Condensed version of remarks delivered to faculty and staff on November 28, 2017
It was two months ago in this very place that I spoke with you about the State of the University. Three slides that you may recall illustrated the missed revenue projections that created the bulk of the gap that we face within the current year budget.
- The tuition discount rate for the first year class was up 3%.
- The occupancy of the residence halls was down.
- And there was a significant decrease in retention.
Our graduate and professional enrollments, summer melt, and transfers shortfall in projections also had an impact.
In sum, these missed projections caused about a four percent deficit in the current budget.
I am pleased that the campus community responded so favorably to my call for participation in a Resource Management Advisory Committee chaired by Dr. Carole Pfeffer, our provost, and Mr. Bob Zimlich, our chief financial officer. I would like to commend our co-chairs and all of the faculty and staff who served on this important body in the very difficult task of soliciting recommendations for cost savings, cost reductions, reallocations, and revenue generation. We, as a university community, are indebted to your selfless work. It is the first step to a much more transparent shared governance process, and I could not be more grateful for the community’s thoughtful and collegial participation.
Today, I will address a number of the recommendations from the widely distributed list of recommendations. There is a sense of urgency when the institutional budget is not balanced – and the significance cannot be underestimated. We will present the Board of Trustees with a balanced budget.
One step that we have taken to bridge the gap is to refinance some of our debt – not to extend it, but to reduce the interest rates in a favorable market. This step has occurred since we met in September and is resulting in considerable savings over time. To secure this refinancing, Bellarmine University had to be evaluated by Moody’s, a nationally recognized financial rating agency that establishes a rating for the bonds that are sold to refinance our debt. Our credit strengths were: a trend of healthy enrollment increases, careful financial management and planning, and limited future debt plans. Our credit challenges were: limited revenue diversity with a heavy reliance on student charges and fees, weak enrollment rates (yield) with only 14% of accepted students matriculating in Fall of 2017, high tuition discount rate, regional demographic issues, and competition.
I share this level of detail with you to let you know that our institutional budget is important – it is closely monitored, it is audited annually, it is part of our accreditation process, and it has been well managed. I understand that missing budget projections can be frustrating to all of us and we are always working to improve our accuracy at this. However, the track record has been very good indeed, which is how Bellarmine has been able to make such progress with our academic reputation, the campus, and the marketplace.
We have just completed a bid process resulting in our selection of a new partner to assist with projecting our financial aid packaging, yet, we will still cycle through with a much smaller class that will be juniors next year. Once you enroll a smaller class than projected, or retain fewer students than projected, the only way to make up for it is through other new revenue streams such as transfers or new academic programs. Even then, it is very difficult to make up the loss until that class graduates four years later. This is a topic we will return to in our future budgets.
Now let me address the faculty resolution: “While the faculty are willing to help the University in a period of fiscal difficulty, the first step in addressing our current budget shortfall should include a restructuring of all administrative areas with a goal to significant cost reduction.”
First, my earliest decisions as President were to cut two senior level positions in the President’s Office – the Assistant to the President and the Executive Vice President. As a result of these decisions, all vice presidents have been taking on additional responsibilities as I moved responsibilities such as athletics to Student Affairs, analytics to the Rubel School of Business, and special events to Development. They have taken on these responsibilities without new positions or new resources and they have done so enthusiastically. So, while your resolution implies that the growth of the budget has been largely in administrative areas, the data do not reflect administrative bloat.
In fact, there are offices in the University that I consider to be woefully understaffed, including the Office of Identity and Inclusion and community service which are both staffed by one administrator – and this bothers me every day because I consider these offices to be mission critical.
However, the President’s Cabinet members know that I am not interested in adding new positions and that we have to find ways to reallocate from within. The vice presidents have already looked at their operations and have made cuts greater than 4% in most cases and they continue to look at opportunities to save, cut, and reallocate. They are also exploring graduate housing in an attempt to more fully occupy the residence halls for next fall.
We will continue to examine staffing in all areas of the University. Everyone had the opportunity to make specific recommendations and those are the recommendations that I will continue to respond to – including this one. As more decisions are made, I will continue to inform you and the campus community.
Today is Bill’s and my 25th anniversary. While I am not one to mention personal matters, I think it is worth mentioning that each of us learned greatly professionally during the time of our courtship and marriage. When we first met at Loyola, I was struck by how little he knew about the university outside of his faculty position, though he had been there for over five years. I was equally struck by how little I knew about the life of a faculty member – the individual pursuit of scholarship, the emotional drain of grading to see what students had not learned, and the never-ending service of committees, advising, and community engagement. I mention this to hope we can reflect upon how to continue to appreciate the different roles we all play in educating the whole student body, mind, and spirit.
For instance, while I appreciate the suggestion, I am not ready to endorse the recommendation to raise the faculty teaching load across the University to a 4:4 teaching load as I do not want to do anything even on a temporary basis that could dramatically impact the quality of the student experience. I am a believer that your research as scholars makes you better teachers. However, for those faculty who are not participating in research, we will explore increasing their teaching load. The deans and department chairs will have to determine those cases.
Here are the decisions that I am ready to make regarding the recommendations from the Resource Management Advisory Committee. Ultimately, the Board of Trustees needs to approve the final budget and these recommendations:
- There will be no increase in salary for all employees in January.
- There will be a reduction in the university contribution to retirement by two percent for the next five months beginning in January, which will result in a little less than a one percent annual reduction in the university contribution to your individual retirement account.
- We are not filling most open positions.
- There will be at least a four percent reduction in budgets across the university. The provost and vice presidents will be able to provide the answers to specific questions regarding this. These changes will occur this year and next year.
- We will use contingency funds to help bridge the budget gap.
- Sale of the Glenview house will mean substantial internal debt reduction.
- And there is a recommendation to reduce the credit hour requirement from 126 to 120 hours – and first discussions are happening with governance bodies this week and next. This is a retention issue as well.
We are also paring back our campus celebrations. You will notice that our faculty and staff Christmas party is a cocktail party with music this year, and not a dinner-dance. Some recommended eliminating it entirely, but I did not want to do that: It’s important to celebrate the season in community, and what we are planning will be very nice!
I will continue to follow up with other administrative structure recommendations, cost savings, and reallocations as more internal conversations occur. I want to thank you all again for demonstrating the strength of our Bellarmine community throughout this very difficult but urgent and important process. If we continue to be thoughtful and collegial, we will come through this together even stronger than ever as a community.
And that will stand us in good stead as we embark on our strategic planning process to chart a brilliant future for this institution.
I have asked Dr. Pfeffer and Mr. Zimlich to continue a Resource Management Committee to review our budget and to provide this important function in our shared governance as a university. More information on this will be forthcoming.
Let me close with a favorite prayer.
Go forth in peace,
Hold onto what is good.
Strengthen the faint hearted,
Support the weak,
Help the suffering.
Honor all men and women,
And rejoice in the power of the Holy Spirit.
Susan M. Donovan, Ph.D.