Breaking the bank to cover another enrollment dip

By Thomas Albano

As Dr. Gregory Dell’Omo takes the reins as president from Dr. Mordechai Rozanski, the school finds itself having meet an $8 million financial shortfall for the 2015-16 fiscal year.

In a letter to the faculty and staff on May 29, Rozanski cited a failure to meet goals for enrollment as the primary cause. The need to fund scholarships also had an impact.

An update from Rozanski the following month acknowledged that the university had implemented spending cuts — such as saving $4 million saved by deans and division heads with “ways to reduce costs to address the budgetary shortfall” and $650,000 by awarding fewer scholarships because of lower enrollment and

Rozanski stated more cost-cutting measures would be enacted, including administrators and other non-bargaining employees not receiving a wage increase for 2015-16. The university will also cut its maximum contributions to the pensions of these employees from 8.25 percent to 5 percent. According to the letter, this would mean another $1.5 million saved.

“Recognize [board of trustees], as I do, that, as a community, we must do everything we can to achieve additional savings while providing competitive scholarships and a quality university experience for students,” Rozanski stated in the letter. “While I am very sorry that I must announce these painful measures, I am optimistic that enrollment and revenue growth will also contribute to the future financial health of the University.”

Enrollment

In his letter, Rozanski announced that Rider would miss its new student enrollment goal by 75 students and its continuing student goal by 79.

When Dell’Omo addressed faculty and staff in the Student Recreation Center at the Fall Convocation on Sept. 3, those numbers had changed. As of the end of August 2015 the freshman goal was missed by 127 students and the continuing students goal was missed by 53.

Julie Karns, the vice president for finance and treasurer, said that when the university was planning for the 2016 fiscal year, the high number of applications and acceptances made the enrollment goal seem achievable.

“As we got into February and March, and we packaged financial aid awards and we sent those out to the students, the deposits were lagging what we would’ve expected,” Karns said. “As we came closer to the usual June budget approval, we saw that the overall enrollment would be coming in very significantly under.”

Obstacles

Dell’Omo attributed the shortfall to challenges brought upon by what is called “the new normal” in private institutions. These challenges include demographic changes, price sensitivity, debt levels and competition from other institutions.

“These are not temporary issues or minor challenges, but in fact fundamental changes that require new ways of thinking and operating while maintaining a mission and a purpose,” Dell’Omo said.

Demographics, mainly in the New England and Mid-Atlantic regions. Jamie O’Hara, vice president for enrollment management, said there has been a decrease over time in the number of students graduating from high school.

“In the state of New Jersey, for example, this past year there were just about 1,000 less graduates from traditional high schools,” O’Hara said. “If you go back — there’s a graph I’ve been sharing with some folks — from 2004 to around [projected graduation dates of] 2026, the actual decline is pretty significant.”

This decline is not nationwide, however. According to O’Hara, states in the South and Midwest are still seeing growth in the number of graduating high school students.

New Jersey ranked in the top five states for “exporting” high school students, according to O’Hara. Students leaving for higher education institutions in other areas affect Rider each year.

“New Jersey is incredibly popular for having a lot of colleges and universities come to recruit New Jersey students because they’re willing to travel,” O’Hara said.

Karns added that private institutions like Rider face challenges involving the Building Our Future bonds issued by the state.

“When New Jersey issued those Building Our Future bonds to help colleges and universities improve their facilities, the majority of the money is going to the public colleges and universities,” Karns said. “It was $754 million in bond money and maybe about $50 million in total went to the private colleges. So, it just makes it really challenging when the state of New Jersey is paying for [public colleges’] facilities’ improvements. It puts us at a disadvantage.”

Cuts and savings

The expectation of an increase in freshman enrollment for 2015-16 allowed the original budget to have increased wages and the same pension contribution. Once the numbers came in, steps had to be taken, administrators said.

To start, any purchases made in June were frozen. According to Karns, this helped the university save $1 million and preserve the quasi-endowment, which consists of accumulated surpluses and can only be spent with approval by the board of trustees.

“We were basically saving it for prospective deficits,” Karns said. “The key message is that it’s not permanent funding. Once it’s gone, it’s gone.”

When additional steps needed to be taken, Karns says non-bargaining employees were not the only ones impacted.

“We said, ‘How could we offset the decline in revenue?’ and really we brought it back at this point with some really painful steps about the personnel pieces,” Karns said. “We also did university-wide operating budget cuts and that included lots of different action. I do expect we’re going to have a couple of years of deficit spending, the same kinds of contributions to the savings that we asked the staff. Right now, that is who is contributing to the wage and benefit savings. We are hoping that the AAUP (American Association of University Professors, which represents the faculty) will join in, but that’s a decision they have to make and those conversations are in process.”

However, Dr. Bryan Spiegelberg, president of Rider’s chapter of the AAUP, says the union is still in the dark on a number of issues.

“We are happy to work with administration to solve problems, but our relationship needs to be a two-way street,” he said. “Our membership will do what we believe is in the best interest of the long-term health of the institution, but we need information to perform appropriate analyses.”

Future

While the next goals for new student enrollment and continuing student retention will not be specifically established until some point in the recruitment cycle, O’Hara is confident about the future, especially considering new programs at Rider, including the sport management co-major and the health care management and health science majors.

O’Hara feels these programs, along with financial aid packages, will keep prospective students attracted.

“It’s important to have strong academic programs that are also attractive to students that are in the market,” O’Hara said. “Now that there are less of them, you have to make sure that you’re keeping your majors in a place that are responsive, so your programs are very important.”

In addition, Dell’Omo will develop strategic planning for the next couple of years with the intention of improving student experiences. He also announced plans to expand recruitment activities, which include expanding online advertising, expanding out-of-state recruitment in those with growth of high school graduates and enhanced faculty interactions in days such as Admitted Student Days.

“I’m grateful I’ve been given the opportunity to be Rider’s seventh president and I am enthusiastic to work with all of you to build Rider’s strengths and traditions,” Dell’Omo said.