Wittenberg University plans to cut at least $6.5 million — about 11 percent of its annual budget — through benefit reductions and restructuring.
The cuts are needed to avoid a projected structural deficit of that amount at the end of this fiscal year and a $5.5 million deficit next year, President Laurie Joyner said.
“The great news is that this plan projects Wittenberg to be in a cash positive position in (fiscal year) ‘17, which has been the board’s goal from the beginning of my presidency in 2012,” Joyner said. “Most importantly, these difficult decisions will help ensure that we protect the mission of Wittenberg for future generations of students.”
Some of the major reductions outlined to faculty and staff members in a series of meetings this week include:
- $1.9 million in savings by refinancing the university’s debt.
- $1.7 million in savings by eliminating health benefits for retirees and reducing the benefit package for employees. The main change for current employees will be a switch to a higher deductible plan, said Randy Freebourn, vice president for finance and administration.
- $1.6 million from a review of administrative positions to identify deficiencies. Cuts aren’t out of the question, Freebourn said.
- $1.5 million in savings from a review of academic programs. The Educational Policies Committee will meet to create a plan by December, identifying programs that aren’t attracting students, those that need restructuring and those that are strengths, according to Interim Provost Mary Jo Zembar.
- Wittenberg will also exam all contracts to see where savings can be found and has already made some changes, including to an elevator service contract that resulted in $40,000 in annual savings, Freebourn said.
It’s the latest round of cost cutting since Joyner took over in 2012 and announced a goal of balancing the university’s $56 million budget. In 2013 the university made more than $5 million in cuts that included eliminating the geography program and cutting 29 faculty positions, mostly through attrition and retirement.
The news of more reductions was a lot to process for faculty members, Associate Professor of English Rick Incorvati said.
“It was not welcome news,” he said. “There were certainly voices of frustration.”
Several faculty members said the announcement wasn’t a total surprise and the campus community widely understands the need to act to secure Wittenberg’s future.
“We’ve been in this space for a while now,” said Doug Schantz, director of the Office of Student Accounts. “(The faculty) seemed to understand. They seem to be very seasoned as to what the industry standard is on some of the options out there. And so it didn’t seem to be as much of a surprise.”
Reductions in benefits and potential job losses are never easy topics, said Pete Hanson, associate professor of chemistry and chairman of the Faculty Executive Board.
“This type of change is not easy. It’s going to bring about feelings of anxiety, feelings of hurt in our community,” he said.
Wittenberg faces the same revenue challenges as many small institutions across the nation, Joyner said, but its situation has been compounded by nearly two decades of irresponsible handling of its endowment.
The university has sued its former law firm Martin, Browne, Hull & Harper, accusing it of malpractice. The school’s suit argues the firm provided poor legal advice and created a conflict of interest that led to real estate transactions that damaged Wittenberg’s finances, including the purchase of the building that houses the Springfield Museum of Art.
Representatives of the firm declined to comment Wednesday and the lawyers have denied those allegations in its court filings.
“The museum transaction is a prime example of what has caused the university to face significant budget issues,” Joyner said. She called the practices at issue in the lawsuit, “not just unethical and imprudent, but also illegal.”
The university continues to look for sources of increased revenue as well, Joyner said, and is committed to continuing its four-year tuition freeze. It has added a May semester, bachelor’s degree completion programs in nursing and criminology and the President’s Leadership Academy, all aimed at attracting new students, she said.
Investments, including a $30 million athletic facility expansion that already has $17 million in donations pledged, are also intended to drive recruiting and retention, Joyner said.
“The reason we’re doing this is we want to make sure the mission of Wittenberg University remains strong … Our first priority is to respond in a responsible and very transparent way, to make sure that that mission continues for generations of students to come. The future of Wittenberg must be financially sustainable and financially strong,” she said. “And we will do whatever it takes to make that happen.”
Joyner expects there will be backlash from employees upset about the cuts.
“It does not change what needs to be done at this institution one bit,” she said.
More than 55 tenured faculty members recently submitted a letter to the university’s board outlining concerns about high turnover among long-time professors, Incorvati said.
He hopes the recent revelations about financial difficulties will spur the entire community to be more involved.
“I hope there is more awareness of the financial realities at Wittenberg,” he said.
In the past, as outside organizations like Moody’s Investors Services continually downgraded the university’s bond rating, Incorvati said the administration made assurances that the financial outlook was still bright.
“In hindsight we have to say that was spin,” he said.
Administrators will continue to meet with employees and retirees to answer questions about the changes to their benefits, Freebourn said.
“Our total benefits spend here is $8.5 million a year and just health and dental benefits for our employees and our retirees is about $4 million, and that’s a significant portion of our operating budget,” he said. “We’re creating what you’ll see just about anywhere these days, which is a high deductible health plan with a health savings account.”
Premium deductions from employee paychecks should stay about the same, Freebourn said, if not go down.
Dental coverage for employees will become voluntary and the university is eliminating all health, dental and life insurance benefits for retirees.
As the university moves forward with the reduction plan, including the review of its academic offerings, the goal will be to minimize impact on student learning, Joyner said.
“We still feel very strongly that the teaching and learning enterprise at Wittenberg is very, very strong. We feel that our co-curricular offerings provide amazing opportunities for students to do things like study abroad or serve in the community. So those are areas we’re going to work really hard not to negatively impact as much as possible,” she said.
As news spread on campus Wednesday, students and staff said it’s always worrying to hear about cuts.
“Every student kind of worries a little bit, you know, like what’s going on?” said Callan Swain, a senior business and Spanish major.
Joyner wants to assure the community that Wittenberg isn’t in danger of closing, despite the cuts and recent bleak projections for small private universities nationwide.
“They say that the institutions most at risk are going to be those with fewer than 500 students,” she said. Wittenberg has about 1,850 students. “Many of those institutions have very small endowments or no endowment at all. This institution has a $100 million endowment. We still brought in 536 new students this year.”
The actions taken by Wittenberg have become common, especially in Ohio, said C. Todd Jones, president of the Association of Independent Colleges and Universities of Ohio.
“Hard budget decisions are something that colleges in every higher ed sector are making right now,” he said. “The state is in the midst of a significant, dozen year decline in the number of traditional students who are graduating from high school.”