September 3, 2014
Budget Message from Kathy Cobb and Dave Christy
Dear Members of the Baruch Community:
Earlier in the summer, we sent a letter to alert the Baruch College community that preliminary enrollment data, both undergraduate and graduate, were underperforming vs. our targets to a significant degree and that the direct effect of actual enrollment underperformance would inevitably mean a reduction in operating revenue available to the College. We write now to update the situation, based on still preliminary enrollment numbers, and to discuss and elaborate upon the implications.
There are powerful demographic, economic and social forces that are affecting enrollments, not only at Baruch but throughout CUNY and indeed, across the nation. These trends are likely to accelerate in the years immediately ahead, which will only add to the challenge of stabilizing our College budget. If we act in a unified, coordinated and sustained fashion over the next several years, however, we can succeed in building a new equilibrium that will return Baruch to a healthier budget situation.
Our Budget is Enrollment Driven:
While there are a relatively small number of US colleges and universities whose budgets are primarily determined by the performance of their endowments, the majority of private and all public university budgets are driven by tuition revenues from enrolled students, research grants and contracts, auxiliary services—and in the case of public universities, state support.
At Baruch, we derive very limited budget impact from grants and contracts, and even more limited revenues from facilities rental, student housing, and food service. We do receive state support, and private donor support through the Baruch College Fund makes an important contribution to supporting excellence. Nevertheless, the primary driver of our budget is student tuition and fees.
CUNY provides Baruch with a base allocation of state tax levy dollars based upon historical budgets that are unique to each institution and its projected enrollments. We are required to generate the balance of the total budget from tuition and fee revenues to meet our enrollment revenue target. When we indicate that we can do this, CUNY provides budget authorization to expend funds up to our total budget. If we are unable to generate the projected tuition and fee dollars, our ‘authorization to spend’ will be reduced, which is what we mean when we say that ‘our budget has been cut.’ If this happens repeatedly, CUNY will reduce both the enrollment revenue target and the base allocation, and we have to learn to be a ‘smaller’ college, largely through a reduction in faculty and staff.
Four Years of Enrollment Data:
The two charts below provide specific insight regarding our college budget. These are fall semester enrollments only, but they tell the story.
BARUCH COLLEGE GRADUATE ENROLLMENT
* Data as of 8/29/14; Not final census data.
You can see that in three years’ time, our graduate enrollment has declined by close to twenty percent by each of these three measures: headcount, credits and FTEs. Graduate students pay higher tuition, so the impact on college revenue is significant. MBA students pay the highest tuition, so growth in M.S. programs in business does not fully compensate for lost MBA student revenues.
Parallel data is available for fall semester undergraduate student enrollment for recent years.
* Data as of 8/29/14; Not final census data.
In this case, during the past three years we have slightly increased the full time equivalent (FTE) number of undergraduate students, which is the best indicator of revenue. Recall that our Office of Admissions was asked to increase undergraduate admissions on the margin in 2012 and 2013 to partially offset the revenue shortfall from lower graduate enrollment. It is important to remember two points in this regard: (1) an undergraduate FTE brings far less revenue than a graduate FTE, and (2) we have an increase in part-time undergraduate students this fall, which could become a serious problem if this trend continues.
Our Response to the Enrollment Revenue Shortfall:
Last year, we did not generate sufficient tuition revenue to cover our revenue target, so we took several actions to balance the budget. First, we applied all available funds in our reserve. Second, we reduced our expenses through a hiring pause; and third, we closely monitored and limited other discretionary spending. This year, we do not have the benefit of reserve funds to apply to our revenue shortfall; we only have funds to cover the reserve that CUNY requires us to maintain.
Fortunately, our enrollment situation has improved somewhat from what we reported in early summer, thanks to extraordinary efforts made by the staff of the Vice President for Enrollment Management. But due to continuing shortfalls in graduate enrollments, we still face a significant gap between the tuition revenue we anticipate based on the latest enrollment numbers and our enrollment revenue target. Therefore, we must make adjustments to base budgets and take other measures to bring spending into line with anticipated revenues. We intend to make these adjustments consistent with our strategic plan, and take only those actions that we believe will stabilize our FY15 budget. Departments, centers, and programs will see these budget reductions when budget allocations have been finalized.
An Invitation to Work Together to Grow Enrollment:
Our current situation is not sustainable. First and foremost, we need the participation of our faculty to build market-facing degree programs that will attract significant numbers of well-qualified students. Students investing in graduate education are keenly interested in the opportunities that degree will provide them, so working with your advisory boards to insure linkages to employers and careers is critical. We need to communicate the success of our graduates, because doing so enhances the reputation and value of the degree to current students and alumni, and attracts prospective students. Our goal must be full cohorts of qualified students in programs with efficient, compelling curricula and excellent placement.
A second issue for faculty in every department is a careful review of the curriculum for each undergraduate major to insure that course sequences and prerequisites enable undergraduate students to complete degree requirements efficiently, and to the maximum extent possible as full-time students. This is particularly relevant for our substantial transfer population, as these students increasingly arrive with the bulk of their general education requirements completed, and struggle to construct a full-time schedule that advances them toward their degree objective. Faculty assistance is also needed to quickly determine if courses taken by transfer students at their first university or college can be applied to their Baruch degree. Success by transfer students is the most significant component of our commitment to access to an excellent education for students who had deficiencies in their high school education. We must insure that there is a feasible path through each of our majors for these students.
With your collaboration on these issues, we are confident we will build a strong foundation for Baruch students and a healthier budget situation in the coming years.
Thank you for your efforts,
David Christy, Provost and SVP for Academic Affairs and
Katharine T. Cobb, VP Administration & Finance
If you are having trouble viewing or going to links from this email, please
paste www.baruch.cuny.edu/provost/messages/Sept_3_2014.htm into your browser.