Even after filling the hole left by a $2.6 million budget deficit last year, the University of Idaho isn’t getting a financial break any time soon.
This year, the university faces yet another deficit resulting from a decrease in enrollment — approximately $1.4 million, according to Keith Ickes, UI executive director for planning and budget.
“I’m told some of that is some stuff left over from a few years ago, as silly as that is,” Ickes said.
Ickes said the university used one-time money — or money that was saved during a year when the university had additional unexpected revenue — to fill last year’s budget hole, and this is what the university will tap into once again to fill the new deficit.
Unfortunately, the budget shortfall isn’t the only financial strain the university faces.
State funding for higher education has decreased by $26 million since 2008. In 2001, 71 percent of UI’s budget was state funding. In 2012, less than half of the university budget — 49 percent to be exact — came from state funding.
UI faculty and staff have received one 2 percent pay increase in the past six years — only 60 percent of which was actually funded by the state. The remaining 40 percent was left up to the university to fund.
UI has also racked up nearly $230 million dollars in deferred maintenance — a cost the state legislature used to pay for and when it couldn’t, pushed off to each university in Idaho.
Although the legislature approved a $3 million increase in state funding for higher education in 2013, only $1.6 million was designated to UI. When administrators received a 1 percent lower increase in tuition than what they estimated was necessary to cover the budget, the increase from the state covered that gap — but left little to do anything new.
In addition, the simple costs associated with running a university — things such as paying the electric bill or water bill — have risen and caused additional expenditures for the university, Ickes said.
Ickes said the university does have healthy reserves built up at this point, but having to dip into those reserves year after year could lead to even more financial strain.
Every year, Ickes said he and the rest of UI’s budget-setting team hold their breath and hope the state will designate more money for higher education. When it doesn’t, things like increasing employee compensation and making a dent in the deferred maintenance list are pushed to the next year.
Ickes said the university has reached a point where it can’t keep waiting for the state to step up.
“Since we’ve been at this point for probably 20 years … it’s always hard to decide when to give up, because you always wonder if the next legislature might be more willing to give funding,” Ickes said. “There’s always a glimmer and you hold out for that. That’s the problem with our salary raises. We wait for the state and keep having a hope that the state will help us and then they don’t and we don’t know what to do. We’re afraid if we start doing it ourselves, the state will never help us. I think we’re at that point. I think my colleagues, the executive team, we are of the opinion that we have to do something. We can’t depend on the state to get us there.”
Finding savings for the future
The state mandated program prioritization — dubbed Focus for the Future by Interim Provost Katherine Aiken — is expected to reveal areas where the university could be performing more efficiently. This in turn is expected to save money that can then be redistributed to fill gaps in the budget where state funding would otherwise pay for the expenses.
“I think one of the other things that we’re trying to do is … look across campus at things we do,” Aiken said. “For example, could we look at how we purchase computers? Is there some way we could make purchases in a way that’s more efficient? I don’t know the answer to that, but that’s one thing we can look at.”
Ickes said the key will be appropriately redistributing any money saved from program cuts or position consolidation as a result of Focus for the Future. He said the university will want to look at putting the money saved into areas that can grow significantly or grow faster as a means of raising the overall revenue.
For example, Ickes said a small program of 15 majors might be able to be grown to 20 majors — a slight increase in revenue from the five additional students. Or, he said, the university could take all of the money in that small program and add 200 majors in a more popular, more effective area. He said if the university is going to redirect funds, it has to do so in a way that will help UI improve its revenue — rather than just spend it.
“So you have 200 more students, now you have more revenue,” Ickes said. “Then you can solve some of the things like perhaps salaries, maintenance. Taking money out of Focus for the Future probably doesn’t help our revenue. It could solve a problem … but that doesn’t help raise the revenue. So maybe takeing some of these dollars and using them in ways that can increase the revenue maybe we can solve the problems.”
Ickes said some of the financial issues the university faces would be better solved not by putting Focus for the Future savings directly into them, but by increasing the revenue and using that new consistent stream of money to address the larger issues.
“We need to know what it is we’re trying to do,” Ickes said. “We’ll need to pick from those examples … which problems are we trying to solve. And how can the dollars from Focus for the Future help solve that problem.”
The example Ickes gave was a one-time salary raise for faculty and staff. While needed, he said a one-time increase would still leave a problem in future years.
“You could permanently eliminate some programs — administrative or academic –and give a salary raise, but that’s only one salary raise,” Ickes said. “Next year, you have a question of how are you going to do it again or are you stuck again. It’s not a permanent solution to that problem.”
Deferred maintenance is the other issue Ickes said would be an unwise place to directly redistribute funds. He said there are other sources of money the university can get by on while it waits for state funding to pick up or assist in the rest.
Aiken said there is some expectation the state will eventually find a way to assist in the multi-million dollar deferred maintenance costs.
“We all recognize, especially at a place like the University of Idaho — which is the oldest of the institutions of higher education — we have deferred maintenance needs and that really is the state’s investment,” Aiken said. “It would be like if you didn’t paint your house.”
Work in progress
As the university awaits word from the state on funding for the 2014-2015 academic year, considerations for next year’s budget are already being undertaken. Aiken and Ickes said although permanent changes based on Focus For the Future will not take place until after a formal presentation has been given to the State Board of Education, the data already collected could be used to find efficiencies in planning the FY15 budget, which will be approved this spring.
“Eventually President Burnett and eventually President Staben will have to have some goals for this process and make some determinations with what they do with any savings,” Aiken said. “One of the things that has been at the forefront of our conversations has been what can we do to address our compensation issue. It still may be that the governor puts a CEC in his budget and the state legislature funds a compensation enhancement.”
Aiken said in the mean time, the university is finding ways to maintain the quality of education, faculty, staff and services provided at UI — despite numerous funding deficiencies and shortfalls in the past decade.
“We really are so committed to doing what we do the best we can and we have to balance that with the fiscal realities that we face,” Aiken said. “I think when you look around the University of Idaho we do a pretty good job of that. Since 2008, we’ve had a $26 million reduction in state funding and I would challenge students or stakeholders in the state to be able to point to a place where they didn’t get the same kind of service they were accustomed to getting in the wake of that.”
Kaitlyn Krasselt can be reached at firstname.lastname@example.org