AAUP Recommendations for Addressing the Budget Shortfalls

To the Wright State University Board of Trustees:
Although the president and provost made the case that a budget deficit needs to be addressed, they have not been very clear on the size of the deficit nor have they acknowledged any internal causes of the deficit. Instead, they have simply pointed to the reductions in state support and the constraints on adding revenue through tuition increases that have occurred under the Kasich administration.
We believe that that Wright State is indeed in the midst of a financial crisis, because we know that for the first time since the University was required to produce cash flow statements starting in 2002, it has experienced negative operating cash flows for the past three years. This means that more cash has been flowing out of the University than has been flowing into the University from the University’s operations. One year of negative operating cash flows should have set off alarms. Three consecutive years of negative operating cash flows is prima facie evidence that the administration is incompetent and that the Board of Trustees has abdicated its fiduciary responsibility.
The explanation of reductions in state support and constraints on adding tuition revenue as proximate causes of the crisis do not ring true. All of the other state universities are facing the same constraints, and yet not even Central State and the University of Akron, the only other schools in the state with SB-6 scores lower than 3.0, have had three consecutive years of negative operating cash flows. The University of Akron, which has experienced a substantial decline in enrollment, has still maintained positive operating cash flows every year. Central State had two consecutive years of negative operating cash flows in 2013 and 2014, but managed to have positive operating cash flows in 2015. It’s time for the administration and the Board to stop making excuses and come clean with the faculty, staff, students and community.
The administration speaks about a budget deficit. We know that budgets are just plans. Every year when the University presents its budget it always presents a balanced budget, despite the fact that historically the University’s revenues have exceeded its expenses. It should be obvious to everyone now that plans, especially at WSU, are probably not worth the paper they are written on. What we need is data on actual revenues and expenses, actual cash flows to date, and projections going forward.
Assuming that there is deficit that needs to be addressed and that it is in the $10 to $30 million range, we believe that its impact on the college budgets must be minimized because instruction and research sustain the core mission of the university and are the primary source of its operating revenue.
We believe that the administration should commit itself to finding savings of $25 million in the following areas:
1. The reduction, rather than the continuing multiplication, of administrative positions on all levels: A reduction in the number of associate and assistant vice presidents and provosts, associate and assistant deans, and associate and assistant chairs.
2. The reduction in the number of administrative “silos”: Administrative units with complementary functions should be consolidated if not eliminated (e.g., one recurring suggestion has been that the graduate programs can be administered by the colleges in which they are offered).
3. The elimination of stipends to administrators (other than for department chairs) who are already among the most highly paid employees of the university: Even a glance at the list of those receiving stipends reveals that there is a dramatic disparity between the stipends being paid to faculty and those being paid to administrators for additional service.
4. The reduction in the duplication of service units: Such services as marketing, recruitment, retention, advising, student support, and technical support now exist at the university level, at the college level, and increasingly at the departmental level. Worse, these service areas seem to account for many of the major expenditures on outside consultants. This duplication seems largely the result of the multiple efforts to develop a workable RCM/MDA budgeting model. To be very clear, we are not suggesting that staff should be furloughed, but we are suggesting that further duplication should be immediately halted and that the support units should be gradually and thoughtfully realigned to operate without the organizational redundancies — and, moreover, that developing the expertise that we already have in house will be much more cost-effective and advantageous to the university than hiring further consultants. (Any effort to address administrative bloat should, in our view, absolutely not start with the furloughing of support staff. But if we are going to use attrition to reduce personnel costs, then some concurrent restructuring of how support services are delivered seems very important.)
