EMU's budget shortfall could grow to $6M, regents told
Eastern Michigan University enrollment levels declined this year, ending the school’s two-year growth streak and contributing to a growing budget shortfall.
EMU is experiencing a $1.7 million shortfall so far this fiscal year, EMU Chief Operating Officer John Lumm reported at a Board of Regents meeting Tuesday afternoon.
The gap, Lumm said, could grow to between $5 and $6 million by the end of the fiscal year.
Susan Martin
The reasons include the enrollment decrease and a drop in investment income.
"The challenges we face are really twofold: The enrollment shortfall is one, the second one, which is way too early to draw any conclusion on, is the investment income,” Lumm said. “Investment income is tracking down year to year. The markets are down.”
Board of Regents Chairman Roy Wilbanks asked Lumm to present a plan on how the university plans to deal with the shortfall.
“Obviously this is a pretty discouraging report,”Wilbanks said. “If this track continues, the board is going to have to give some type of budget amendment.”
Lumm said EMU’s financial department already is looking to craft spending adjustments that it will bring to the Board of Regents by December.
He said this year’s budget shortfall is “more challenging” than the $3 million shortfall EMU experienced last year.
To accommodate the shortfall, Lumm said the university will have to carefully manage expenses and make strategic cuts. He said that layoffs would be a "last resort."
In June, 81 positions were cut, for a savings of $4.24 million in salaries.
Also affecting EMU's $281.4M operating budget is a drop in grants: they're down by $800,000 from this time last year.
The budget shortfall and enrollment decrease comes after EMU received a record number of applications last year.
EMU received more than 12,600 applications for the 2011-2012 academic year, a 24 percent increase from the year before.
However, the number of students enrolled in classes at EMU this year is 23,341, a 0.07 percent decrease from last year. The number of credit hours decreased by 1.4 percent this year.
While overall enrollment has decreased at EMU, the freshman class is 6 percent larger than last year’s
B.J. Selfridge, coordinator of EMU’s admissions visit programs, reported that university representatives attended more than 600 high schools and 250 college information sessions last year.
Selfridge said that as EMU pushes to increase enrollment, the university continues to focus “within the Midwest.”
Altough overall enrollment at EMU has decreased, this year’s freshman class grew by 6 percent, increasing from 2008 students last year to 2,130 students this year.
The number of students participating in student housing has also grown, rising 5.7 percent from last year.
“Overall, having this many more student on campus, you can really see the difference,” EMU Vice President for Student Affairs Bernice Lindke said. “When you look at the buildings and you look at the grounds, and you see the students who were at orientation, there’s just a different feel this year and you can really tell.”
Students entering EMU this year are academically stronger than last year.
“Our academic profile has improved,” EMU President Susan Martin said during the regents meeting.
The average GPA rose to 3.10 percent this year from 3.06 percent last year. The amount of students entering EMU with a GPA above 3.5 increased by 16 percent this year.
Lumm also said that fundraising for the 2011-2012 fiscal year, which began in July, has already surpassed last year’s levels. EMU’s current $5.7 million fundraising total is largely because of two large donations, Lumm said.
“Fundraising is quite a positive story,” Lumm said. “We have an aggressive goal. We raised $5.1 million last year, our goal for this year is $9.5 million.”
Kellie Woodhouse covers higher education for AnnArbor.com. Reach her at kelliewoodhouse@annarbor.com or 734-623-4602 and follow her on twitter.
Comments
Gordy Austin
Thu, Sep 22, 2011 : midnight
This is the University which misused funds to build a Presidential House it didn't need and also paid $2.5 million to the family and estate of Laura Dickinson and $350,000 to the Department of Education (for violating the Clery Act). There are departments and offices on campus which make available coffee (Starbucks, in some cases) and bottled water to its staff, which is in violation of EMU Purchasing (and possibly IRS) guidelines. Staff members go off on "boondoggles" in resort cities across the country, where they stay in five-star hotels and allegedly learn new information and trends, yet the information is never shared upon their return. Dozens and dozens of staff members also are allowed to essentially "collect a paycheck" for free while surfing the Internet all day and/or watching television from their work computers. The Marketing area is allowed to clutter up campus with hundreds of thousands of dollars of signage that is both tacky and not necessary. Is anyone really surprised EMU continues to struggle with its finances? Why does it matter if there was an increase an applications if the students aren't registering and/or graduating? If a car dealership sees an increase in visits to its showroom, there'd better be an increase in sales and returning buyers. If not, there's clearly a problem.
jmcmurray
Wed, Sep 21, 2011 : 5:02 p.m.
