Ransdell announces possible $3.1 million budget cut, privatization of Health Services

Gary Ransdell mug

Trey Crumbie

President Gary Ransdell sent an email to faculty and staff Wednesday afternoon announcing WKU is facing a $3.1 million budget reduction and explaining the university’s intent to privatize WKU Health Services.

“We’re looking to balance the budget in everyway possible that saves as many jobs and brings as little harm to the campus as possible,” Ransdell said.

Ransdell said the privatization of WKU Health Services will allow the university to apply the subsidy that was given to WKU Health Services to other areas of the university.

“Health Services represents an area that the private sector can manage without cost to the university and therefore we can apply what is now the university subsidy towards the budget cut and reduce everybody’s budget all across campus,” Ransdell said.

Ransdell said he hopes the State Biennial Budget, that has passed the Kentucky House of Representatives and is now in the Kentucky Senate, will diminish the budget cut for Higher Education.

“I’m hoping that the Senate reduces the budget cut for Higher Education and keeps the capital projects as well,” Ransdell said.

Ransdell said he was confident the facility will be managed well once it is turned over to the private sector

“No, I cannot think of any risks,” Ransdell said. “A hospital for a private sector health provider manages the health center then they are managing something that’s within their expertise so I would expect a sustained high level of service to our students with a private operator.”

Ransdell said the privatization of WKU Health Services would not balance the budget completely.

“We’ve got serious challenges to have a balanced budget next year and this is just one strategy to achieve a balanced budget,” Ransdell.

Ransdell said because of this, the administration is still deliberating other steps.

“I do not anticipate other actions that would be of the significance of this health center action, which will be the largest single reduction variable, but there will be more modest strategies that will need to be put in place,” Ransdell said.

Ransdell said in order to turn WKU Health Services center over to the private sector, there will need to be a bidding process. WKU will issue a Request for Proposals around April 1, receive proposals around early May, make a decision by late May and begin a contract by July 1.

Read the full email below:

“Fellow Faculty and Staff:
This message is intended to brief you on two matters.  First, the status of the state budget process; and secondly, the decision that has been made to seek private operation of WKU Health Services. 
State Budget
The 2014-2016 State Biennial Budget has now moved from the House of Representatives to the Senate.  The House version of the budget largely mirrors the budget proposed by Governor Beshear in January, and no major changes were made to the higher education variables.  This means that for our purposes, the 2.5 percent cut to higher education ($1.8 million for WKU) remains in the House budget.  It also means that the $48 million funding of the Thompson Complex Center Wing renovation remains in the House budget.  Funding of $1.3 million to help us with the increased costs for the Kentucky Employees’ Retirement System (KERS) also remains in the budget, as does a $2 million increased appropriation for the expansion of the Gatton Academy for Math and Science from 120 to 200 students.  The House budget also includes approximately $2.2 million in one-time endowment match funding for WKU through the Bucks for Brains program.
The House budget is now in the hands of the Senate.  It is too early to tell how any of these variables might change in the Senate.  We are communicating closely with Senate leadership and tracking the process which will unfold over the next several days.
Campus Budget
Regarding our own budget, with the final drop for non-payment action a few days ago, we now know that we will have a revenue shortfall of approximately $1.5 million this spring.  As you recall from our communication last fall, we had a revenue shortfall of approximately $1.6 million in the fall semester.  This is primarily due to a declining Fall 2013 enrollment, which of course carried over into the Spring 2014 semester.  We, therefore, must address a $3.1 million budget reduction as we prepare next year’s budget before we deal with covering our fixed-cost increases, a state budget cut, or a salary and/or benefits increase. 
We will be working closely with the Council on Postsecondary Education (CPE) over the next few weeks to determine what tuition increase we will incorporate into our budget profile for next year.  CPE will set a cap on tuition increases and we will work within that cap once it is confirmed.  Revenue from a tuition increase will then be applied against our total budget shortfall, and the difference between the two will be the measure of our campus reduction in order to achieve a balanced budget on July 1.
Health Services
Senior Vice President for Finance and Administration, Ann Mead, and I met this afternoon with the staff in the WKU Health Center.  In an effort to reduce the campus-wide budget cut and improve efficiencies, the decision has been made that we will issue a Request for Proposals (RFP) to accept bids from the private sector to operate our campus WKU Health Services.  This decision has been made for a number of reasons.  First, we can achieve a net savings of more than $1 million to apply to our campus-wide budget cut that will reduce the amount of the cut for each division of the university.  Secondly, we want to give private sector medical providers the opportunity to show us how they might operate our Health Services program in a more efficient manner, and provide enhanced services to faculty, staff, students, and perhaps even the general public. 
The primary concern in this action is, of course, the well-being of the employees in the Health Center.  They are a terrific staff, and they serve us well.  We will encourage the successful bidder to employ our current Health Services staff; but that, of course, cannot be guaranteed.  If the contract is awarded, we will work with the successful bidder and our employees to make this transition in as thoughtful a manner as possible. To be clear, all services and provisions in our Health Services program will continue uninterrupted through this semester.  All future decisions will be fully described as they are made.
This action does not affect Health Education or Employee Wellness.  We will move Health Education to the Preston Center and Employee Wellness to Human Resources and retain those employees in our WKU employee profile.
Our challenge is significant, but we are working through the budget process in ways that will reduce the burden on as much of the campus as possible and continue to provide the quality learning environment and campus services which our students deserve.  I will keep you informed as these matters continue to unfold. 
Thank you.
Gary A. Ransdell”