President Gary Ransdell announced via email Monday afternoon that portions of WKU’s 2015-2016 fiscal budget would be reallocated due to WKU facing “financial challenges.”
Ransdell cited two significant factors that contributed to WKU’s budget woes: decreased funding from the state and an enrollment decline.
Kentucky hasn’t provided new funds to support higher education since the 2008 biennial budget was passed and has been cutting funds in most years since then, according to the email.
For enrollment, Kentucky’s public postsecondary universities and the Kentucky Community and Technical College System achieved enrollment of 235,833 in fall 2011, however by fall 2014, overall enrollment had declined to 215,509- a drop of 8.6 percent, with KCTCS experiencing the highest rate of enrollment decline.
WKU has lost $15.4 million in state funds since 2008 and has internally reallocated an additional $7.1 million to meet WKU’s fixed costs increases and ensure a balanced budget annually, according to the email.
Cost drivers for WKU include scholarships and mandated tuition waivers, increases in employee benefits such as retirement, health care and workers compensation. Contractual obligations such as insurance, computer software, library subscriptions and maintenance are also considered costly to WKU. The increased expenditures of the cost drivers add up to $9.6 million that WKU needs to cover.
There are only three ways to cover the increased expenditures: increased state appropriation, increased tuition and/or reallocation of existing funds, according to the email. WKU’s most significant source of revenue is tuition. WKU’s tuition for undergraduate resident students for the 2015-2016 school year is $4,741 per semester.
The resident undergraduate tuition is capped at 3 percent for next fiscal year. A 3-percent tuition increase will generate approximately $4.3 million, but net only $1.9 million when enrollment losses are calculated. In order to achieve a balanced budget, WKU must reallocate approximately $7.7 million within its existing budget.
Ransdell provided a breakdown of specific areas for how and why funds will be reallocated in the upcoming fiscal year.
The budget increase for WKU’s academic scholarships will increase almost $3.9 million in order to fund projected freshmen who are accepting scholarship awards and returning students. The entire scholarship program is being re-evaluated with changes coming with the entering class of fall 2016.
Fixed cost increases for employee benefits, such as health insurance and retirement total almost $1.66 million.
Contractual obligations, property insurance and utilities and maintenance on new square footage on campus require a budget increase of about $1.2 million.
The division Enrollment Management will receive $457,000 to secure its base operations with permanent funding.
Enrollment Management is responsible for Admissions, International Student Recruitment and Support Services.
Other scholarship adjustments include department scholarships, faculty/staff/dependent-child scholarships, graduate fellowships and athletics grants-in-aid. The total increase for these scholarships is $819,400.
Division vice presidents are in the process of identifying targeted reductions in each of their budgets and will have complete flexibility in how to manage impact on division operations. A detailed summary of how WKU will reallocate centralized funds is still being finalized.