, 2010
Last fall, I solicited input from departments regarding their views on their health and ability to effectively serve students. I very much appreciated receiving this input, and it helped to confirm a sense that others – including students – had been providing to me: that the size of our undergraduate enrollment, in the wake of our significant rate of growth, was putting a tremendous amount of pressure on faculty and staff alike, not to mention facilities. As you are already aware, our entering freshmen numbered 1,239 this fall, significantly higher than the 1,080 for which the university budgeted. With this in view, I made the decision that in the near term we need to moderate our rate of undergraduate growth; for fall 2010, we will aim to bring in a class of between 1050 and 1100 freshmen, and a same-size group of new transfer students (155). While this will slow the rate of growth, our overall enrollment level will remain largely unchanged next year versus this year.
With these targets, and assumptions that our student retention and graduate enrollments will be similar to the current year, we began preparing the budget for next year. In late fall, as the preliminary 2010-11 fiscal year budget began to take shape, it became obvious that – without adjustments – our projected expenses would outpace our projected revenues. This was not an unexpected result; each year we begin the process with a larger amount of projected expenses than we have revenues to cover. (It is important to note that the projected imbalance is in part due to assumptions related to compensation and student financial aid [i.e., undergraduate retention].) Given our faculty and staff commitment to Gonzaga and its students, which in turn has a significant positive impact on student enrollment and retention, providing at least a modest salary increase is important to me. Further, we anticipate that the aggressively mounting costs of health care will impact premiums and out-of-pocket expenses, which in turn will have an impact on all of us. During this time of economic chaos, it is also important that we do everything possible to help our students remain at Gonzaga, which in turn means (at least in part) sustaining our commitment to affordability.
In December, with a “pro forma” FY 2010-11 budget illustrating $4 million out-of-balance, I directed the Cabinet members to identify five percent (5%) of their current-year operating budget for potential reduction or re-allocation. This required a great deal of effort on the part of the VP’s and their colleagues: the challenge was to reduce expense without compromising what is essential, and especially that which is essential for students. For their efforts I am grateful. I should emphasize that this is not, in my opinion, the response to a “crisis” situation; it is however the necessary alternative to increasing revenues through additional undergraduate enrollment growth.
The initial by-product of this exercise - proposing a balanced budget to the Trustees at the recent February Board Meeting - was attained. Key hallmarks of this process were as follows:
An approved FY 2010-11 Budget that assumes:
- A minimum freshmen class of 1,050 (target between 1,050 and 1,100)
- A new transfer group of 155
- A tuition increase of 4.25%
- Continuation of the Four Year Guarantee for Financial Aid
- Modest salary increases for faculty and staff
- No reductions to the Student Life division budget
- Reductions in base operating expenses, particularly for University Relations/ Development; Finance - particularly in Utilities, Athletics and General Administration; and Information Technology Services.
- The Academic Vice President has identified AVP Office administrative budget reductions of about 5.5%. Due to the need to accommodate the overall undergrad enrollment increase, no reductions were made to the College of Arts and Sciences. A combined amount totaling less than 2% of the remaining Schools' budgets was identified by the Deans and will be retained in a contingency account within the Office of the AVP. This money will be available to fund academic expenses during the 2010-11 academic year on an as-needed basis.
None of the identified expense reductions involved eliminating personnel, although certain currently-vacant positions were eliminated. Also, little in the way of additional allocations for critical needs (i.e., "new money") has been identified or budgeted.
For the FY 2010-11, planned salary increases will reflect a 2.5% budgetary increase in non-faculty staff compensation, with a commitment to ensure that all staff are paid at the minimum of their salary range. (Ranges sometimes fluctuate from year to year, and despite modest increases last year, some staff fell below the minimum of their range.) Faculty salary increases will be funded, as they were this year, reflective of the scheduled CUPA- or survey-based increase.
Although the Trustees approved a balanced budget in February, the exercise that brought us to this point is only the first of a series of actions that will be necessary moving forward. This spring, I am asking each of the Vice Presidents to work with their department heads to produce and propose objectives-based plans for the deployment of FY 2010-11 resources. At the same time, we will begin to build the capacity to better understand our own operation through the implementation and use of robust analytical software.
I would like to take this opportunity to ask the following two things of every Gonzaga administrator, staff and faculty member. What is absolutely critical to our near-term success is the support, persistence and retention of our students. Next year's budget depends upon continued success in not only attracting new, but retaining current students in our programs. As has become a hallmark of our community-based ethos, I ask that you continue to connect with students, and refer students who appear to be having difficulties of any kind to colleagues in Student Life, Academic Services, and other key support offices.
Second, I ask that we all do our best to conserve resources where possible. As an administration, we will be putting additional focus on systemic policies and procedures where opportunities for resource conservation can be realized. I would be grateful if each of us could consider ways in which we can ensure that we are careful in spending the minimal resources available, since the vast majority of the dollars we have come from student tuition.
The economic recession has had profound and lasting effects upon our nation and its people; it will be years before the adjustment to a "new reality" takes shape. In the meantime, we will need to be prudent and thoughtful about how resources are deployed in support of our educational mission.
My hope is that this information is helpful. More information about the 2010-11 budget and our planning for it will be forthcoming. Thank you very much for your ongoing support and the many ways in which, on a daily basis, you animate the mission of this university.
Thayne M. McCulloh, D.Phil.
Chief of Staff to the President
Exec. Assistant to the President
Sr. Admin. Assistant