That ban on medical marijuana should provide some relief, right? That's was time well spent.....
jmcmurray
Wed, Sep 21, 2011 : 5:03 p.m.
*That was time well spent....*
njoy1
Wed, Sep 21, 2011 : 12:59 p.m.
Perhaps if they apportion the tuition and fee structure so that first-year students pay more than upper-division, they will not only help students complete degrees, but also be able to pay for the retention support/services directed at 1st-year student retention.
Jessica 'Decky' Alexander
Wed, Sep 21, 2011 : 10:31 a.m.
As a faculty member at EMU, and one who advises and works with many graduate students there appears (in my experience) to be many variables as to why a student enrolls or chooses to discontinue their studies. A factor not mentioned in previous posts may include the elimination of unsubsidized loans to graduate students. In the debt-ceiling drama of this past summer, graduate students loans were moved from subsidized to unsubsidized in order perhaps save Pell Grants. money.cnn.com/2011/08/01/news/economy/debt_ceiling_students/index.htm Certainly, there is no data on the above, but this may be one reason for lower graduate student enrollment. Others issues may be more internal including financial support, transportation barriers, and communication of programs,etc.
schoolsmuse
Wed, Sep 21, 2011 : 3:53 a.m.
Regarding Geoff Larcom's referral to graduate students, I think this is likely because the vast majority of EMU graduate students are in the Education school, and at this point, it doesn't seem that helpful to get a MA or PhD in Education when jobs are being cut right and left. In fact I would venture to guess (without looking at EMU's numbers) that the number of students in the school of education is also probably dropping.
EyeHeartA2
Wed, Sep 21, 2011 : 2:56 p.m.
If you have a job it is helpful and more to the point, it is lucrative. Teachers salaries schedules have rows - for years and columns - for MA, MA +30 etc. Most teachers don't get masters degrees or PHDs looking for their first job. Nobody would hire them. School board want the cheapest person that will keep a room full of kids occupied. This has been this way for 25 years, so please spare me the inevitable "Rick hates teachers" comments. Therefore, most teachers get their degrees later on. In fact, the state requires continuing education to maintain their license. If you need the credits, you may as well get the degree and associated salary bump. So, I would submit that the "helpfulness" of the degree has little to do with it. Very little teacher hiring going on - natural result of decrease in students and budget cuts. All the "old" teachers are at the top of the scale and don't need any more credits. Nobody at the bottom to need the classes to get the salary bump - therefore, lower demand for graduate degrees.
Geoff Larcom
Wed, Sep 21, 2011 : 2:01 a.m.
Another important financial variable to note is that, for the past three years, EMU has led the state of Michigan's public universities in tuition restraint, including last year's 0-0-0 effort that held tuition at previous year levels. This no doubt contributes to any budget challenge, but is aimed at helping our students afford college.
EyeHeartA2
Wed, Sep 21, 2011 : 1:27 a.m.
Ummm. Does this mean all the 0-0-0 tee shirts will be used for car wash rags now?
EyeHeartA2
Wed, Sep 21, 2011 : 2:44 p.m.
<a href="http://www.annarbor.com/news/eastern-michigan-university-announces-0-tuition-increase-amid-much-fanfare/">http://www.annarbor.com/news/eastern-michigan-university-announces-0-tuition-increase-amid-much-fanfare/</a>
garrisondyer
Wed, Sep 21, 2011 : 3:37 a.m.
What's the story behind those? Haven't heard of them.
Geoff Larcom
Wed, Sep 21, 2011 : 1:20 a.m.
Here are some other meaningful details of this situation that can contribute to the understanding of this story: • EMU administration had budgeted for a 1.7 percent increase in overall enrollment in this fiscal year. This helps to explain the budget shortfall described above, as overall enrollment numbers, while down slightly, decreased less than one percent from last year. Overall enrollment for fall 2010 showed an increase of 2.8 percent over the previous year, while fall 2009 enrollment showed a gain of 4.25 percent. • Administrators explained at Tuesday's regents meeting that the overall enrollment decrease was primarily due to a decline in graduate applications and in continuing graduate students - a logical outcome of a bad economy. • EMU's retention rate remained roughly the same as last year, when EMU's rate increased five percent from fall 2009. • The budget shortfall could only grow to that specified in the headline if no actions are taken during the year. The remarks of regents and the CFO clearly indicate a cost cutting plan will be implemented before that time. Note: I formerly covered higher education (and EMU) for The Ann Arbor News and now work as executive director of media relations for Eastern Michigan University.
Martin S.
Thu, Sep 22, 2011 : 12:05 a.m.
