Colleges in Dire Financial Straits

[Hibush]

Saw this today:

UA has much less cash on hand than the Board of Regents requires. The faculty is accusing the administration of financial mismanagement.

https://www.insidehighered.com/news/business/financial-health/2023/11/16/university-arizona-miscalculated-cash-hand-millions

As noted upthread,

The University of Arizona is suddenly missing $240 million.

If administartion has spent $240 million without good records and only notices because the cash account is low, "financial mismanagment" is a reasonable characterization. Perhaps an understatement!

[dismalist]

Saw this today:

UA has much less cash on hand than the Board of Regents requires. The faculty is accusing the administration of financial mismanagement.

https://www.insidehighered.com/news/business/financial-health/2023/11/16/university-arizona-miscalculated-cash-hand-millions

As noted upthread,

The University of Arizona is suddenly missing $240 million.

If administration has spent $240 million without good records and only notices because the cash account is low, "financial mismanagement" is a reasonable characterization. Perhaps an understatement!

Understatement? "Yeah, pa, I thought I had the $240 million in my other pants pocket!"

Yes and no. How the hell can a firm hire a bunch of morons like that? Only because there is no incentive to do otherwise. "It's not my fault, pa." 

The WVa guy talks a good game, but the U Arizona guy can't add, well, subtract.

[Puget]

Saw this today:

UA has much less cash on hand than the Board of Regents requires. The faculty is accusing the administration of financial mismanagement.

https://www.insidehighered.com/news/business/financial-health/2023/11/16/university-arizona-miscalculated-cash-hand-millions

As noted upthread,

The University of Arizona is suddenly missing $240 million.

If administartion has spent $240 million without good records and only notices because the cash account is low, "financial mismanagment" is a reasonable characterization. Perhaps an understatement!

Sorry, missed your earlier post (buried in the theology derailing).

They apparently know where at least some of it went! :

. . .a $55 million loan to the athletics program, which has not been paid off. "We had assumed when we used cash on hand to support athletics that there would be an increase in revenue, and it just turned out not to be the case," Robbins told regents, adding that the loan has not been paid back "fast enough."

Apparently that's what they pay the president the big bucks for, assuming things?

[Hibush]

At the regents meeting yesterday, U of A President Robbins blamed the preparations for a move to the Big 12 athletic conference. Apparently they had to game certain numbers to be admitted. Varsity athletics there has a budget of $100 million a year. (Even with gross mismanagement, how do you rack up a deficit of 2.4 years operating budget in one year?)

Apparently others at UofA think the university spent too much on integrating for-profit, online Ashford University's 35,000 students. (Ashford's owner paid UofA $37 million to take it off their hands. One wonders how many hidden liabilities were transferred.)

Who is going to get fired for this stuff?

[lightning]

At the regents meeting yesterday, U of A President Robbins blamed the preparations for a move to the Big 12 athletic conference. Apparently they had to game certain numbers to be admitted. Varsity athletics there has a budget of $100 million a year. (Even with gross mismanagement, how do you rack up a deficit of 2.4 years operating budget in one year?)

Apparently others at UofA think the university spent too much on integrating for-profit, online Ashford University's 35,000 students. (Ashford's owner paid UofA $37 million to take it off their hands. One wonders how many hidden liabilities were transferred.)

Who is going to get fired for this stuff?

at the end, the Humanities faculty

[apl68]

At the regents meeting yesterday, U of A President Robbins blamed the preparations for a move to the Big 12 athletic conference. Apparently they had to game certain numbers to be admitted. Varsity athletics there has a budget of $100 million a year. (Even with gross mismanagement, how do you rack up a deficit of 2.4 years operating budget in one year?)

Apparently others at UofA think the university spent too much on integrating for-profit, online Ashford University's 35,000 students. (Ashford's owner paid UofA $37 million to take it off their hands. One wonders how many hidden liabilities were transferred.)

Who is going to get fired for this stuff?

at the end, the Humanities faculty

In all probability, yes. No matter what causes a college to fall into financial hard times, it's always the humanities faculty who are the first to pay by being laid off.  Among academics, at least.  The first sacrificial lambs are always departmental secretaries, librarians, and other staff members.

In this respect Higher Ed has become reminiscent of the frontier town that had one carpenter and two blacksmiths.  When the carpenter was convicted of murder, the townspeople hanged one of the blacksmiths instead--they could spare one of them, but not their carpenter!

[Hibush]

U of A has identified the problems being that their variable cost for educating and undergraduate student exceeds their revenue in that enterprise. That is probably a bigger problem than the crazy and obvious athletic overspending. Their costs seem rather average for a school of their type, so a financially rational person would look more closely at the revenue side. Obviously such creatures have not inhabited the administration building in Tucson, so this is simply an academic exercise.

If the humanities are drawing too few students, one source of revenue that has minor marginal cost would be to open those courses to non-matriculated students like retirees who have the time to commit and the life experience to regret not having taken those courses four decades earlier. In that sense, humanities courses might be the first and best opportunity to improve finances.

