University Predicts Budget Doom and Gloom, But We Have Questions

January 26, 2021 / PSU-AAUP

In short: Administration continues its pessimistic budget projections, but PSU-AAUP remains skeptical that making long-term financial plans and decisions based on unpredictable projections during this crisis will best serve the University. The University is on solid financial ground, with over $100 million in its reserves. Reserves are meant to be used on a rainy day and right now it’s pouring, and we haven’t even touched them yet.

Please attend the upcoming Faculty Senate meeting February 1, 3:00-5:00 to hear what Administration says about the budget, and we urge membership to pay attention and push back on narratives that suggest all University budgets must be  dramatically cut. 

It is that time of year again, when Finance & Administration (FADM) starts making budget presentations to plan for the upcoming fiscal year. The plans could include possible tuition increases, budget cuts, and use of reserves. This year the narrative is being driven by declining enrollment and was even highlighted by OPB, casting a bleak future for enrollment at PSU. 

What is actually going on? Here are some numbers: enrollment was down 7.8% this past fall and freshman applications for Fall 2021 are down 28% compared to this time last year. These numbers are scary. Only somewhat less scary are FADM’s annual enrollment forecasts: they expect total academic enrollment for 2020-21 will be 5.0% below 2019-20, and 2021-22 will be 4.8% below that, starting to level off by 2024-25 at about 15% below pre-pandemic levels. FADM reports that these forecasts are informed by preliminary admissions data for next fall. 

But we have some questions:

  • Do these forecasts take into account that students have been delaying registration due to the uncertainty about the future? 
  • Do they attempt to account for any uptick in enrollment by students who have put their education on pause during the pandemic, or the uptick typically expected during periods of economic slowdown? 
  • Does it seem reasonable to project an average annual decline in enrollment of 3.2% over the next 5 years when the average decline over the 10 years prior to the pandemic was just 1.8%? 

We are in the middle of a once in a lifetime event, and there is no way of knowing what will happen next fall, let alone in 2025. It is foolish to be making long-term plans, including drastic cuts, based on anything going on during this pandemic. 

PSU is on solid financial ground: 

  • Since 2016, PSU has brought in more money than has been spent each year;
  • the University has built its reserves to over $100 million; and
  • its total assets have increased by $189 million since 2016 (for comparison, instructional costs have only increased by $4 million (2%) over the same time period). 

Reserves are a rainy day fund, designed to pull the university through rough times. We did not use reserves last year, and likely won’t this year. While we are hearing about cuts, layoffs, and closures nationwide, PSU is standing strong. The projected $11 million budget shortfall this year does not account for the $30 million in stimulus money coming our way from the CARES Act. Time and time again we hear from Administration about budget deficits and the need for cuts, yet every year, after everything is counted up, there is a surplus. If PSU can pull that off during a global pandemic, it seems we should be able to face whatever the future may hold.

Moreover, we don’t know what the new administration in Washington will do for higher education. We are energized by new nationwide efforts to increase federal funding for higher education, and our union will be participating in these organizing opportunities to secure a more just, equitable, and sustainable future for higher education (see New Deal for Higher Education). 

As a Board Member said at the Board of Trustees’ Finance Committee meeting, “you cannot cut your way to success.” 

We would like you all to pay attention and push back on narratives that suggest all University budgets must be  dramatically cut. If you have questions or concerns about these budgets, please contact your Faculty Senator and/or attend the upcoming Faculty Senate meeting February 1, 3:00-5:00. A YouTube link will be available on the Faculty Senate website

Blog Categories