Editor’s note: This is the first in a series of stories from the weeklong University of Wyoming Board of Trustees meetings.
LARAMIE – The University of Wyoming Board of Trustees convened early Monday morning for the first of several meetings concerning many items, including proposed university budgets, upcoming/ongoing construction projects and the fall semester.
Monday and Tuesday’s hearings, chaired by John McKinley, focused on proposed budgets for fiscal year 2022. Presidents, deans and vice presidents of UW college departments and divisions presented their proposals after a consolidated review of revenue projections and operations budget was given by Vice President for UW Finance David Jewell.
Similar to personal finance, budget planning for an academic institution is a matter of efficiently distributing income to cover costs of expenditures.
Jewell provided extensive detail about what income or revenue looks like at the university, both in recent past and for the upcoming fiscal year.
In FY 2021, about $400 million in anticipated revenue was budgeted for; in actuality, a little over half of this was realized with just over $252 million as of March, according to the president’s proposed FY 2022 operating budget.
For this upcoming fiscal year, the committee has budgeted about $373 million.
Calculations comparing those figures showcased an overall reduction of $27.1 million for the unrestricted operating budget for FY 2022.
There are a number of reasons for this reduction, Jewell said, including the COVID-19 pandemic – which limited enrollment and tuition fees paid to UW – and an approximate $31.3 million loss in state appropriations. In fact, one of the biggest drivers of the revenue decline is the steady reduction of state appropriations awarded to the university.
Since 2015-16, the historical trend for university state appropriations has been somewhere around the $336 million mark for standard budgeting. However, state aid is projected to decrease by about 8% ($30.6 million) for this biennium.
Another explanation for such a drastic offset between FY 2021 and 2022 incoming revenue pertains to the “bottom line,” Jewell said.
Last fiscal year, UW budgeted $500,000 to remain on the bottom line or income remaining after all expenses have been accounted for. This fiscal year has a zero-dollar bottom line.
In short, FY 2022 is “very imbalanced” because of the offset of recent declines in revenue and the need to grow institutional income.
It isn’t all bad news, however, and Jewell made a point to highlight an overall 5.3% ($4.2 million) increase in FY 2022 operating budget.
“This was driven by tuition fee increases, as well as … lower institutional student financial aid,” Jewell said.
To make up for lost state appropriations, tuition rates/educational fees would have to increase by 6% with an overall decline in direct student financial aid to mirror the pace of appropriation losses. This strategy – which ultimately represents 11% of the operations budget – could potentially produce $4 million in revenue, Jewell said.
He added this figure represents all facets of university programs, including distance learning.
Budgeting takes an entity’s income and allocates it across various expenses. The University of Wyoming has many – the two biggest being personnel and capital projects, which will be discussed in a later installment of this series.
As the budget currently stands, salary, wages and benefits for campus staff, faculty and administration accounts for 35% of the entire operations budget.
Another result of the pandemic was the elimination of employee positions. In the proposed budget reduction plan, a total of 18 faculty and staff positions were eliminated in the College of Arts and Sciences, saving about $2 million in corresponding costs.
A total of 80 faculty and staff positions were proposed for elimination last fiscal year, which created a benefit for the FY 2022 budget, Jewell said.
The projected net new revenue generated primarily through increased student fees is committed to contractual obligations (i.e. promotions and tenure awards), Jewell said. Those funds can also be used to cover institutional inflation costs for supplies or services.
Off-put by the teetering balance between revenue generated by enrollment and expenses for instruction, outreach and research, Chairman McKinley asked Jewell and his committee to assemble a thorough analysis that breaks down how much revenue a course generates and how much that course costs to instruct.
Anticipating the need for similar information, Jewell discussed the ongoing collaboration with an undisclosed outside firm to develop an economic analysis on student/instructor revenue streams.
To demonstrate the function of the analysis, Jewell used English 1010 as a working example: Data on how many students enrolled in the course; how much gross income was generated; and the amount of discounts awarded are compiled into a lump sum.
For security reasons, the model does not allow examination of fiscal contribution on the individual level, but rather calculates an accurate and general figure of how much a specific course costs to bankroll.
According to Jewell, the analysis is currently finalizing three years of data and can be ready in a couple of months.
Jewell alluded to the challenges of budgeting this season, and made sure to show his appreciation for the budgeting team. Although he seemed confident in the consolidated budget review, he urged caution to the institution.
“In the absence of any significant revenue enhancement [or] growth … the university must continue to be vigilant and find efficiencies,” he said.
Gov. Mark Gordon’s “Step 2” reduction plan for UW includes an ongoing reduction of 10% to the university’s block grant in future fiscal years, according to the budget reduction plan.
Block grants are federal appropriations allocated to state or local government to ensure specific programs, institutions or projects are funded.
“If there’s an overall takeaway for fiscal year 2022 budget and its outlook going forward, it is … reallocating an ever-shrinking pie,” Jewell said.