What led to a major budget deficit for the College of Arts and Sciences

Liz Young
Mon, 27 Apr 2015 04:36:18 +0000
Area, Campus, Local, budget, college of arts and sciences, deficit, faculty, osu, tuition

Two years after Ohio State’s conversion from quarters to semesters, the university’s largest college might be feeling impacts beyond academic calendars in the form of a projected $10 million budget deficit.

The College of Arts and Sciences — which encompasses nearly 80 majors, 38 departments and more than 2,000 faculty and staff members — has a fiscal year 2015 deficit of $4.6 million. The amount is projected to grow in fiscal year 2016 by $5.4 million.

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That will mean budget cuts, the exact effects of which remain uncertain.

David Manderscheid, who took over as Arts and Sciences dean in 2013 from now-Provost Joseph Steinmetz, told The Lantern that he sees two causes of the budget deficit: an unanticipated decline in the college’s credit hours this past year, and the college’s reliance on a tuition increase that didn’t happen.

He said in an April 9 meeting with faculty in Independence Hall, where the college’s chief administrative officer John Nisbet also spoke, that the lack of a tuition increase was a major factor.

“We’re in a position now in the college where if we (had) gotten the 2 percent tuition increase, we wouldn’t have been having these serious discussions, but what happened was we were skating too close to the edge,” Manderscheid said. “What happened was, when we didn’t get that 2 percent increase, all of a sudden we get a $4.5 million deficit for this past year, and if we don’t get a 2 percent increase for this coming year — that’s not clear either way — then we have another $5 million.

“I think what we’re really seeing here is we need to do things differently. We need to stop operating on hope that more money will come in and take care of our budget, while at the same time pushing to get increases to our budget.”

The Board of Trustees discussed tuition increases for next academic year in its meeting earlier this month. In-state students are looking at a potential maximum increase in tuition of 2 percent for the 2015-16 school year, but it will ultimately be determined by the support given to state schools in Gov. John Kasich’s proposed budget. Last year, tuition was frozen for in-state students.

Students are charged instructional fees based on the number of credit hours they take each semester. For fiscal year 2015, credit hours are up across the university, Manderscheid said, but in Arts and Sciences, credit hours are down 1.6 percent.

That decline is not new. Credit hours dropped 13.9 percent for 2013, and only increased 2.39 percent in 2014, according to a presentation from the April 9 meeting.

Libby Eckhardt, Arts and Sciences’ chief communications officer, said that drop happened for several reasons:

changes in general-education requirements that were introduced at the semester conversion;

a national trend of students toward science, technology, engineering and mathematics majors and courses; and

the increasing number of students arriving at OSU with some college credits already completed.

Manderscheid told faculty April 9 that the college received a letter from former Provost Joseph Alutto and former chief financial officer William Shkurti that said the college would be held harmless by semester conversion.

“It’s worth the paper it’s printed on to be honest with you,” Manderscheid said. “We have pushed on this issue, we submitted a letter to … Provost (Joseph) Steinmetz in December saying by our best calculations, semester conversion cost the college $3.1 million in permanent budget, and we asked for that and we documented it.

“We have not received a response on that in terms of a dollar amount, but what we have been told is that, ‘Yes … we agree, there is some cost to semester conversion. The college was not (held) harmless.’ In fact, a number of colleges were harmed and a number of colleges did better.”

Manderscheid said the college was told such harm would “be considered as part of the rebasing of budgets” expected for the next fiscal year.

“The answer being, well, if we’re gonna have to take from somebody then we’re gonna need to do this very carefully, because they don’t have … that $3.1 million sitting around,” he said. “It has to come from someplace else.”

Meanwhile, Arts and Sciences has essentially run out of the cash reserves that it was using in the past five years to make up for its expenses outweighing its revenues. As a result of the projected $10 million fiscal year 2016 deficit, the college is making a 3.75 percent reduction in its present budget allocation — referred to as PBA, the college’s general funds budget allocation — to decrease expenditures. At the same time, it will look for ways to generate $15 million to $22 million in cash annually.

