Fredonia State in loan position for next year
A “self-inflicted wound” is how SUNY Fredonia College Council member JoAnn Niebel described New York state’s role in the college’s multi-million dollar deficit, which was the subject of a recent college council meeting. According to SUNY Fredonia President Virginia Horvath, Ph.D., over the past few years, the state has reduced its annual base support to the campus by $5 million, while increasing mandatory expenses. This, combined with declining enrollment, caused the college to dip into its reserve funds over the past 10 years, the last of which will be used up this school year.
During the meeting, Michael Metzger, vice president for Finance and Administration, explained that the college will be in a loan position for the 2019-2020 school year. For the 2017-2018 school year, the college’s expenses totalled approximately $48 million and revenues totalled nearly $45 million, which resulted in a $3.4 million deficit. Reserve funds from over-enrollment from prior years covered this deficit. However, not only are these reserves gone, but so, too, is the state’s program that allowed the college to keep money from over-enrollment.
Horvath explained, “These were generated when we had an (enrollment) target from SUNY, and if we exceeded that, the excess tuition dollars stayed here and carried over from year to year.” During the late 2000s when the state’s population of high school graduates reached historic highs, Fredonia and other SUNY colleges benefited greatly from the excess tuition dollars, which became reserves that could be used year to year, unrestricted.
Fredonia’s enrollment has declined during recent years, and despite this year’s large cohort of incoming first year students, the college still did not meet its projected enrollment of 4,800 students, coming in at 4,657. Enrollment, the college’s primary source of revenue, continues to impact next year’s budget. “Looking at the 2019-2020 budget, which starts this July, we’re looking to reduce by $4.5 million,” Metzger explained. “That is our internal target. With that, we will still result in a structural deficit of $3.4 million, and therefore will need to borrow these funds.”
Increased expenses such as staff raises contribute to the deficit. “The new raises that were implemented, which are very much deserved, have affected our 2018-2019 budget by $3.4 million and our 2019-2020 budget by $2 million, meaning an additional expense,” Metzger explained. “So that would be an unfunded mandate, meaning the state has negotiated salary contracts on our behalf, but is not reimbursing us for the result of those contracts.”
Council Chairman Frank Pagano asked Metzger to explain what the source of borrowed funds will be and what the requirements are for borrowing. According to Metzger, Fredonia will borrow the funds from the SUNY system, who asks for a multi-year plan to show how the college will correct the situation so that the loan can be paid back. Niebel asked Metzger how the college would rebuild its reserve fund if it is also trying to pay back SUNY. “We get money by generating a surplus instead of a deficit,” Metzger stated. “We can do that by cutting expenses or generating more money. On the revenue side, that’s predominantly enrollment.”
Metzger listed multiple ways that the college tries to reduce expenses, including examining vacated positions before rehiring and reducing or postponing purchases. Horvath explained that administration is also talking to the state about changing its policies so that Fredonia is in a stronger financial position.
For example, the state sets the price of tuition. “There’s a flat rate for full-time students, regardless of how many credits they take, 18 or 21 credits, and we staff the courses for that. The tuition is the same for someone who signed up for 12 credit hours,” she explained. Other states have gone to a per credit hour system for tuition. Horvath pointed out that a past program that generated revenue, Attic and Cellar Days, when the college sold its old equipment to the community, was discontinued because the state forbids the sale of its property to the public.
Both Horvath and Provost Terry Brown pointed to diminished state support as a systemic problem that, in Horvath’s words, “shows the lack of investment in this generation of learners.” Not only did Fredonia’s support drop by $5 million, but it is a third of what an institution around Fredonia’s size would receive in a neighboring state, according to Horvath. She said, “We have examples of how that impacts instruction, how that impacts student support, how that impacts facilities,” all of which Fredonia is sharing with SUNY’s chancellor.
Metzger said that the PEPRE (Procedures for Emergency Program Reduction/Elimination) plan is one cost-saving initiative, in addition to a voluntary incentivized retirement plan.
Horvath addressed the difficult — and highly criticized — position the college is in, as well as the challenge of getting through to Albany. “It’s the advocates from this campus and elsewhere who are making hard choices to protect the opportunity that’s provided through public education,” she stated. “We’re very vulnerable right now because we’re saying, ‘These numbers do not work.’ And it’s not squandering, it’s not mismanagement. It’s working to protect the opportunity that Fredonia students have for the careers that they want…Every opportunity that we have — as citizens, as voters, as educators — to share with people the investment in learning that is necessary for the future is something that we’re committed to.”