Let’s Get Fiscal
By Katie Zeck and Joe Petrizzo
Rider has quietly taken steps to deal with a $2.6 million budget shortfall – about 1.4 percent of the university’s operating budget – and the blame is being placed on a decrease in room and board revenue, a reduction in state funding and a lack of enrollment.
This came as a surprise to anyone who attended the Convocation on Aug. 30 when President Mordechai Rozanski announced that the university was taking the necessary precautions to repair a $1 million budget deficit. But less than a month later, the debt more than doubled and the relatively manageable shortcoming became a web that is now spinning itself all over the campus.
To compensate for this short fall, the university began making spending cuts in various departments and requested that the academic chairs seek ways to reel in unnecessary spending by canceling under-enrolled sections for the spring semester.
Dr. Jeffrey Halpern, Rider’s contract administrator and chief grievance officer of the American Association of University Professors (AAUP) expressed his concern for the effects the cuts may have on students.
“Many courses in the fall were filled to capacity and beyond so that some students could not get the courses that they needed at the times that worked for their schedule,” he said. “We may expect that with some sections of courses being dropped that this problem will be made worse. If this happens to any student I would urge that student to voice his or her complaint not with his or her faculty adviser but with the university administration.”
Associate Provost Jim Castagnera said that 33 class sections – about 2.4 percent of all planned class sections – are going to be cut for the spring 2013 semester, but insists that the impact this will have on students will be minimal.
According to Castagnera, the university will save about $5,000 for every course that is cut.
“I want to emphasize that no required classes have been cut, though in some cases where there was more than one section of a required course and one of those had low enrollment, only one section will run,” Castagnera said in an email. “Even after this modest reduction, we will still offer more sections in spring 2013 than the last time we had a similar enrollment level.”
Dr. Anne Osborne, chair of the History Department, felt that there should have been more of an open conversation between the administrators and the deans of each school and college.
“I think there should have been more transparency about what the Dean’s Office was asking each department in SLAS to cut,” she said. “My understanding is that the dean’s [of SLAS] office itself did not know from the beginning exactly what the requirements were. I think there was also a situation that was less than fully clear in that even when the Dean’s Office did get the word it was not always clear exactly what they wanted or what kind of authority they were relying on to make the requests that they were and that created some questions about the issues of authority.”
Details of the Cuts
According to an email sent to the deans of the different colleges and schools from provost Don Steven, Rider’s Academic Affairs division would be making a total of $350,000 in cuts and savings to help with the shortfall. After the $135,700 worth of reductions that will be made in the Provost’s office, the libraries, the Teaching and Learning Center and the Center for International Education, the university’s five schools and colleges will have to collectively make $214,300 in cuts and savings.
Comparatively, the offices of the President, Finance, Institutional Advancement and Athletics will make $982,000 worth of unspecified cuts and savings. Enrollment Management will receive $600,000 in cuts and Student Affairs will contribute $200,000.
In order to accumulate the $214,300 needed from the schools and colleges to help balance the budget, Steven has requested that reductions be made in the form of actions such as reducing courses for spring 2013 or canceling unstaffed sections.
According to Steven, these amounts were “allocated proportionally based on each college and school’s overall adjunct and overload instructional costs and its operating budget.”
The Long Term
As far as the time frame for how long these cuts will remain in effect, Steven, Vice President of Enrollment Management Jamie O’Hara and Vice President of Finance and Treasurer Julie Karns said in an email that some of the expense reductions may continue, but not all.
“Balancing our original budget and closing the new budget gap for this year were accomplished by also using recent major donor scholarship gifts and some facilities reserves,” they said. “These are appropriate short-term solutions which will temporarily help bridge the gap, but they can’t be counted on to the same extent year after year. That is because scholarship donations are not consistent every year, and facilities reserves can’t be used on an ongoing basis to cover a structural gap; otherwise, we would not be able to continue to invest in facilities upgrades or new facilities.”
Castagnera explained that there is a strict, regular review process for deciding which sections are canceled. Courses are only canceled because of low enrollment, while some are added because of student demand or to necessitate graduation.
Dean of Students Anthony Campbell said that, overall, students will be unaffected by the cuts and savings being made across campus.
“The budget process will not impact the quality of student life,” Campbell said. “The evidence can be seen in the new dining halls and various student programs we have on campus.”
According to Karns, Rider’s original total budget for the 2012-13 academic year was $201.5 million. The original operating budget – the amount of money the university puts aside to manage its current expenses – totaled $193.8 million before the cuts were put in place.
Now the university’s operating budget is $191.2 million, meaning 1.4 percent of the original operating budget will be cut. The $2.6 million that was reduced from the initial number equals the total debt the university is in.
The revised operating budget actually increased from last year by $8.3 million, according to Karns. “Virtually all of the increase is due to increased spending on student financial aid, scholarship, wages and benefits,” Karns said in an email.
Despite the voluntary-status of the request for deans to make these budget cuts to their respective school or college, Steven said that the academic departments on campus are deciding to take the necessary steps to assist the university in working toward a smaller structural gap.
“I know that all units have been taking a careful look at their expenditures and every division is contributing to balancing this year’s budget,” he said. “I’m also confident that this shared commitment to the greater good will help us maintain balanced budgets in the future.”
Halpern said that even if each school and college follows through with all the cuts they were asked to make, the faculty on campus will not be affected from a hiring standpoint.
“There is no job freeze of any sort for faculty, either full-time or adjunct,” Halpern said. “Since hiring is one of the matters covered in the collective bargaining agreement between the AAUP and the university any job freeze would have to be discussed with the AAUP and there has been no such discussion.”