Isn't it interesting how the "executive director of media relations for Eastern Michigan University" is constantly found commenting on aa.com? $85,850 for blogging? The Executive Director of Media Relations serves as a high level liaison in the media community, especially with editors and publishers. This person will at times act as spokesperson for the University at the direction of the Vice President for Communications. In addition, the Executive Director participates in the development of strategic news initiatives of the university. The Executive Director assists in the coordination of media efforts with other divisional areas to highlight news of the university in new and compelling ways. Further, at the direction of the Vice President for Communications, this position oversees the efforts to create news on behalf of the university through the use of polls and reports, creating special events with the president and developing source material of contact information for faculty and staff experts.
Bacon Bits
Wed, Sep 21, 2011 : 3:56 p.m.
Strange that EMU cites a bad economy leads to decreases in graduate enrollment. At U-M and, as Kafkaland said, across the US the opposite is clearly true. A sour economy has led to almost double the graduate school applicants in my department.
djacks24
Wed, Sep 21, 2011 : 1:44 p.m.
"perhaps EMU schould stay with what it's good at at the undergraduate level, and try to excel at that while being cost-efficient for the typical undergraduate instead of despearately trying to break into the ranks of the PhD granting institutions at great expense?" Or else make the graduate degrees more cost effective. Especially since getting an advanced degree is pretty much as much of a gamble as earning even a bachelors anymore. Not to mention, there is no financial aid for going back and earning a Masters degree. The only option for financial aid on the graduate level is the small chance an being a graduate assistant. This is unrealistic due to the fact there are so few spots and moreover unrealistic as EMU is a commuter school where many students (especially at the graduate level) are working full time. So the high price of grad school is left to the student to pay by themselves out of pocket or through loans. Tuition reimbursement by employers is not so much an option anymore as the economy stinks. Furthermore, to charge such a premium for a Masters is driving students to bigger name Universities. They figure if they are going to be drowning in debt over an advanced degree, it might as well be from a big name school. Drastically lower the cost of grad school and I'd be happy to enroll.
Kafkaland
Wed, Sep 21, 2011 : 1:32 a.m.
With all due respect, if the reason for the decline in enrollment and student credit hours is due to a decline in grad students, this is something that cannot be attributed to the bad economy in general. In fact, across the country the opposite is true: because good jobs are scarce, people tend to stay in school longer in get a graduate degree instead of entering the workforce right away. I don't know much about the EMU graduate programs, but I venture to suggest that not every school is cut out to provide graduate degrees - perhaps EMU schould stay with what it's good at at the undergraduate level, and try to excel at that while being cost-efficient for the typical undergraduate instead of despearately trying to break into the ranks of the PhD granting institutions at great expense?
whatsupwithMI
Wed, Sep 21, 2011 : 12:57 a.m.
Contract negotiations are coming up next year. Cue a year of "the sky is falling". Earlier when negotiations drew near, there were also "we're losing googleplexes of millions" announcements. When called out, and real accountants did the math, the university was millions in the _black_. Lets see what legal actions produce this time. Perhaps it is a newer, cleaner, honest administration this time. Perhaps not. No surprise the $600/month PhD-holding lecturers approved a unionization vote, given the adminstrations well-earned reputation.
Ann
Wed, Sep 21, 2011 : 12:50 a.m.
I'm surprised anyone is surprised that enrollment is down. First, Michigan high school graduating classes are getting smaller thus providing fewer students to apply to colleges. Then, of course, there's the economy. However, what's most disturbing about this "new" funding shortfall is that academics will bear the brunt of the cuts as they have in the past. Yet, EMU's Regents and the President continue to fund Athletics at more than $20 million per year, and that funding comes directly out of student tuition and fees. It's a mystery to me how the state can continue to allow a state-funded school like EMU to use public money and to bleed its students' tuition to fund Division ! football when academics is suffering from lack of faculty, resources, and funding. It's not as if EMU's football team is a startlingly good team either.
schoolsmuse
Wed, Sep 21, 2011 : 12:30 a.m.
It seems to me that their numbers would look a lot better if they hadn't tried to keep their tuition increase artificially low.
Kafkaland
Tue, Sep 20, 2011 : 10:52 p.m.
Substantially larger freshmen class, but marginally reduced overall enrollment, and credit hours significantly down? Unless they had a record class just graduating and had a little slump in between, this means that more students drop out, or take longer to complete their degrees. Something to take seriously and address before it's too late, for sure.
MAS
Wed, Sep 21, 2011 : 12:14 a.m.
I am going to guess that a number of the students dropping out probably shouldn't have been accepted in the first place. College shouldn't be a senior year in High School Part II.