[Wahoo Redux]

IHE: Another Round of Campus Budget Turmoil

[Hibush]

IHE: Another Round of Campus Budget Turmoil

Thanks for adding that list to our resources

The cuts are often in low-enrolment courses, but those are not necessarily "the usual suspects".

University of Nebraska at Lincoln needs to cut a massive $12 million. A full 25% of that will come from cutting adminitrators, 20% from not hiring TT faculty, 15% from cutting adjuncts and 7% from cutting DEI programs.

University of Nebraska at Kearney will eliminate undergrad degrees in utilitarian subjects like business intelligence, geography, geography and geographic information sciences,
as well as more recreational music theatre, recreation management, recreation, outdoor and event management, and theatre.

Oklahoma Christian University is eliminating its graduate school of theology.

Baldwin-Wallace University faces a nearly $20 million budget deficit, far larger than the $3 million deficit it thought it had. That is proportionally worse than the University of Arizona oopsie. They are finding it challenging administering grant-supported science faculty and grant-free humanities faculty who are feuding with each other, as well as a very expensive conservatory.

[kaysixteen]

Of course it is, because whyever would a 'Christian University' want a grad school of theology...?

[apl68]

Baldwin-Wallace isn't that large of a school.  A $20 million deficit is proportionally enormous!  They're going to have to absolutely butcher most of their programs to try to cut down a deficit like that.

[lightning]

Baldwin-Wallace University faces a nearly $20 million budget deficit, far larger than the $3 million deficit it thought it had. That is proportionally worse than the University of Arizona oopsie. They are finding it challenging administering grant-supported science faculty and grant-free humanities faculty who are feuding with each other, as well as a very expensive conservatory.

There are only about 3,000 students at BW. Holy sh*t!!! How could some be so inept that they didn't know what was really going on. Considering the relatively small size of BW, making this kind of financial mistake is completely inexcusable. The admins should all be sacked immediately.

[larix]

Looks like institutions in Nevada will be making cuts as well.
https://thenevadaindependent.com/article/nevada-higher-ed-eyes-more-cuts-hiking-student-fees-to-fund-faculty-pay-raises

[dismalist]

Baldwin-Wallace University faces a nearly $20 million budget deficit, far larger than the $3 million deficit it thought it had. That is proportionally worse than the University of Arizona oopsie. They are finding it challenging administering grant-supported science faculty and grant-free humanities faculty who are feuding with each other, as well as a very expensive conservatory.

There are only about 3,000 students at BW. Holy sh*t!!! How could some be so inept that they didn't know what was really going on. Considering the relatively small size of BW, making this kind of financial mistake is completely inexcusable. The admins should all be sacked immediately.

I googled around a bit. Here is the first newspaper article I have ever come across that reports on the subject of a higher ed institution's finances with some relevant facts: BW Finances

Past deficits were covered from endowment! [Eat your house until it's gone and you don't have a place to live anymore.] The person doing this was the CFO, who just retired. End game!

His boss clearly had no incentive to monitor his behavior. The structure of a non-profit gives the bosses a way to have a soft life -- until the money runs out.

[apl68]

Baldwin-Wallace University faces a nearly $20 million budget deficit, far larger than the $3 million deficit it thought it had. That is proportionally worse than the University of Arizona oopsie. They are finding it challenging administering grant-supported science faculty and grant-free humanities faculty who are feuding with each other, as well as a very expensive conservatory.

There are only about 3,000 students at BW. Holy sh*t!!! How could some be so inept that they didn't know what was really going on. Considering the relatively small size of BW, making this kind of financial mistake is completely inexcusable. The admins should all be sacked immediately.

I googled around a bit. Here is the first newspaper article I have ever come across that reports on the subject of a higher ed institution's finances with some relevant facts: BW Finances

Past deficits were covered from endowment! [Eat your house until it's gone and you don't have a place to live anymore.] The person doing this was the CFO, who just retired. End game!

His boss clearly had no incentive to monitor his behavior. The structure of a non-profit gives the bosses a way to have a soft life -- until the money runs out.

This is exactly what I've been trying NOT to be guilty of doing at our library.  I could maybe, if the overall local economic situation doesn't take any more serious turns for the worse (a big "if"), stretch out our cash reserves socked away in previous surplus years until I retire, and leave the problem for the next director.  Instead I've furnished our Board of Trustees with a detailed report on budget trends and the development of our structural deficit in recent years, with thoughts for possible future actions.

We're starting the retrenchment process this coming year.  I'll stop going to the annual state library conference and try to find other little economies that won't inflict pain.  We have a staff member in her late 60s who has asked to semi-retire by dropping to part-time.  By letting her do that, and not getting anybody else to fill the hours she'll no longer be doing, we can save some on payroll.  There's another elderly staff member whose part-time position can probably be eliminated by attrition within the next couple of years.  I'm really hoping that economies like this in the near term can help to avoid layoffs down the line.  But it may just be postponing the inevitable.

These are the sorts of decisions that the schools that have been appearing on this thread have been facing.  The most responsible thing to do is to face them sooner rather than later.