CU Denver’s budget has been described as being on a razor’s edge, but university leadership want faculty and staff to know that while there is a sense of urgency, there is not an emergency. They see the budget shortfall as an opportunity for the university community to refocus and join forces.
On Nov. 1, Todd Haggerty, Associate Vice Chancellor for Budget, and Jennifer Sobanet, Chief Financial Officer and Vice Chancellor for Administration and Finance, tackled the budget topic alongside Chancellor Dorothy Horrell and Provost and Executive Vice Chancellor for Academic and Student Affairs Roderick Nairn at the latest Campus Conversation. Held at the Lawrence Street Center Second Floor Terrace Room, the event drew a full house and went over the usual one-hour timespan so that faculty and staff in attendance could ask questions.
“Our situation would be much worse but not for the efforts that all of you put in, and we recognize that,” Horrell said. “The thing that is most impactful to me is that our future is in our own hands.”
Budget squeezed by declines in enrollment and state funding
CU Denver leaders kicked off the Campus Conversation by painting a picture of the university’s current financial situation. Fluctuations in enrollment, paired with declining state support, limits on tuition rate increases, and higher mandated costs such as insurance and AHEC fees, have squeezed the budget. “We are really reliant on tuition and state funding,” said Haggerty, adding, “Neither one of those are very predictable at times.”
Combined student tuition and fees are the single largest component of the budget, making up 80% of the general operating budget, Haggerty said. Even though this year’s incoming freshman class was the second largest in history, the number of returning students and new graduate enrollments fell short of projections by 344 students, or about 2%. For the fall 2019 semester, that means a revenue shortfall of $2.2 million. If spring 2020 headcounts remain under budget, the annualized tuition revenue shortfall will increase to a budget deficit of $5 million.
“Student success is financial success”
The four hosts of the Campus Conversation stressed that CU Denver is in a strong position to address budget challenges because of efforts to build reserves, investments in institutional financial aid, and its incentive-based budget model, which focuses on generating funds, reallocating resources, and containing costs. They also outlined tangible plans for the year.
To solve the short-term financial challenge, CU Denver will use one-time, central funds coupled with permanent, strategic budget reduction targets for schools, colleges, and central support units, Haggerty said. All the while CU Denver faculty and staff must work together to increase student retention and new student enrollment for spring 2020. Haggerty pointed out that a 1% increase in retention equates to $1.2 million in revenue while a 1% percent increase in new freshmen generates $.2 million.
Given that budget constraints aren’t limited to the current fiscal year and cannot be solved with one-time funds and reserves, Haggerty shared plans for addressing the long-term financial challenge. They include:
- Utilizing the incentive-based budget model process.
- Employing the Chancellor’s Advisory Committee on Budget, comprising the chancellor’s cabinet, the deans, the Faculty Assembly Budget Priorities Committee Chair, Budget Priorities Committee Chair, Staff Council Chair, and Student Government Association representation, among others.
- Using one-time funds to invest in strategic priorities, such as campus wide strategic enrollment management and retention strategies.
- Aligning and strengthening faculty and staff incentives with outcomes for student success.
- Identifying operational efficiencies.
- Developing tools to assist in decision-making.
A campus-wide effort
Now is the time for faculty and staff to examine the efficiency of processes, to determine where duplications are happening, to invest in priorities while keeping in mind ongoing reductions. “We have to be bold and courageous,” Sobanet said. Hosts of the Campus Conversation recognized that there will be questions, and they will do whatever they can to provide answers.
In working together to overcome the financial challenges, everyone benefits. Higher enrollment and retention mean more resources to support faculty and staff, who are essential to creating an “unparalleled student experience.”
“We are changing people’s lives and the lives of their families, and I know that’s what keeps all of you here,” Horrell said. “We will figure this out. We’ve got good plans in place.”