Recently announced layoffs, cuts won’t be enough at WSU

Budget cuts announced earlier this month will not go far enough, officials said. Reserves will need to be boosted by $45 million over the next three years.
Budget cuts announced earlier this month will not go far enough, officials said. Reserves will need to be boosted by $45 million over the next three years.

Wright State University’s $30 million in proposed budget cuts will not be enough to stabilize the school’s future finances if a new revenue source is not found or enrollment does not grow.

Wright State will almost certainly be placed on state fiscal watch by 2019 and to be removed from it, WSU must add around $45 million to its reserve fund over the next three years, school and state officials both said.

There are just a few ways that money could be generated, the most obvious being even more cuts and layoffs.

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Wright State announced on May 19 that it will likely lay off 71 employees and eliminate 107 already vacant positions, as part of a 2018 budget proposal. Trustees are expected to vote on a finalized budget on June 8 and layoff notices could go out the week of June 12.

While future layoffs and cuts are already being called last resort, more could be made in the coming years, said Doug Fecher, chairman of the WSU board’s finance committee.

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Wright State University Budget: 5 things to know

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“They’d almost have to be made,” Fecher said. “That’s what the community needs to understand. If revenue doesn’t come in (as projected) we will have to cut.”

Nothing is “off the table” including taking WSU athletics back to a Division II status, though no serious discussions on that topic have occurred yet, Fecher said.

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To minimize future cuts and layoffs, the university could consider selling off some of its assets and operations, Fecher said. Last year, WSU leaders discussed outsourcing the college’s parking operation and in October trustees sold 11 unused lots in Yellow Springs for $350,000.

Tuition is WSU’s biggest single source of revenue but enrollment has dropped by 1.2 percent this spring and it is expected to decline again next year. To combat that trend, an enrollment and retention task force is being formed, said Provost Tom Sudkamp.

“Enrollment is our best weapon,” said Jeff Ulliman, WSU’s vice president of business and finance. “We’ve all got to do everything we can to bring students to this university and to keep students at this university.”

Wright State is expected to end this year with around $29 million in reserves, about $2 million more than more than what was originally expected, officials have said. It’s a sign that the austerity measures WSU has taken, such as axing catering and overnight travel, are working, Fecher said.

“We’re just going to have to be hyper-vigilant,” Fecher said.

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Boosting reserves by $45 million would allow the university to swiftly enter and exit fiscal watch in the three years required by the state. But, getting to that point will be challenging, said Jim Bennett, vice chancellor of finance at the Ohio Department of Higher education

“It takes commitment and discipline and acknowledgement that this is going to be a multi-year (effort),” Bennett said.

To completely avoid fiscal watch, Wright State would have needed to add another $25 million to its reserve funds in 2018, Ulliman told trustees during the May 19 layoff announcement.

The state measures every public college’s fiscal health with something called a “Senate Bill 6 score,” an annual rating of 0 to 5. Any school that falls below a 1.75 two years in a row is put on notice.

Ulliman told trustees that he fully expects WSU to fall below that threshold in fiscal years 2018 and 2019. The level of reserves a university has are the biggest factor in gauging a “Senate Bill 6 score,” both WSU and state officials said.

Once on fiscal watch, WSU will have three years to recoup its finances and boost its score back to a 2.4 for at least a year. If the school doesn’t increase its score, the state could take over by appointing a “conservator” to oversee budget remediation.

The university has the option of going even one step further by declaring “financial exigency.”

In doing so, Wright State would be granted the authority to issue budget cuts and lay off virtually anyone, officials said. But, by declaring “exigency,” WSU would also concede that it is risk of closing.

Despite the university’s struggles, Fecher said said it won’t come to that because Wright State won’t come close to running out of money.

“It hasn’t even been discussed,” Fecher said. “I don’t think that’s a possibility.”

Staying with the story

The Dayton Daily News is your best source for information on Wright State University’s continuing financial struggles. Follow our higher education reporter on Twitter at @MaxFilby for more coverage of WSU’s budget crisis and remediation plans.