College works to address budgetary gap concerns

Allegheny College’s Finance and Facilities Committee has been assessing different steps to take that would alleviate a large budgetary gap created by the under-enrollment of the Classes of 2018 and 2019.

President James Mullen addressed the faculty during a faculty meeting on Sept. 29, 2016.

“As you know, the next two fiscal years [2017-18 and 2018-19] will be challenging as the two small classes continue to work their way through graduation,” Mullen said.

One half of the college’s revenue comes from net tuition, according to the FFC minutes from Nov. 30, 2016, so when the Classes of 2018 and 2019 were under-enrolled, it had notable budgetary consequences.

We highlighted about a million dollars of budget levers we are vetting.

— Linda Wetsell

Luke McBride, ’17, the Allegheny Student Government treasurer and a voting member of FFC, said the committee was assessing options to alleviate cost since there is about a 1.5 to 2 million dollar budget gap.

FFC consists of 15 members. This includes five members of faculty, four students who are appointed by Allegheny Student Government  and other staff and administration, including Executive Vice President Eileen Petula and Provost and Dean of the College Ron Cole.

“There were the classes which were smaller than anticipated and that caused the college to make some severe budget cuts last year,” Petula said.

“It’s kind of weird how the finance works because you have to work backwards in the year because you have to determine how many students are going to come in for the school year,” McBride said.

In addition to the issues presented by the under-enrolled classes, according to Petula, the college is also losing a large number of its students to graduation.

“The Class of ’17 — who are graduating this year — was one of our largest classes,” Petula said.

The loss in revenue affected several areas of the college, according to Petula. She said the college was forced to make changes to health insurance, departments were forced to make cuts and administration, faculty and staff did not receive pay increases.

Linda Wetsell, chief financial officer and treasurer of the college, said there was approximately a 1.4 million dollar gap at the beginning of the budget process.

“We highlighted about a million dollars of budget levers we are vetting,” Wetsell said. “With the budget gap, we have minimal salary increases proposed.”

The FFC minutes from Nov. 9, 2016, show that a proposed 1 percent increase to salaries would cost an estimated $300,000 to the college, which is currently the proposed increase for the coming year.

Additionally, the 1 percent increase is also tentatively proposed for the following year, should all their estimations and assumptions hold true, according to Petula.

“As this process unfolds, it will remain our goal to provide stability for Allegheny’s faculty and staff, so as to sustain the outstanding teaching and learning community we enjoy,” said Mullen during his address to the faculty.

Mullen also acknowledged that some faculty may be worried.

“I am particularly sensitive to our tenure track faculty and the understandable anxiety that they have felt about the future,” Mullen said.

Two of the budget decisions which have garnered substantial attention from students are proposals to charge those who take an overload of credits and charging a summer housing fee.

“Some possible revenue budget levers being considered are: implementing a course overload fee, increasing retention in freshman class by 1%, implementing a summer housing fee, and other revenue enhancements,” the minutes from the Nov. 9, 2016, FFC meeting read.

In the FFC meeting of Nov. 9, 2016, there was discussion about the proposed fee.

“FFC discussed the pros and cons of each of the levers on the institution as a whole and the climate of the college. What impact would a course overload fee have on prospective student?” the minutes read.

McBride said there are not many possible budget levers that directly affect students available, aside from the proposed overload fee and summer housing fee.

“There is not much, and a lot of that stuff gets shot down pretty quickly,” McBride said.

As of now, Petula said the proposed overload fee “was recommended not to move forward.”

“That was a lever we talked about, but it’s not one we are going to pull this year; it needs further vetting,” Wetsell said.

There have been adjustments made to the summer housing fee, however.

“Typically, free housing has been provided for approximately 200 students. One hundred of those students participate in faculty research efforts for approximately 10 weeks during the summer,” read the FFC minutes from Feb. 8, 2017.

Summer undergraduate research programs have been a feature of Allegheny for many years. In his address, Mullen said summer research opportunities are an important part of Allegheny’s reputation.    

