Webster University is projecting a budget shortfall — similar to the university’s financial state eight years ago. In January 2006 Webster announced mid-year cuts and a projected revenue shortfall for the second year in a row. Former Faculty Senate President Jim Brasfield said the shortfall wasn’t a crisis then and isn’t a crisis now. But he said finances are fragile.
“This is an ongoing problem. It affects everyone and everyone has to somehow play a role in dealing with the problem,” Brasfield said.
Basfield said the faculty’s role could be trying to keep expenses down and being as effective a teacher as they can be.
Brasfield wrote and distributed a paper about the university’s revenue stream to faculty in 2006 when he was Faculty Senate President. He said everyone needs to understand that state universities have tax dollars, and larger private universities like Washington University have more money in their endowments than Webster.
“All institutions don’t survive. It is possible Webster has begun a long-term decline… We must survive by our wits,” Brasfield stated in his 2006 paper.
Webster is making mid-year budget adjustments. The university predicted a $6 million shortfall for the Fiscal Year (FY) 2014, which ends May 31. Webster’s total budget for FY14 was $221.4 million.
Webster Provost Julian Schuster and Chief Financial Officer Greg Gunderson answered questions regarding the budget at the Faculty Assembly meeting on Thursday, Feb. 6. Schuster said next year’s budget process needs to look different.
“Our business model, as it operates currently, needs to change,” Schuster said at the meeting.
After selecting where mid-year cuts will occur, Schuster and Gunderson said the university will focus on structurally re-aligning the budget for FY15.
Student tuition dollars make up 95 percent of Webster’s revenue. While undergraduate enrollment was up this past year, graduate enrollment had declined. That decline in graduate enrollment contributed to Webster’s current shortfall projection.
Brasfield said Webster is too dependent on only a couple programs that are relatively small in number.
At Webster, 75 percent of all graduate enrollment decline comes from two programs: the master’s of business administration and the master’s of counseling.
Graduate students are responsible for about 75 percent of Webster’s revenue while undergraduate students make up the remaining 25 percent.
The Council of Graduate Schools reported a persistent decline in M.B.A. and law-degree enrollments, according to a 2012 article in The Chronicle of Higher Education.
A Moody’s Investors Service 2011 report stated, “Many public and private universities with both undergraduate and graduate programs have been relying on graduate-student enrollment to help build net tuition revenue as various pressures encumber undergraduate net tuition-revenue growth.”
Faculty Senate President Gwyneth Williams described Schuster as honest and transparent. She said she opened the door during the Faculty Assembly meeting for faculty to ask hard questions.
Williams said the conversations between faculty and administrators regarding the shortfall are more contextual than the conversations were last year when the shortfall was announced.
“I think we’ve had much fuller conversations now about how there need to be structural changes,” Williams said. “I think people are now seeing it as part of a bigger challenge that is endemic to higher education and that is going to need bigger, more permanent answers.”
Moving forward, the university will increase recruitment, tighten programs and launch new programs that are in demand in the U.S. Schuster said Webster will also evaluate its external campus locations.
When forming a budget, the university first sets tuition rates, then makes enrollment projections. From those two elements, it forms a budget and allocates the funds.
At the meeting, School of Communications Professor Joe Schuster asked why Webster budgeted for a growth in revenue after the shortfall last spring.
Gunderson said the university set revenue targets last year based on what it expected new programs to achieve, which resulted in budgeting for a revenue growth in FY14. Then the university set aside half of that budgeted revenue growth, which left Webster budgeting between a 2 and 2.5 percent growth in FY14.
For FY15, the university will cap its enrollment projections at the actual enrollment numbers for FY14 for planning purposes. Gunderson said at the Faculty Assembly meeting that Webster’s intention for its FY15 budget is to reset the base of the budget to fit within existing revenue.
“Clearly that budget (FY15) will be a smaller budget than this fiscal year’s budget because we’re reassessing our enrollment projections in light of national enrollment trends for graduate students, and we want to be more conservative,” Gunderson said in an interview with The Journal on Feb. 4.
While looking at balancing next Fiscal Year’s budget, Gunderson said the university has a few ways to save on operating costs:
Ending the retiree healthcare plan will save an additional $700,000.
Deployment of contingency revenues will provide $500,000.
Adjusting veteran tuition rates will provide $1.5 million.
Julian Schuster said the budget process needs to be different for FY15.
“Next year’s budget will be fundamentally different than this year’s budget,” Julian Schuster said at the meeting. “Otherwise we will have the same conversation next year. We will budget more than we will get in revenue and then we will go to cuts.”
Brasfield said Webster entered the market for online, part-time night students and military education early. Now, there is more competition. Given the increased competition, Brasfield said it is impressive that the university has been able to maintain about the same number of total students each year.
“Staying even can be a battle,” Brasfield said. “I don’t see a simple, easy solution to the issue.”
Jim Brasfield's 2006 Paper on Webster University's Budget_distributed to Faculty in 2006