A new finance policy to help WKU cover budget shortfal may also change the way programs and divisions save funds, leaving revenue dependent programs to wonder about the future.
The university’s current carry forward policy has allowed programs and divisions to reserve money leftover at the end of each fiscal year, often using these “rainy day” funds for one-time purchases like equipment or conferences not appearing on the annual budget.
However, under a new policy, unspent money will be allocated to the central budget to cover any university shortfall before being redistributed back to the funds it came from.
“It’s good to have a policy that encourages people to be frugal and judicious about how they spend their resources in order to maximize the benefit,” faculty regent Barbara Burch said about the current policy.
Under the new policy, the university will use carry forward funds to balance the central budget at the end of each fiscal year. After the campus budget is balanced, remaining funds will be redistributed back to the divisions proportionately to what each division contributed to balance the central budget, according to an email sent out to faculty and staff this month by President Gary Ransdell.
This year, the university faced a $6.5 million shortfall and developed a balancing plan, drawing unspent money from certain divisions. Approximately $4 million was reallocated from carry forward funds already reserved by departments in anticipation of the shortfall. Additionally, $1.7 million came from one-time reserves of the Division of Extended Learning and Outreach (DELO) and Health Services.
“With a campus budget well in excess now of $400,000,000, we are in a position to manage carry forward funds in such a way that we can ensure a balanced budget each year,” Ransdell said in the email. “President [Tim] Caboni, however, will certainly want to study our current budget model, and ensure that he has a budget model that is consistent with the strategic planning process he will engage early in his Presidency.”
In his email, Ransdell said revenue dependent programs will no longer be exempt from the policy, meaning they will also be required to provide remaining funds to the university to balance the central budget.
The 2015-2016 Operating Budget listed over 50 items as revenue dependent, including Imagewest, the WKU Florist Shop and DELO. The College Heights Herald is also revenue dependent. A revenue dependent program operates solely on money generated independently of the university by that program.
Burch said it’s unclear exactly how the new policy will affect the revenue dependent programming.
“If you were to take the policy as it’s written and assume that it applies to revenue-generating accounts—which I don’t know that it does for sure—but if it were, I think it would be devastating to some of our programming,” Burch said.
DELO was created in 2003 and encompasses several areas of outreach programming, including distance learning, on demand classes, cohort programs, winter sessions, dual credit, study away programs and more.
Beth Laves, associate vice president of DELO, said each of these programs have revenue connected to them; all operations are funded by the revenue generated by the program, separate from the university’s base budget, with the exception of utilities and building maintenance, which is paid for by the university.
Laves said she doesn’t know yet how exactly the policy change will affect DELO operations.
“It is unclear,” she said. “The policy doesn’t say anything specifically about how it will impact us.”
Laves added she understands there is a large revenue shortfall and said she believes everyone must step up and be a part of the solution.
“We can’t say it’s somebody else’s problem; it’s everybody’s problem,” she said about the university’s shortfall. “We also know that there are ways to get to that solution together. I don’t think we should be exempt just because we’ve been exempt in the past. I think we’ve got to address the budget problem as a whole.”
Other programs, including the College Heights Herald, run on money generated within the programs by students. The Herald operates on funds collected by students selling advertisements, which is used to pay students for their work and to distribute the paper.
Chuck Clark, director of student publications, said the Herald’s “reserve” has been accumulating for more than 40 years and allows students to work on up-to-date technology and get real-world experience.
“The Herald has been self-supporting for many years, and I would be worried how a change in the policy will affect the Herald going forward,” Clark said.
Ransdell included the new policy in his email; as it is, the policy does not specifically address how revenue dependent programs will be affected individually. Burch said she hopes the intent is not to apply the policy as currently written to revenue generating accounts.
“I certainly understand the need to look at the policy,” Burch said. “I understand the need to consider the extent to which the university needs some resources to deal with institution-wide needs, and [carry forward] is one source, but I am very concerned about the impact on revenue-dependent accounts and activities, and I think this is something we need to give a lot more consideration to before any decisions are made.”
The Board of Regents will host its second quarterly meeting this Friday where the board will be requested to approve the plan.
Reporter Emma Austin can be reached at (270) 745-2655 and email@example.com.