“Our success in advancing our reputation is evident in recognitions such as that we received last year from Council of Undergraduate Research as the nation’s premier undergraduate research program,” Mullen said.

In light of that, there was substantial discussion on how charging a fee for summer housing could potentially alter that reputation and perhaps even dissuade prospective students.

At the Nov. 30, 2016, FFC meeting, peer research was presented that compared the college’s summer housing policy with other institutions.

“Peer research has shown that many campuses either do not provide summer housing to students or that students pay for summer housing. The typical fees for student summer housing range from $100-$150 per week,” the minutes say.

In the past, Allegheny offered free housing to students staying on campus over the summer. Students simply had to pay the taxes on the living space, which amounted to approximately $13 a week, according to a memo provided by Petula.

This was done because of an IRS regulation, according to Petula.

“If you don’t charge for housing, you have to tax the market value of it,” Petula said.

At the Feb. 8, 2017, FFC meeting, a vote was taken on whether or not to begin charging $75 a week as a summer room fee.

“With the exception of one voting member voting ‘no’, the recommendation passed,” the minutes read.

But the change in room fee was accompanied by other changes to the summer research program as well. Students were previously awarded a $3,000 dollar stipend for the 10 week summer program, according to Petula. This meant that each week they were given $300, but then had the tax withheld, meaning they earned approximately $287 per week.

For the upcoming summer, students are now going to be earning an hourly wage of $10 with a maximum of 35 hours a week, for 10 weeks. This means students will now be earning a maximum of $350 dollars a week, which, after the summer housing fee, would amount to $275 per week.

The net difference for the students will be a reduction of approximately $12 dollars per week.

In response to the decreased pay of students, other steps are being taken to relieve the cost of living on campus during the summer. For example, according to Petula, seven kitchens will be renovated over the next two summers in the dorms which usually house summer researchers.

“We are investing in the living spaces so that students on campus in the summer will have access to functional kitchens,” Petula said.

Additionally, some summer positions for students that are grant-funded will be under threat once that funding runs out, but there are efforts being made to continue their existence.

“One of the initiatives we are working on right now is supporting all the summer employment jobs when the grant money goes away,” Petula said.

In addition to only looking at closing the budget gap for this year, these steps are a part of a larger effort to be more efficient, according to Petula.

“In the long term, we have to look at what is sustainable,” Petula said.

Moving forward, Petula said that assessing class size is imperative. Accordingly, the assumption moving forward is 550 incoming freshmen along with 20 transfer students per year in the future.

“In our multiple-year plan, we look to target class sizes and find accompanying budgets,” Wetsell said.

Admissions are not only a financial concern, but interdepartmental.

“Each group has a different focus,” Wetsell said.

Among these focuses are diversity initiatives, residential requirements, retention rates and typical trends in applications.

“Our goal is to have those [small] classes graduate and have strong classes behind them,” Petula said.

In his faculty address in September, Mullen also spoke about future classes.

“The size of our future classes is another key strategic issue for us to address. The goals in doing so are clear — to maximize net tuition revenue per student, to control and eventually lower discount rate, to maintain a class profile that is both strong academically and diverse in its composition, to enroll students who will retain at the college,” Mullen said.

One of Petula’s main goals for the future is to improve the public’s understanding of budgetary issues. She has proposed creating a budget class for community members, during which they can have an interactive education about the funding and budgets of the college.

“I think it would be really exciting. I’ve had the opportunity to do this at an institution where I previously worked, and it was very popular,” Petula said.

FFC is still working to close the budget gap and has several options to do so. It is not yet balanced, but it is close, according to Wetsell.

Petula will present a tentative balanced budget, on April 6, 2017, in a closed meeting.

“If all the assumptions hold true, this May we may have a proposal for a balanced budget for the next two years,” Petula said.

There are also tentative plans to present the proposed balanced budget to the wider college community on the following day, April 7.