Wright State University may meet its budget and avoid state fiscal watch this year but future revenue dips could make doing so again next year just as difficult.
WSU administrators are trying to add $6 million to reserves by June 30 to avoid being placed on state fiscal watch. Administrators and trustees have expressed a wide range of opinions in recent weeks about whether the university will meet that goal, with chief business officer Walt Branson saying on Monday that he thought it would be achieved.
A 2018 budget re-forecast presented to trustees during a Monday meeting states that Wright State may add $7.2 million to reserves by the end of FY 2018.
“I just think we have to recognize that there has been some good work to set the stage for what we’ve been able to do over the past year,” said WSU president Cheryl Schrader.
The state measures every public college’s fiscal health with something called a “Senate Bill 6 score,” an annual rating of 0 to 5. Any school that falls below a 1.75 two years in a row is put on notice. Wright State projected its score last year was a .8, meaning one more year below a 1.75 would put the school on fiscal watch.
Under fiscal watch status, WSU trustees and administration will have to adopt a financial recovery plan with an eye toward ending the status of fiscal watch within three years, according to state law.
By June 30, Wright State will have a projection of whether the school will enter fiscal watch. But, the state likely wouldn’t decide whether to place the school under added scrutiny until the end of 2018.
Even if Wright State meets its budget goal this year, doing so next year will again be a challenge because of declining revenue and the university’s need to continue rebuilding its depleted reserve fund.
Wright State will aim to add another $3 million to its reserve fund in fiscal year 2019 but to do so school leaders will have to find a way to boost revenue or implement more budget cuts.
“Next year is going to be a very, very tough year for the university,” Branson said.
The $3-million goal is part of Wright State’s ongoing attempts to rebound from a budget crisis that forced trustees to slash more than $30.8 million from the school’s FY 2018 budget. Wright State has spent more money than it brought in every year since 2012, draining its reserve fund from $162 million six years ago to an estimated $31 million as of June 2017.
Trustees will consider the FY 2019 budget at a June 8 meeting. The 2019 fiscal year starts on July 1.
A projected $12.65 million decline in revenue is the main reason WSU will enter the next fiscal year still on shaky financial ground. The shrinking revenue is mostly due to yet another drop in enrollment and comes even as WSU is hiking the price of tuition for incoming freshmen by 6 percent this fall, according to the university.
State appropriations to WSU are also expected to decrease by more than $1.4 million for fiscal year 2019.
Overall enrollment at Wright State’s main campus is expected to decline 6.5 percent, according to a preliminary budget proposal. Out-of-state enrollment, which includes residents of other states and international students who attend WSU, is expected to decline by 32.4 percent, according to the university.
Trustee Bruce Langos voiced concerns about enrollment and the budget proposal, calling it “a recipe for disaster” and saying that it was “going to drive this place into the ground.” Boosting enrollment and therefore tuition revenue is a much better way to solve Wright State’s financial woes than having to implement budget cuts every year, trustees have long said.
The proposal presented to trustees today would likely result in more budget cuts, something both Langos and finance committee chairman Sean Fitzpatrick said is not a long-term sustainable solution for the university’s financial problems.
“You can’t operate this way. Trust me, it doesn’t work…This is a recipe to die,” Langos said. “I’m serious…This is crazy. The university can’t survive this way.”
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