5. A moratorium on the hiring of outside consultants, search firms, and other comparable external contractors: Last year, we spent almost twice as much on just two consultants as we spent on all consultants in 2011, and the spending on consultants in 2011 represented a historic high to that point.
6. The moth-balling of some if not most of the semi-autonomous entities: Any of these entities that require university subsidies to operate–that are not producing a net profit for the university–are luxuries that we apparently cannot afford. Worse, they clearly involve significant public-relations and financial liabilities. Moreover, “moth-balling” these units should not involve absorbing salaried positions directly into the university budget.
7. Greater control of the costs associated with recruiting international students: Some of these recruitment efforts have been very successful, but others have not. Given that these efforts necessarily involve great expense, stricter protocols should be put into place to insure that the results more consistently warrant the expense.
8. The reduction of the cost of intercollegiate athletics: In 2002 the budgeted subsidy for intercollegiate athletics was $4.5 million per year. It has now grown to $8.3 million per year. In addition, there are many years in which intercollegiate athletics has overrun its budgeted subsidy. For example, in 2015, expenses exceeded revenues by almost $1 million even after the $8.3 million subsidy. The University should eliminate the $8.3 million a year subsidy for intercollegiate athletics over a period of 5 years. We can no longer afford to take money from academic programs or to continue raising tuition and fees on students to support intercollegiate athletics. However, the University should honor scholarship commitments to the athletes it has recruited so that they can finish their degrees.
9. Elimination of the deficit at the Nutter Center and the Student Union: The deficit at the Nutter Center has grown from $0.5 million in 2002 to $1.4 million. The deficit at the Student Union has grown from $1.4 million in 2002 and is now $3.3 million. The University needs to develop and implement a plan to eliminate these deficits over a three-year period.
Finally, we request that the administration and Board begin acting in a transparent manner.
Specifically, we want:
1. Clear accounting of the direct and indirect costs of the ongoing investigations: Since these issues do not involve instruction, these costs should not be covered with any reductions to any instructional budgets.
2. Clarity regarding the liabilities that we are assuming in hosting the presidential debate: If the promised outside contributions do not materialize, we should have a very clear idea of where the revenue to cover any shortfalls will be found, and they should not be from the academic programs.
3. Clarity regarding the liabilities that we have assumed with the real-estate purchased through Double Bowler: Although the creation of this entity has undoubtedly expedited the university’s acquisition of properties, it has also eliminated much of the institutional oversight that would otherwise have been given to such purchases. Since our track record with these semi-autonomous entities is dubious at best, it seems prudent to ask for some clarity of what liabilities the university may ultimately be responsible for.
4. A full and open discussion with real data before the university considers “monetizing” of university assets: The effort to plug short-term budget shortfalls should not be to the longer-term disadvantage of the institution. If the firms to which we can potentially outsource housing and parking services can make money managing those services, while paying both us and their investors, surely we can make money managing them directly.
Lastly, there should be a commitment to resolving the budget issues without making things worse for those whom we, arguably, already exploit: At the budget-remediation meeting, just about the only specific budget numbers that were shared involved overruns in the amounts budgeted university-wide for student workers, graduate-tuition remission (presumably for graduate assistants), adjunct faculty, and faculty overloads.
We are submitting open-records requests to gather supporting data, as well as gathering available data from other sources. Over the next several months, we will regularly share that data.
Marty Kich
President, AAUP-WSU
On Behalf of the Executive Committee
Advertisements