If successful, the college can reset and create a sustainable path forward, according to a presentation given at the faculty meeting.

Manderscheid said at the meeting that solutions could include hiring faculty more strategically, seeking funding from sources beyond the government, and increasing credit-hour production by various means, such as offering more GEs and distance learning classes.

Manderscheid told The Lantern that faculty will likely not be let go as part of the budget cuts.

“We’re trying to not fire people,” Manderscheid said. “On the other hand, we won’t hire as many lecturers as we have in the past.”

He said the departments in the College of Arts and Sciences have been told to bring in fewer new graduate students. “But we won’t fire graduate students or anything like that,” Manderscheid said.

Some college faculty members, however, said they are significantly concerned about such a large deficit.

Ulrich Heinz, a professor of physics, said the faculty meeting with Manderscheid introduced some answers to questions, but “none of the answers were actually pointing to a solution.”

“I don’t know where this is leading. I’m seriously worried,” Heinz said.

Heinz said the main problem was the drop in credit hours taught in Arts and Sciences.

With every credit hour taught, there comes a state subsidy, Heinz said, so fewer hours mean less money from the state.

“There was nothing done to compensate for that loss,” he said.

In a follow-up email, Heinz explained that students pay tuition for the total number of credit hours they register for, and the state subsidizes the cost of teaching from taxpayer funds according to the total number of credit hours taught.

Those, he wrote, are the two main income streams from which the colleges pay the salaries of the faculty, staff and lecturers. The colleges actually keep less than half of the funds — the rest flows back to central administration to fund various programs.

Robert Perry, a physics professor and vice chair for undergraduate studies, said the way scholarships are funded is another main cause of the deficit. Overall, he said, “it’s an extremely complicated issue.”

Scholarships are credited the same way as tuition money sent to the college, but there is no actual exchange of funds. Colleges must still pay a 24 percent “central tax” — made up of a university-mandated 19 percent tax that goes to infrastructure and a 5 percent tax that goes to the provost’s reserve — and student-services assessment on scholarships, as if that scholarship money was actual tuition.

“That’s actually just one piece of a much larger problem, but I just don’t understand why anybody has not looked at that and said, ‘Well, there’s one clear problem,’” Perry said.

Harvey Graff, a professor of English and history, said in an email that he has seen previous Arts and Sciences deficits in his 11 years at OSU, but this is “the highest, with the least clear acknowledgement and response.”

“The problem is university-wide but ASC is hit especially hard and is not responding openly and responsibly,” he said. “The budget situation — and the failure to discuss it and deal with it openly and responsibly — worries me greatly.”

Manderscheid told The Lantern he hopes there will be a tuition increase this year.

“I think many people were surprised that there wasn’t a tuition increase. Now … if we think there’s gonna be a tuition increase and there isn’t one, we shouldn’t be surprised,” Manderscheid said. “I mean, hopefully there will be a tuition increase because I think our costs are going up in the college, but if not, we have to deal with it.”

The plan for now, he said, is to create that “sustainable college budget” this year, so that there won’t be cuts next year or the year after.

“Something that has happened over the past few years (is) one cut this year, one cut the next, and that’s very discouraging,” Manderscheid said.

Because the drop in credit hours was partly related to students trending toward STEM majors, that’s meant an increase in credit hours for one of the three Arts and Sciences divisions — Natural and Mathematical Sciences — while the Arts and Humanities and Social and Behavioral Sciences divisions have struggled more.

Perry said success in the Natural and Mathematical Sciences division has been used to buoy the other two.

“We haven’t been losing money; we just have money taken out of our budget to cover their budgets,” Perry said.

Manderscheid played down competition between the divisions.

“Just as we’re a bunch of colleges that are part of one university, the three divisions are part of the College of Arts and Sciences and that’s the strength of the college,” he said. “You’ll see enrollments grow in certain sections of the college and you’ll see enrollments decline in certain sections.

“That happens with time, students’ interests and majors change, so we have to adjust our budgets to accommodate that interest so we can educate the students.”

This story was made possible by the generosity of The Lantern and Ohio State alumna Patty Miller.?