$11 Million in the Red

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Missouri Western has spent over $11 million more than it has brought in over the last five years, according to year-end university financial statements.

This is an average of $2.2 million per year. So, why has the university overspent so much throughout the last five years?  It’s been a combination of factors, including declining appropriations from the state, inflation and the need to give cost-of-living salary increases and an increase in the number of scholarship given.

In 2018, Missouri Western received $20,609,352 from the state. For comparison, in 2010 the university received 22,880,701. When factoring in inflation, that 2010 figure equates to 26,452,343. That means Missouri Western is receiving roughly six million less from the state than they were eight years ago, which is a much larger figure than the $2.2 million deficit they average over the last five years.

Approximately 30 years ago, the state appropriation was about 70 percent of Missouri Western’s budget. Today, that number has dipped to 37%, forcing increases in tuition, tighter budgets and, these past five years, deficit spending. President of Missouri Western Robert Vartabedian has been lobbying for more money from the state since he arrived on campus.

“I’ve been singing this song now, for 11 years but our appropriation has been over $20 million for quite a while,” Vartabedian said. “Two schools very similar to us have significantly larger appropriations. Northwest Missouri has about 10 million more than we do in their appropriation and Truman State has about 20 million more in appropriation.”

While, of course, the school would like more money from the state, it’s not always as simple as that. Interim Provost & Vice President for Academic Affair Douglas Davenport expresses his thoughts on the matter.

“We are hard pressed to essentially say we deserve more money, even though we would like to do that,” Davenport said. “What we would then be doing is putting every institution in the state in this position of competing against us for limited state resources. We’re trying to be more cooperative in our push for legislature to get all of us more money.”

As a result of that cooperation and other factors, state universities have generally received the same increase—or decrease—across the board. So, if the legislature votes for a 2% increase for higher education, all universities get that same increase. While the percent increase may be the same, for universities at the bottom like Missouri Western, the dollar difference continues to grow. For example, a 2% increase on Missouri Western’s $20 million budget is about $400,000. For a school that gets $30 million from the state, the increase is $600,000. Because that usually goes into the base, over time, and with an effect similar to compounding of interest, Missouri Western falls further and further behind.

Carey McMillian, associate vice president for financial planning and administration, stressed that although, Missouri Western receives less from the state than they would like, they try to remain as realistic as possible when planning a budget.

“We try to be very conservative when me [make the budget],” McMillian said. “It really doesn’t do anyone any good if you’re really optimistic and you can’t make (the budget). The state represents 37 percent of our current budget, so tuition and fees is the other largest percentage. So, we have to really look at that to see what our projected expenses will be.”

Although Missouri Western knows what to expect from the state year in and year out, their expenses have to go up due to a multitude of things, including taking care of the staff and making sure Missouri Western is an inviting place to come.

“Last year, [the state] held the line, so our state appropriation remained stable, but our costs went up,” Davenport said. “For instance, one reason our costs went up is because we gave a much needed cost of living adjustment to our employees. Comparing what our faculty makes to other institutions in the state, you see we aren’t as competitive as we would like to be. These costs of living adjustments are necessary just to keep us from getting further and further behind.”

Also, making a budget is difficult, and with the growth Missouri Western has experienced over the last two years, budgeting is even harder. McMillian expressed how the growth sometimes changes the expected expenses.

“Budgeting is not an exact science,” McMillian said. “What we do when we go through this process is, we look at the history, we look at projected enrollment. When we are looking at the projected enrollment at the end of February, first of March, that’s a lot different picture than what in ends up in July, August. What we do is we look at the credit hours we had last year and we look at approximately where we are at with credit hours this year and we put that into a spreadsheet and calculate how much it’s going to be at the current rate we have.”

Growth is always, always, good for a university, but it can make budgeting a little difficult at first. In Missouri Western’s case, scholarships have been a large part of their over expenses. In 2018, Missouri Western planned on giving out 8.1 million dollars out worth of scholarship money. It gave out 9.5 million. One reason for the large increase is the Griffon Rate. Missouri Western offers this scholarship that allows students from any state that touches Missouri to get in-state-tuition.

Missouri Western has also been getting applicants with higher high school GPAs and better ACT scores. This enhances the student body, but again requires Missouri Western to give out more scholarship money. While it might sting in the budget initially, gaining these types of students is what the university wants.

“A lot of the merit-based scholarships have really been increasing, which means we have a higher ACT scores,” McMillian said. “We are getting above the national average on the ACT scores, so the merit-based scholarships have been going up, which is good, but that’s less actual tuition fees we’re getting in. But, as we keep them year after year, the retention is really important and those need based scholarships, those are the students that stick around.”

So while Missouri Western has been losing money, there is reason for optimism. Enrolling smarter students and retaining them will help Missouri Western get back on track.

Missouri Western is not just going to sit around and wait for it to happen though. Action is being taken and Missouri Western hopes to turn around their budget deficits sooner rather than later. This may involve cuts and possible changes to tuition. While this is not ideal, sometimes decisions must be made in order to withstand the current struggles.

“We’ve been fighting for equity for a lot of years and we still fight that and we still try to get that additional equity,” McMillian said. “Anything we can do to be able to pursue that further is going to be a good thing. Also, we have a budget advisory council. That council is basically a committee that is going to be tasked with brainstorming to come up with different revenue generating ideas, cost cutting measures to try to meet the challenges that we have.”

Earlier this decade, through cuts and enrollment growth, Missouri Western was able to reverse budget deficits and have a cumulative budget surplus of $7.4 million in FY 2010, 2011 and 2012. The goal is to not only get in the black, but to hopefully build up the reserves that have been depleted during the recent downturn.