POSTED BY MARTIN KICH

In today’s Dayton Daily News, Max Filby’s article “Wright State Was Warned a Year Ago That More Cuts Were Needed” includes, as a sort of appendix, two timelines:

WSU Total Reserves

2012: $162 million

2013: $140 million

2014: $135 million

2015: $109 million

2016: $64 million

2017: $31 million*

*Projection from FY 2018 budget.

 

WSU Budget Crisis Timeline

July 2016: WSU withdraws from presidential debate, citing mounting costs.

October 2016: WSU eliminates 23 positions.

March 2017: WSU president resigns, citing budget concerns.

March 2017: Interim WSU president says programs and sports teams could be cut.

June 2017: WSU trustees approve $30.8 million in cuts, decides to keep swimming team for another year.

July: 2017: Cheryl Schrader takes over as president.

October 2017: WSU announces it will cut swimming and diving teams.

January 2018: WSU administrators say they may avoid state fiscal watch.

March 2018: WSU asks departments to slash remaining budgets by combined total of $10 million.

April 2018: WSU trustee says school is “on a trajectory” toward fiscal watch.

 

Anyone looking at just these two timelines should be able to grasp immediately that the evidence of what has been a largely self-created financial crisis has been obvious for years, as has the evidence of the lack of any real strategy to stem and then resolve that crisis.

Many of the same people who have “overseen” this largely self-created financial crisis now want to gut major elements of our contract as if our bargaining rights and our job security is keeping them from addressing the crisis effectively.

Max Filby reports that the administration and Board were warned a year ago that more cuts will be needed. Actually, in the two open letters sent to the administration and Board almost exactly two years ago, AAUP-WSU first warned them that action needed to be taken immediately and, shortly afterwards, actually highlighted very accurately where the over-spending was occurring. On each recommendation, however, we were very low in our estimates of how much money was actually being squandered.

 

First Letter:

To President David Hopkins and the Wright State University Board of Trustees:

In light of what has been happening at our University, the weekly e-mails we receive from President Hopkins paint a picture that bears little resemblance to reality. The former Provost has been on paid leave for nearly a year. Now we are told there is a major budget crisis. Yet, thus far and in typical fashion, the administration has directed the deans to plan for an 8% budget cut but otherwise has not shared any substantive information.

If the administration had bothered to share financial information in a meaningful way, perhaps the alleged crisis could have been averted. Instead, the administration spent years talking about budgetary transparency and MDA (and our magnificent salt barn!) All the while, apparently none of the extraordinarily well-paid administrators was minding the store and the Board was paying no attention. Year after year, now-departed Vice President Polatajko delivered a dog and pony show in his annual budgetary presentation to the Board, reported that we were spending money on new initiatives, and gave no hint that a budgetary storm was coming. What has been the return, monetary or otherwise, on our new initiatives? Apparently, not enough to offset the supposed financial crisis that has prompted the administration to ask the Deans to submit plans for 8% cuts in their colleges.

Several million dollars have been budgeted on a branding campaign. The administration disseminated a new logo, realized it looked like the logo for a local recycling company, and withdrew it. Of course, branding is supposed to be about more than just a logo. But have there been any tangible returns on our investment? We are confident that Wright State’s reputation is at a long-time low, branding campaign notwithstanding.

Millions have been spent on a consultant, and that in turn prompted the Ohio Speaker of the House — one of our alumni no less — to announce publicly that House members should use caution when dealing with Wright State. Clearly there were negative returns for that expenditure.

Millions are spent subsidizing intercollegiate athletics, when there is no evidence that students come to Wright State for athletics. In fact, in a recent survey, playing sports was the least significant reported factor in recruitment of students. Of course, the real test would be to ask our students whether they would rather have their tuition decreased by $500 a year or keep intercollegiate athletics. Meanwhile, the administration routinely allows intercollegiate athletics to overrun its already swollen budget. If that is not bad enough, a million dollars was spent building a football field so that a few male students would have a fancy venue for their games when 58% of our students are female. To top it off, the Athletic Director was allowed to fire the men’s basketball coach, who had two years left on his contract. So now we will be paying someone else for two years for doing absolutely nothing!

Millions have been spent on stipends, which is not surprising since WSU has over thirty individuals whose title includes president or provost (e.g., vice president, associate provost) and over forty whose title includes dean, many receiving stipends in addition to their base salaries. Why do we need so many administrators, and why do many of these individuals receive stipends when they are already among the highest paid employees at the University?

The administration and the Board have taken on a multi-million dollar liability to hold a Presidential debate at Wright State. If the massive funding needed does not materialize, how many employees will have to be furloughed? How many students won’t be able to take the classes they need to graduate?

