SMSU solves FY2015 budget shortfall

MARSHALL – When faced with challenges – even ones that involve a $3.2 million budget reduction for fiscal year 2015 – the Southwest Minnesota State University community isn’t afraid to roll up its sleeves and work together to find solutions. That process became apparent as many gathered at an all-university meeting Thursday on campus to hear a budget recap from President Connie Gores and then take part in a professional discussion about the Minnesota State Colleges and Universities (MnSCU) biennial budget.

“The spirit of cooperation and partnership that was exhibited in finding solutions was very refreshing to see, and I’m grateful to each and every one of you for being part of that process,” Gores said. “And I’m grateful to your peers and other colleagues as well. Thank you very much for your involvement in finding these solutions.”

The 2015 fiscal year budget process began in January with an estimated $3,231,259 budget overage at SMSU. Back then, Gores reported that four contributing factors – estimated enrollment decline, tuition revenue declines, no carryover use and estimated increase of expenditures – created the projected shortfall.

“When we began this process, which wasn’t that long ago – it was in January – we laid out some contributing factors that created this projected shortfall,” she said. “We talked about the fact that these were all estimates, and they would all change with each new piece of information. My challenge to all of us at the time was to be mindful of the principles that support our themes. So we tried to really focus on those as we went through this.”

Those three principles include educational excellence and distinctiveness, student learning and success and meaningful partnerships and engagement. Gores said she attributes the balanced budget success to the hard work of the faculty and staff, beginning on the Feb. 7 planning day.

“The faculty and staff generated many, many new ideas and solutions, that really began in earnest and have been really helpful,” Gores said. “And we will start moving forward now on implementing even more of those. I’m very appreciative of the thoughts, the discussions, the collaborations that went into this work, especially on February 7, but at other times, too, when solutions were identified.”

Gores reported that a summary and recap of the budget solution process was shared with all the constituency groups at meet-and-confer gatherings this week on campus, noting that all except for approximately $20,000 was addressed.

“Solving the 2015 budget shortfall was not an easy task,” Gores said. “In fact, it was very, very difficult in some cases because $3.2 million is a significant reduction for an institution like SMSU, which already operates on one of the leanest, if not the most lean, institutions in the state.”

While challenging, Gores said the overall budget solutions avoided extensive program closures, with no retrenchment of probationary or tenured faculty.

“We were able to avoid that,” she said. “And because of attrition, because of various retirements, we were able to restructure and realize significant budget saving, again, with the help of people in this room, with all of us working together.”

Approximately $2.1 million was reduced in the salaries/benefits/contract items/other compensation budget, while more than $500,000 was reduced in the non-salary items/operating funds area.

“While there was the elimination of several positions, restructuring and reassignment opportunities prevented the involuntary loss of full-time employment for any of our current employees,” Gores said. “Significant savings were also projected with reductions in our adjunct and overload budget and compensation model changes for College Now.”

Gores said that several operating budget reductions and one-time adjustments would also be implemented, while athletics and the Foundation are dedicated to increasing fundraising support.

“Both athletics and the Foundation have committed to increased fundraising support to offset some of their current expenses, thus helping the budget as well,” she said. “The result of all of these ideas and strategies is that it has us within approximately $20,000 of a balanced budget. This is an amount that we are confident that will be able to address.”

Gores said there are positive signs that the freshman enrollment is increasing for the fall term. Retaining current students and recruiting new students is the key to SMSU’s success in the future, she said.

“Every one of us in this room plays a vital role in recruiting our future students and retaining our current students,” Gores said. “There’s absolutely no question about it, that we all play an important role. And in order to survive today and thrive tomorrow, we need to continue to explore new initiatives that make us distinctive and that help us create new enrollments. I know that by continuing to work together, we will truly have a bright future for the university.”

Deb Kerkaert, vice president for finance and administration, and Dan Baun, chief information officer of technology, then led those present in a MnSCU biennial budget conversation.

“The process takes a long time, to develop the budget, present them to the Legislature, get them through the Legislature and find out what our outcomes are,” Kerkaert said. “Unfortunately, by the time we find out our outcomes, we’re going to start the next year in a couple of weeks or months. But today’s goal really, is to get your input on what we can ask the Legislature for. What are the important aspects of what the Board of Trustees will submit in November of this coming year, for the 2016 and 2017 biennial budget?”

Kerkaert stated that state appropriations and tuition revenue are SMSU’s major source of revenue, both of which the Legislature has input on.

“As you recall, they froze our tuition for this year and next year, and they could do the same for the next biennial,” she said. “That’s one of the questions that will be coming up. Should we be asking them to or not? What should we be doing as a system?”

Kerkaert said that tuition covered 57 percent this past year, MnSCU systemwide, while allocation covered around 42 percent.

“State appropriations set constraints on a number of things,” Kerkaert said. “It has a direct effort on what funds we have available for spending and compensation, program growth, innovation and inflationary costs.”

If the Legislature freezes tuition again, Kerkaert said that the system would need approximately $142 million more in state support to cover modest increases in compensation and inflation for 2016 and 2017.

“That’s systemwide, not just SMSU,” she said. “If there are salary increases in each of the years, they’d need $106 million to cover that and another $36 million for a 3 percent inflationary and operating cost.”

“That type of increase has not been seen very often from the Legislature,” Kerkaert added. “So we’ll gather your information and send it on to the system for them to review. Then leadership will review it this summer and broad discussions will take place in the fall. The board needs to consider the budget that gets put together so that it can be submitted in November, so we’re encouraging input here, but also through your unions and statewide meet-and-confers, so that our voice gets heard.”

While those in attendance were given a sheet of paper for their comments in regards to two questions – how might the Legislature help SMSU advance affordability and how might the Legislature help SMSU advance student success – more than 10 of those present chose to share their thoughts with the entire group.

SMSU English professor Teresa Henning advocated for reducing student debt and keeping tuition down. Student Association president Josh Anderson said he felt that the system needed to quit funding for-profit institutions, possibly by establishing a different formula for state grants. Anderson also stressed the importance of limiting appropriations to support office costs instead of students.

English professor James Zarzana agreed with Anderson.

“I think it’s important that they know these comments are coming from students, that the students have noticed it, too,” Zarzana said. “We have this huge MnSCU bureaucracy, and they’re not doing what they’re supposed to.”

English professor Ruthe Thompson noted the importance of retaining quality faculty, while registrar Pat Carmody said she would like to see some sort of compensation for student completion.

Many more potential solutions were offered in the hour-long discussion.

“We got lots of good suggestions,” Kerkaert said. “Thank you for the suggestions, not just now, but all semester, too.”