April 11 Open Letter to President Hopkins and the Board of Trustees

To President David Hopkins and the Wright State University Board of Trustees:

In light of what has been happening at our University, the weekly e-mails we receive from President Hopkins paint a picture that bears little resemblance to reality. The former Provost has been on paid leave for nearly a year. Now we are told there is a major budget crisis. Yet, thus far and in typical fashion, the administration has directed the deans to plan for an 8% budget cut but otherwise has not shared any substantive information.

If the administration had bothered to share financial information in a meaningful way, perhaps the alleged crisis could have been averted. Instead, the administration spent years talking about budgetary transparency and MDA (and our magnificent salt barn!) All the while, apparently none of the extraordinarily well-paid administrators was minding the store and the Board was paying no attention. Year after year, now-departed Vice President Polatajko delivered a dog and pony show in his annual budgetary presentation to the Board, reported that we were spending money on new initiatives, and gave no hint that a budgetary storm was coming. What has been the return, monetary or otherwise, on our new initiatives? Apparently, not enough to offset the supposed financial crisis that has prompted the administration to ask the Deans to submit plans for 8% cuts in their colleges.

Several million dollars have been budgeted on a branding campaign. The administration disseminated a new logo, realized it looked like the logo for a local recycling company, and withdrew it. Of course, branding is supposed to be about more than just a logo. But have there been any tangible returns on our investment? We are confident that Wright State’s reputation is at a long-time low, branding campaign notwithstanding.

Millions have been spent on a consultant, and that in turn prompted the Ohio Speaker of the House — one of our alumni no less — to announce publicly that House members should use caution when dealing with Wright State. Clearly there were negative returns for that expenditure.

Millions are spent subsidizing intercollegiate athletics, when there is no evidence that students come to Wright State for athletics. In fact, in a recent survey, playing sports was the least significant reported factor in recruitment of students. Of course, the real test would be to ask our students whether they would rather have their tuition decreased by $500 a year or keep intercollegiate athletics. Meanwhile, the administration routinely allows intercollegiate athletics to overrun its already swollen budget. If that is not bad enough, a million dollars was spent building a football field so that a few male students would have a fancy venue for their games when 58% of our students are female. To top it off, the Athletic Director was allowed to fire the men’s basketball coach, who had two years left on his contract. So now we will be paying someone else for two years for doing absolutely nothing!

Millions have been spent on stipends, which is not surprising since WSU has over thirty individuals whose title includes president or provost (e.g., vice president, associate provost) and over forty whose title includes dean, many receiving stipends in addition to their base salaries. Why do we need so many administrators, and why do many of these individuals receive stipends when they are already among the highest paid employees at the University?

The administration and the Board have taken on a multimillion dollar liability to hold a Presidential debate at Wright State. If the massive funding needed does not materialize, how many employees will have to be furloughed? How many students won’t be able to take the classes they need to graduate?

Meanwhile, faculty and students — the heart of the University — suffer the consequences for these gross failures of leadership. Even more troubling than the firing of the basketball coach, the former Provost sits at home collecting a very substantial salary, and we still don’t know whether the reasons for his suspension are only apparent misdeeds, or will actually be subject to prosecution as federal felonies, or something in between. All the while we raise tuition, and our students go deeper and deeper into debt. We admit students who we know have virtually no chance of academic success but take their money anyway, while offering almost no need-based scholarships. Our most distinguished faculty are awarded modest raises and ordered to stop printing handouts that might help those students.

It is time to come clean with the University community before we are forced to redesign our logo again to show the Wright Flyer crashing into the ground.

Very soon, you will receive recommendations from us regarding cuts in expenditures that can be made without imperiling the academic core of the University.

But in the meantime, we have questions.

Who is responsible for the alleged financial crisis, and will anyone be held accountable? What is its real magnitude? What are its causes? Is the alleged shortfall due to overly optimistic estimates of revenue, or is it simply the result of out of control expenses?

Specifically:

Even if the reported financial problems are due in part to continuing reductions in state support, why have the problems been allowed to accumulate to the point where planning for an 8% reduction in the college budgets is suddenly necessary?

How much has Wright State spent investigating the H-1B visa scandal? The investigation by the administration has dragged on for more than a year while the University’s reputation has been dragged through the mud.

Why is Wright State one of only two state universities whose audits for 2015 have yet to be posted on the Ohio Auditor’s website?

Where are the Trustees? Has the Board exercised its fiduciary responsibility at all? How many Board members have benefited from the issuance of H1-B visas or nepotism?

What is going on at WSRI? We keep seeing statements about the millions in research dollars that WSRI and our consultants are bringing into the University, and yet our Carnegie ranking has dropped and each year the University continues to provide millions of dollars to subsidize WSRI.

And to repeat questions we raised above: What returns have we realized from our new initiatives? From the branding campaign? From our expenditures on consultants? From millions poured into intercollegiate athletics? And why does WSU have so many administrators, and of them why do so many receive stipends in addition to their salaries?