Meanwhile, faculty and students — the heart of the University — suffer the consequences for these gross failures of leadership. Even more troubling than the firing of the basketball coach, the former Provost sits at home collecting a very substantial salary, and we still don’t know whether the reasons for his suspension are only apparent misdeeds, or will actually be subject to prosecution as federal felonies, or something in between. All the while we raise tuition, and our students go deeper and deeper into debt. We admit students who we know have virtually no chance of academic success but take their money anyway, while offering almost no need-based scholarships. Our most distinguished faculty are awarded modest raises and ordered to stop printing handouts that might help those students.

It is time to come clean with the University community before we are forced to redesign our logo again to show the Wright Flyer crashing into the ground. Very soon, you will receive recommendations from us regarding cuts in expenditures that can be made without imperiling the academic core of the University.

But in the meantime, we have questions.

Who is responsible for the alleged financial crisis, and will anyone be held accountable? What is its real magnitude? What are its causes? Is the alleged shortfall due to overly optimistic estimates of revenue, or is it simply the result of out of control expenses?

Specifically:

Even if the reported financial problems are due in part to continuing reductions in state support, why have the problems been allowed to accumulate to the point where planning for an 8% reduction in the college budgets is suddenly necessary?

How much has Wright State spent investigating the H-1B visa scandal? The investigation by the administration has dragged on for more than a year while the University’s reputation has been dragged through the mud.

Why is Wright State one of only two state universities whose audits for 2015 have yet to be posted on the Ohio Auditor’s website?

Where are the Trustees? Has the Board exercised its fiduciary responsibility at all?

How many Board members have benefited from the issuance of H1-B visas or nepotism?

What is going on at WSRI {Wright State Research Institute]? We keep seeing statements about the millions in research dollars that WSRI and our consultants are bringing into the University, and yet our Carnegie ranking has dropped and each year the University continues to provide millions of dollars to subsidize WSRI.

And to repeat questions we raised above: What returns have we realized from our new initiatives? From the branding campaign? From our expenditures on consultants? From millions poured into intercollegiate athletics? And why does WSU have so many administrators, and of them why do so many receive stipends in addition to their salaries?

The faculty demand transparency and accountability, now.

Marty Kich

President

AAUP-WSU

On Behalf of the Executive Committee

 

Second Letter: Recommendations

To the Wright State University Board of Trustees:

Although the president and provost made the case that a budget deficit needs to be addressed, they have not been very clear on the size of the deficit nor have they acknowledged any internal causes of the deficit. Instead, they have simply pointed to the reductions in state support and the constraints on adding revenue through tuition increases that have occurred under the Kasich administration.

We believe that that Wright State is indeed in the midst of a financial crisis, because we know that for the first time since the University was required to produce cash flow statements starting in 2002, it has experienced negative operating cash flows for the past three years. This means that more cash has been flowing out of the University than has been flowing into the University from the University’s operations. One year of negative operating cash flows should have set off alarms. Three consecutive years of negative operating cash flows is prima facie evidence that the administration is incompetent and that the Board of Trustees has abdicated its fiduciary responsibility.

The explanation of reductions in state support and constraints on adding tuition revenue as proximate causes of the crisis do not ring true. All of the other state universities are facing the same constraints, and yet not even Central State and the University of Akron, the only other schools in the state with SB-6 scores lower than 3.0, have had three consecutive years of negative operating cash flows. The University of Akron, which has experienced a substantial decline in enrollment, has still maintained positive operating cash flows every year. Central State had two consecutive years of negative operating cash flows in 2013 and 2014, but managed to have positive operating cash flows in 2015. It’s time for the administration and the Board to stop making excuses and come clean with the faculty, staff, students and community.

The administration speaks about a budget deficit. We know that budgets are just plans. Every year when the University presents its budget it always presents a balanced budget, despite the fact that historically the University’s revenues have exceeded its expenses. It should be obvious to everyone now that plans, especially at WSU, are probably not worth the paper they are written on. What we need is data on actual revenues and expenses, actual cash flows to date, and projections going forward. Assuming that there is deficit that needs to be addressed and that it is in the $10 to $30 million range, we believe that its impact on the college budgets must be minimized because instruction and research sustain the core mission of the university and are the primary source of its operating revenue.

We believe that the administration should commit itself to finding savings of $25 million in the following areas:

1. The reduction, rather than the continuing multiplication, of administrative positions on all levels: A reduction in the number of associate and assistant vice presidents and provosts, associate and assistant deans, and associate and assistant chairs.

