WKU to use reserve funds to cover executive order shortfall

Emma Collins

In the wake of Gov. Matt Bevin’s executive order mandating that universities’ funding be cut immediately by 4.5 percent, WKU must find a way to revise its current budget.

Bevin made his announcement while the Senate and House remain locked in a gridlock regarding the state’s budget. They have been unable to reach a compromise with the House refusing to agree to the postsecondary education budget cuts. Both the Senate and Bevin insist the cuts are necessary.

“We decided to do the most equitable thing, which was to implement what needs to be done in order to take care of the obligations that the commonwealth has,” Bevin said during a press conference.

The funding will instead go to the pension system, which is underfunded by $38 billion.

Barbara Burch, faculty regent and professor emerita, said the university will need to cut 4.5 percent of its budget: $3,359,200. She said the money will most likely come from WKU’s reserve fund, which currently contains $3,488,660. Only $129,460 will be left in the reserve fund, and Burch said the money will need to be replaced.

On Monday afternoon, President Gary Ransdell released a statement confirming that administrators would ask the Board of Regents for use of the reserve.

“Given the lateness in the fiscal year and the extraordinary circumstances that would be required of the campus to reduce campus operating budgets that have already been obligated, we have decided that the best course of action is to seek approval at the April Board of Regents’ meeting to draw down the University Reserve Fund to carry us through the end of the fiscal year,” Ransdell said in the statement.

Burch said the reserve fund is “good financial practice” and contains money that can be used to cover unexpected costs, and praised Ransdell’s decision to use money from the reserve fund.

“To come up with that kind of money on a minute’s notice is not easy, so that buys time to find some of the money elsewhere to go back in the reserve fund,” Burch said.

Burch said in past years, WKU has cut as much of the budget as possible.

“You eventually have drained the well of options so dry that you’ve run out of places to cut,” Burch said.

Burch said she has seen other universities find new means of revenue in a variety of ways, and WKU has several options.

The university can cut salaries of faculty and staff or let some employees go. There is also the option to close certain programs and services or reduce the number of sections offered for each class. However, Burch said tuition will probably take the largest hit.

“We have pushed our tuition rates just about as far as we can push them,” Burch said. “We are a comprehensive institution that serves our region and beyond, and we have some obligations for supporting Kentuckians, and we have been forced to make the cost go up because the legislature and the state have cut support.”

Tamela Smith, manager of AV services, said increasing tuition, while not ideal, is an easy option.

“Unfortunately tuition is the easiest one to control or to go after,” Smith said.

Burch said WKU has seen large tuition increases in the past, beginning when the state cut a large portion of its universities’ funding in an attempt to compensate for the 2008 economic downfall.

The university as a whole was still able to increase its revenue despite the cuts.

“I think the legislative mentality, maybe the governor’s mentality too, is … ‘Look, we can just cut the universities, and they can find another way to make money,’” Burch said. “The only way they can make the money is on the backs of students, and we can just not keep putting that on the backs of students.”

Burch said she believes Ransdell will do what he can to prevent students from being greatly affected.

“I do think the president is committed to do everything he can to have the least effect on students and academic programs, but he can’t make money out of wishes; it has to be allocated,” Burch said.

In early February, the Student Government Association passed a resolution requesting faculty and staff salaries be increased in the next budget. There has been no significant pay raise in several years.

Burch said inflation costs have outweighed any small increases faculty and staff have received.

Since the governor’s executive order, Democrats in the House have challenged the legality of Bevin’s actions.

Attorney General Andy Beshear, a Democrat, said he plans to challenge the governor’s order. He claims Bevin does not have the power to pass such an order.

Burch said she is unsure about the legality of Bevin’s actions. The governor is allowed to make cuts to the executive budget without the legislature’s approval, but only during emergencies.

“The question is, ‘Is this an emergency?’” Burch said.

While the state waits for the answer, universities must still plan ahead for potential cuts.

Smith said Ransdell, the budget committee and Ann Mead, senior vice president for the Division of Finance and Administration, have already discussed possible options.

“The university is definitely working on what they would do and how they would handle this,” Smith said.

Burch said any cuts WKU makes will need to be made carefully. She said Ransdell indicated it would not be possible to make cuts across the board and take money from everyone.

“[They] will have to be more strategic in determining where the cuts are going to come from,” Burch said.

The next two weeks will be critical in determining the outcome of the budget. The legislative session is scheduled to end April 12. According to the state’s constitution, it can go no later than April 15.

“Our only hope and prayer is that somebody up in Frankfort gets a wake-up call,” Burch said, “and says, ‘It is important that we put money back in our pension system, but we can’t starve our higher education system in order to do it and expect them to make the contribution to the state.’”