The faculty demand transparency and accountability, now.

Martin Kich

President, AAUP-WSU

On Behalf of the AAUP-WSU Executive Committee

 

April 8 Letter to BUFMs on Budget Issues

April 8, 2016

To all Bargaining Unit Faculty:

We appreciate the Faculty Senate asking for faculty input into the budget review. Without the creativity and insight of our members, the Administration will likely take the easy way out and resort simply to cutting targets of opportunity to solve the crisis it created.

Unfortunately, the Administration has not provided any firm numbers about the magnitude of the shortfall, which would assist the faculty in providing meaningful input. At the meeting I attended on Wednesday, the Administration has attributed the shortfall to cumulative historical causes, but it has not acknowledged how administrative decision-making has significantly contributed to the deficit. Despite the apparent urgency of the current situation, the Administration has not provided us with a transparent accounting of actual revenues and expenses.

Pursuant to the CBA, the AAUP-WSU will be submitting information requests to ascertain the true magnitude of the problem. We need the Administration to explain how its misplaced priorities landed us in this mess.

The AAUP-WSU remains committed to ensuring that there are no cuts to instruction or faculty scholarship. We call on all members to assist us in protecting our core mission of transforming the lives of our students and the communities we serve.

Thank you for your continued support.

Marty
[Marty Kich, President, AAUP-WSU]

April 4 Letter to BUFMs on Budget Issues

April 4, 2016

Dear Colleagues:

This past week, the president and the provost met with the deans to present their budget-remediation plan. The key element of the plan seems to be that, as an “exercise,” each college will be asked to identify mechanisms for cutting its budget by up to 8%. I say “seems to be” because the plan has not yet been communicated to the faculty leadership but instead to faculty in several colleges by their deans.

The president and the provost are not scheduled to meet with the faculty leadership until this coming Wednesday, April 6. Since the colleges’ plans, we understand, are due by April 11, this short timeline means at least one of three things will occur: (1) faculty will be participating in reviews of the college budgets before the faculty leadership has the opportunity to take any position on the proposed budget-remediation plan, thereby preempting any meaningfully organized shared governance; (2) if faculty manage to object in any organized way to elements of the proposed plan, meaningful shared governance will still be preempted by the short timeline because we may have time to articulate our objections but not time to provide any further input; or (3) if there is no organized opposition to this plan, faculty acquiescence to it will be implied.

Since these budget issues cannot have come as a sudden surprise to anyone charged with managing the university, we must assume that the short timeline is intended to preempt meaningful input from faculty–to preempt meaningful shared governance.

Moreover, we do not believe that the instructional side of the university ledger is primarily or even largely responsible for the deficits that the university is facing. And we do not accept that the instructional side of the ledger is the only place in which meaningful savings can be realized. We believe, instead, that there are areas other than instruction in which substantial cuts can be made that are large enough to mitigate significantly, if not eliminate, any reductions on the instructional side.

If the university is facing a substantial shortfall, especially one that is likely to persist for any extended period, it is critical that the core mission and the main revenue source of the institution be preserved, even if it is done at the expense of non-instructional initiatives and special interests.

I will be prepared to make some specific recommendations to the administration this Wednesday and then to share them with all of you immediately afterwards. But those initial recommendations will certainly be followed by others as we review the university’s audited financial statements and will therefore be just the beginning of our efforts to ensure that our institutional priorities are not misplaced in the process of addressing the budget issues.

Therefore, we strongly suggest not only that faculty refuse to participate in budget-review “exercises” until the faculty leadership has actually been presented with the plan and has had sufficient time to formulate a response but also that you voice very strenuous opposition to what is a very arbitrarily short timeline for the colleges to submit the results of their budget-review “exercises.” To facilitate your making your voices heard, please visit forums on our chapter’s Facebook and Twitter pages.

Sincerely, Marty
[Marty Kich, President, AAUP-WSU]