To the editor:
I write in response to the Sept. 6 article titled “AAUP, Admin Finally Reach Tentative Agreement.” Specifically, I would like to address President Gregory Dell’Omo’s comments concerning Rider’s projected deficits.
As a Rider faculty member and a member of the AAUP team which negotiated with administration this summer, I have been concerned with Dell’Omo’s cavalier attitude toward the accuracy of Rider’s financial projections and the use of proper accounting methods in making those projections.
Last year, Rider’s vice president of finance began circulating a three-year budget projection which was specifically labeled as using “cash-basis accounting.” This cash-basis budget projection showed cash deficits in excess of $10 million per year over the next three years. Based on this budget, Rider’s vice president of finance provided dire predictions of Rider’s future which involved depletion of Rider’s cash resources and the potential for a “growing concern footnote” in Rider’s fiscal 2016 audited financial statements. Such a footnote implies a business is going to run out of cash and will not be able to pay its bills.
As the AAUP predicted, a “growing concern footnote” never appeared in Rider’s financial statements for 2016, and is unlikely to appear in the future. Furthermore, the AAUP analysis of Rider’s cash flow over the 2016-2017 fiscal year showed that the three-year budget projection circulated by Rider’s vice president of finance was off by almost $7 million. When questioned about this budget discrepancy, Rider’s accounting controller at the time disclosed that the three-year budget was prepared using a “hybrid” approach which combined cash and accrual accounting methods, meaning that it was, in fact, not a cash budget. Based on the AAUP analysis of Rider’s fiscal 2017 cash flow, the use of a “hybrid” accounting for what was supposed to be a “cash basis” accounting document resulted in a $4 to 7 million discrepancy, effectively eliminating almost all of the projected cash deficit for 2017 with similar deficit reductions in future-year projections. If these estimates of cash deficits were incorrect by 40 to 70 percent due to incorrect accounting as Rider’s controller indicated, then by definition, this is a misrepresentation of Rider’s finances. This incorrect representation of Rider’s finances formed the basis for Rider’s Board of Trustees approval of selling Westminster Choir College and for administration attempts to slash faculty pay and benefits by $10 million per year.
In the article in The Rider News, President Dell’Omo admits that he and his vice president of finance were wrong about having a $10 million cash deficit this year. In a confusing statement in which he identifies “people” (presumably the AAUP) “talking about … operating deficits” he indicates that “we are not going to run out of cash.” In the same statement, President Dell’Omo goes on to speak in terms of future deficits (presumably operating deficits) and relating that to a “new round of tuition” and being “way off” (presumably with cash).
So after a year of dire financial claims based on clearly erroneous, incorrectly prepared cash budgets, these serious mistakes are simply dismissed without consequence. President Dell’Omo now appears to be replacing the fallacious budgets as the basis for “structural change” with vague unsubstantiated claims of “being in a hole with … cash” three or four years in the future. His misstatements concerning Rider’s operating and cash positions continue to confuse accrual and cash accounting and are not based on any rational financial analysis. This is why faculty lacks confidence in this university’s leadership and why it will continue to resist President Dell’Omo’s calls for “structural change.”
Professor of Information Systems and Supply Chain Management,
sent to The Rider News on Sept. 15.
Printed in the 10/18/17 issue.