Humboldt State University

September 28, 2016

Strategic Priorities and HSU’s Budget

Dear University community:

The Humboldt State University community has a long history of collaborative problem solving. One of our current challenges is how to manage our institutional budget as we move ahead with our work on student-centered strategic initiatives, the reaffirmation of our WASC accreditation, and reimagining the first-year experience for students. I am confident that, working together, we can do this.

Multiple words could describe our current need for “belt-tightening,” the reasons for which are described below. “Austerity,” “right-sizing,” “retooling,” and “recalibrating” are other terms that come to mind. I think “austerity” is an apt description, with the connotations of simplicity, restraint, self-discipline, frugality, and deficit reduction.

We must engage in this effort together, as we direct – and redirect – our resources toward our strategic goals. Everyone is part of this process. The University Resources Planning Committee (URPC) will continue to provide policy-related thinking about how to change the University and to ensure collaboration so that Humboldt State regains its financial strength and remains a vital provider of educational opportunities for our students and the communities we serve.

This message is designed to convey the seriousness of our current budget situation and to provide additional context for my request that the URPC oversee the development of budget scenarios that reflect a 5% decrease in divisional budgets – and a 5% increase. The creation of these scenarios will be coordinated by the divisional vice presidents. At one level, asking for proposed increases and decreases may seem like a mixed message, so I want to explain the background for this strategy.

Here are six facts about our University budget:

  1. About 40% of our revenues are derived from tuition that is paid by students and about 60% from allocations from the state (via the CSU Chancellor’s Office).
  2. HSU’s student enrollment has decreased. As a result, this year’s tuition revenue is expected to be at least $1 million lower than it was in 2015-16.
  3. HSU’s annual expenditures have exceeded the University’s revenues for more than six years, and multi-year projections indicate that we will not be able to grow our way out of the deficit without changing current spending levels.
  4. This multi-year on-going budget deficit has been covered from University reserves in amounts that have ranged from $3.1 million in 2011-12 to $500,000 in 2016-17 (projected). Even though the current-year deficit is expected to be the lowest in recent years, the deficit is projected to increase again in 2017-18. (See graph of HSU Base Budget Deficit History.)
  5. HSU has one of the highest expenditure-per-Full Time Equivalent Student (FTES) in the CSU at $15,666/FTES. (The CSU average is $13,676/FTES, and the CSU campus with the lowest expenditure-per-FTES is $12,655/FTES.)
  6. HSU’s state allocation in 2016-17 assumes we have 300 to 350 more students than we actually expect to be enrolled this year.

I draw four conclusions from these facts:

  1. We must reduce our FTES cost structure to better position HSU for future success.
  2. We must move forward together with plans for financial austerity.
  3. We must balance fiscal responsibility with the need to leverage opportunity.
  4. Addressing the budget situation involves two major actions: increasing student enrollment (and therefore tuition revenue) and decreasing expenditures.

The current budget situation has developed over multiple years, and we will need multiple years to navigate the path forward. URPC has already begun the process of looking at approaches to multi-year budgeting. The multi-year deficit is not the result of a single department or division; overspending has occurred across campus (expenditures-per-FTES for the CSU campuses with enrollments between 6,000 and 10,000 students). The budget situation must be addressed through campus-wide solutions.

HSU’s 2016-17 budget is approximately 86% personnel (salaries and benefits, excluding financial aid), and this will make reducing our expenditures particularly challenging. All faculty and staff have a key role in supporting student success and retention, which are critical elements of meeting our enrollment goals.

The conclusions above lead to the request to prepare two budget scenarios. In light of the University’s strategic priorities, the minus-5% scenario will clarify activities and initiatives that are less central to the University’s strategic goals. The plus-5% scenario will highlight programs that could significantly enhance the achievement of our strategic goals. Although making these requests together may seem counter-intuitive, we cannot achieve our goals with across-the-board reductions. We might decide to reduce expenditures in one area while increasing allocations in another, consistent with our strategic plan.

Overall, we will need to work together as we address this situation. In addition to developing the plus-and-minus 5% scenarios for each division, specific next steps will include implementing some of the excellent ideas for cost savings submitted by members of the University community in 2015 and producing an enrollment management plan that is responsive to our current budget situation. Further information will be forthcoming soon.

I am grateful for the opportunity to work in a University community that includes so many creative, insightful, and caring people. Thank you for all the ways you help make this University strong.


Sincerely,

Lisa A. Rossbacher, Ph.D.
President

Graph of HSU Base Budget Deficit History
Graph of CSU Expenditures-Per-FTES

Humboldt State University