However, Steven did note that for non-faculty positions, the university uses a process to review the vacant spot and look for opportunities to hold positions open for a period of time to produce budget savings.
Chair of the Accounting Department Dr. Marge O’Reilly-Allen said that, in light of the economy, the university was correct in asking the schools and colleges to reevaluate the efficiencies within their departments.
“It is financially responsible to balance our budget and relative to Rider’s total operating budget, the budgetary cuts are very reasonable,” she said in an email. “Of course, the goal is to maintain high quality teaching while living within our budget.”
As far as the Accounting Department is concerned, O’Reilly-Allen said that students will not be affected because there is enough enrollment to fill all the sections, so none will be cut.
Dr. Tamar Jacobson, chair of the Department of Teacher Education, feels that the School of Education will not be greatly affected.
“Considering the economic situation in general and the economic situation at Rider, I think the cuts are minimal for the School of Education,” she said. “We don’t have a problem closing some sections that are just not filling. We seem to have a little bit less in terms of registration for a number of reasons: some of it’s financial for students, the other is demographically — there’s less high school students graduating these days — we have a little bit of a lower enrollment so it’s easier to cut a couple of the sections. At the moment it doesn’t seem to be hurting us very badly. I haven’t heard any complaints about it and I’m not worried too much at this point because I think we’ve gotten off quite well with the School of Education.”
Causes of the Shortfall
In the email compiled by Steven, O’Hara and Karns, the reasons for the increase in Rider’s structural gap from $1 million to $2.6 million were cited as a shortfall in enrollment goals for freshman, transfer and continuing studies students, an increase in the amount of students choosing not to live on-campus and other unexpected losses in revenue.
“Fewer students were choosing to live on campus,” said the group. “This resulted in a significant loss of revenue of well over a million dollars, from tuition as well as from room and board. In addition, we experienced unanticipated shortfalls in other revenue sources, such as the summer Study Tours program. Altogether, this revenue shortfall resulted in a significantly greater structural gap than was known at the time of Convocation.”
According to the email, a structural gap forms when the university’s regular sources of revenue do not cover the regular cost of “doing business.”
“For this year, Rider set its tuition rates and financial aid and scholarship support so that the tuition students paid plus all our other sources of revenue would cover our planned expenditures,” they said. “However, we experienced lower enrollment than predicted as well as lower revenue in other areas, creating a structural gap. Reducing expenditures and using facilities reserves and one-time donor scholarship gifts will ensure a balanced budget this year, but Rider needs to ensure that it brings regular revenues and expenses into balance for future years as well.”
O’Hara confirmed that the university originally anticipated that 2,450 students would live on campus for the 2012-13 academic year. As of Sept. 21, the end of the add/drop period, a total of 118 students who deposited in the spring decided to not live on campus, bringing the amount of students living on campus this semester to 2,332 — 120 students fewer than the 2,452 students who lived on campus last fall.
In addition to the unexpected loss of revenue from on-campus housing, the expected enrollment of freshman, transfer and continuing studies students was also lower than anticipated.
“At Convocation, the enrollment was reported as 3,991 against a goal of 3,985,” O’Hara said. “President Rozanski indicated that we expected to ‘melt’ between 30 and 50 full-time students from the 3,991 by the end of the add/drop period when we finalize numbers. We did in fact experience a decline. As a result, the final full-time enrollment for the fall semester is 3,958 total students.”
The university lost 33 students since the numbers were reported at Convocation and missed its projected enrollment goal by 27 students.
Alongside the in-house issues of lower enrollment and less revenue from room and board, another factor that helped create Rider’s $2.6 million structural gap is the $2.5 million cut in operating support from the state.
However, at Convocation Rozanski said that necessary cuts and savings had already been taken into consideration to help make up for this loss in state funding. He said that the university was stable, but had some challenges.
As far as making cuts within her department, Osborne was not willing to make cuts that would create difficulties for Rider’s history majors.
“I don’t think it’ll have any significant effect on the students,” she said. “If we thought it would, we would have probably said no [to cutting class sections] because there was a strong feeling that we need to address the needs of the majors and we also need to do our share for the core. One of the things our majors really value is having a range of upper-level courses so we weren’t going to cut significantly with the upper-level courses and leave them with too few sections or sections. I think we were able to meet the two course goal without doing that.”
Steven, Karns and Castagnera added that they are prepared to make the necessary changes needed to prevent a shortfall from happening again.
“To compensate for the substantial growth in financial aid and scholarship support and the loss of state aid revenue, Rider had already taken a number of steps to reduce costs over the last three years,” they said. “Most of the cuts we’ve implemented should not impact students directly. One step we are taking is to plan next year’s course offerings to fit the projected student enrollment. We are working with the deans to adjust our course offerings accordingly, recognizing that some programs have grown and ensuring that students have the courses they need for their programs.”
In his convocation address, Rozanski cited a number of initiatives that would be put in place to help ensure that this structural gap is closed.
He said that there will be continued program innovation such as Rider’s master’s in business communication and the BA in popular music culture, among others. The university will also lobby to restore state cuts to the operating budget.
Enrollment Management will also be making adjustments to create a more on target number of enrolled students to the number of students that would allow for a balanced budget.
The President listed that some of these adjustments would include a 3 percent growth in the freshman application pool, increased joint-admission programs with community colleges to improve transfer enrollments and new recruitment strategies for out-of-state enrollment. Rozanski added that there will be targeted fundraising to secure more scholarship support and continued enhancement of both campuses’ facilities.
Additional reporting by Rachel Stengel and Jen Maldonado.
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