2. The reduction in the number of administrative “silos”: Administrative units with complementary functions should be consolidated if not eliminated (e.g., one recurring suggestion has been that the graduate programs can be administered by the colleges in which they are offered).

3. The elimination of stipends to administrators (other than for department chairs) who are already among the most highly paid employees of the university: Even a glance at the list of those receiving stipends reveals that there is a dramatic disparity between the stipends being paid to faculty and those being paid to administrators for additional service.

4. The reduction in the duplication of service units: Such services as marketing, recruitment, retention, advising, student support, and technical support now exist at the university level, at the college level, and increasingly at the departmental level. Worse, these service areas seem to account for many of the major expenditures on outside consultants. This duplication seems largely the result of the multiple efforts to develop a workable RCM/MDA budgeting model. To be very clear, we are not suggesting that staff should be furloughed, but we are suggesting that further duplication should be immediately halted and that the support units should be gradually and thoughtfully realigned to operate without the organizational redundancies — and, moreover, that developing the expertise that we already have in house will be much more cost-effective and advantageous to the university than hiring further consultants. (Any effort to address administrative bloat should, in our view, absolutely not start with the furloughing of support staff. But if we are going to use attrition to reduce personnel costs, then some concurrent restructuring of how support services are delivered seems very important.)

5. A moratorium on the hiring of outside consultants, search firms, and other comparable external contractors: Last year, we spent almost twice as much on just two consultants as we spent on all consultants in 2011, and the spending on consultants in 2011 represented a historic high to that point.

6. The moth-balling of some if not most of the 19 semi-autonomous entities: Any of these entities that require university subsidies to operate–that are not producing a net profit for the university–are luxuries that we apparently cannot afford. Worse, they clearly involve significant public-relations and financial liabilities. Moreover, “moth-balling” these units should not involve absorbing salaried positions directly into the university budget.

7. Greater control of the costs associated with recruiting international students: Some of these recruitment efforts have been very successful, but others have not. Given that these efforts necessarily involve great expense, stricter protocols should be put into place to insure that the results more consistently warrant the expense.

8. The reduction of the cost of intercollegiate athletics: In 2002 the budgeted subsidy for intercollegiate athletics was $4.5 million per year. It has now grown to $8.3 million per year. In addition, there are many years in which intercollegiate athletics has overrun its budgeted subsidy. For example, in 2015, expenses exceeded revenues by almost $1 million even after the $8.3 million subsidy. The University should eliminate the $8.3 million a year subsidy for intercollegiate athletics over a period of 5 years. We can no longer afford to take money from academic programs or to continue raising tuition and fees on students to support intercollegiate athletics. However, the University should honor scholarship commitments to the athletes it has recruited so that they can finish their degrees.

9. Elimination of the deficit at the Nutter Center and the Student Union: The deficit at the Nutter Center has grown from $0.5 million in 2002 to $1.4 million. The deficit at the Student Union has grown from $1.4 million in 2002 and is now $3.3 million. The University needs to develop and implement a plan to eliminate these deficits over a three-year period.

Finally, we request that the administration and Board begin acting in a transparent manner.

Specifically, we want:

1. Clear accounting of the direct and indirect costs of the ongoing federal and state investigations: Since these issues do not involve instruction, these costs should not be covered with any reductions to any instructional budgets.

2. Clarity regarding the liabilities that we are assuming in hosting the presidential debate: If the promised outside contributions do not materialize, we should have a very clear idea of where the revenue to cover any shortfalls will be found, and they should not be from the academic programs.

3. Clarity regarding the liabilities that we have assumed with the real-estate purchased through Double Bowler: Although the creation of this entity has undoubtedly expedited the university’s acquisition of properties, it has also eliminated much of the institutional oversight that would otherwise have been given to such purchases. Since our track record with these semi-autonomous entities is dubious at best, it seems prudent to ask for some clarity of what liabilities the university may ultimately be responsible for.

4. A full and open discussion with real data before the university considers “monetizing” of university assets: The effort to plug short-term budget shortfalls should not be to the longer-term disadvantage of the institution. If the firms to which we can potentially outsource housing and parking services can make money managing those services, while paying both us and their investors, surely we can make money managing them directly.

Lastly, there should be a commitment to resolving the budget issues without making things worse for those whom we, arguably, already exploit: At the budget-remediation meeting, just about the only specific budget numbers that were shared involved overruns in the amounts budgeted university-wide for student workers, graduate-tuition remission (presumably for graduate assistants), adjunct faculty, and faculty overloads.

We are submitting open-records requests to gather supporting data, as well as gathering available data from other sources. Over the next several months, we will regularly share that data.

Marty Kich

President

AAUP-WSU

On Behalf of the Executive Committee