Running in the red
April 30, 2013
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“I want to know how the university is in such a hole,” junior education student Rachel Ake said. “I’m spending $5,000 a semester, along with the other thousands of students on campus. I just don’t understand how that’s possible.”
Based on data from university officials, tuition and student fees represented approximately 69 percent of the university’s revenue in 2012. State appropriations totaled approximately 24 percent of the university’s revenue, making 93 percent of revenue directly tied to student enrollment.
Despite seeing increasing enrollment over the years, state appropriations have remained relatively unchanged since 2003, where the state appropriations ranged from $87.9 to $90.6 million a year between 2003 to 2012. This results in a reduction of educational appropriations per student over that period. The state of Ohio has bi-annual budgeting, which requires the state to create a budget every two years.
According to The University of Akron’s Chief Financial Officer, David Cummins, higher education took a significant budget cut in the bi-annual that the university is currently in. Cummins said that the $26.7 million deficit is largely connected to the loss of revenue from stimulus funds and a sudden decrease in enrollment. The state had two years to spend money from stimulus funds, which the university saw in 2010 and 2011. President Obama’s administration proposed a second round of stimulus in 2011, but it was not passed by Congress.
In response to the sudden loss of funding from stimulus dollars, Cummins said that the university had put together a two-year plan that would get The University of Akron to its new state funding level over a couple of years.
“Instead of doing a lot of dramatic cuts right at the beginning, we thought we had several years of enrollment growth behind us,” Cummins said. “Enrollment collapsed in 2012, and now in 2013 it has gone down, which compounds our problem.”
The reduction in student enrollment is not limited to new students, but also includes returning students as well. One percent of student enrollment is equivalent to an approximately $2 to $2.5 million windfall or shortfall, depending upon the shift on enrollment, according to university officials.
To deal with the budget shortfall, the university has suggested refinancing on debts, making changes to investment policies, not filling vacancies, a $13-14 million in target reductions across all university units and a reduction of $1 million worth of investments in the Achieving Distinction program.
Several faculty and staff on campus have voiced concerns about the deficit, believing that there are other issues that the university needs to address that have contributed to the deficit.
“The problem is quite simple,” said Dr. William P. Williams. “There are too few full time, tenure track faculty, and there are far too many administrators.”
The University of Akron will also be met with possible costs associated with the Affordable Care Act. In a memo sent to employees addressing actions to increase effectiveness, efficiency and student academic success, The University of Akron said that “Universities…are facing the consequences of the Affordable Care Act, and taking action to address anticipated health care costs. Here at UA…we estimate the cost of providing health benefits to part-time staff and faculty would exceed $4 million…we decided to limit part-time staff to less than 30 hours a week, and part-time faculty to eight credit hours per semester.”
This measure adopted by the university has become an area of concern for many part-time staff, as it will cut their normal semester pay significantly. These part-time staff teach approximately half of the courses at The University of Akron.
In response to these changes, the Ohio Part-Time Faculty Association is holding a rally on May 1 at The University of Akron’s main campus, according to Matt Williams, vice president of New Faculty Majority.
“We want to educate the campus community about the inadequate working conditions and the pay and benefit inequities faced by part-time faculty at UA,” Williams said.
University of Akron officials caution, however, that the $26.7 million deficit is not to be connected to the changes made to part-time employment.
“Part-time faculty have been upset about the restricted pay and credit hours; that is outside this $26.7 million budget problem,” said Eileen Korey, The University of Akron’s chief communication officer. “The activity going on to restrict the hours for part time instructors in order to save what could be another $4 million dollars plus, in costs, that’s completely separate.”
The budget deficit faced by the university is not unique to The University of Akron. Colleges and universities throughout the state are also feeling the bind from decreased state appropriations and down enrollment.
According to ABC affiliate WTVG Toledo, The University of Toledo observed a $13 million deficit last year due to similar reductions in student enrollment.