Earlier this week, Liam Knox’s Inside Higher Ed article, Slimming Down to Stay Afloat, compared the decision by West Virginia University President E. Gordon Gee to pare down expenses to offset projected enrollment declines as either an act of surrender or a prudent choice.
President Gee revealed his decision to a group of faculty, administrators, and students at his semi-annual State of the University address in March. He began his speech by reminding the attendees that prior to the Covid-19 crisis, the university was facing “several difficulties.”
- A declining college-aged population
- A lower college-going rate
- Rising financial costs
- A national narrative that questioned the value of college, and
- Lean financial and personnel structures.
Emerging from Covid in 2022, the university faced new hurdles including the Great Dropout of students from 2019 to 2022, global inflation concerns, and the increase in personnel costs. He added that the university was facing a structural deficit of $35 million for fiscal year 2024. The coming demographic cliff could increase that deficit to $75 million based on enrollment and inflation projections. While the $35 million deficit only represented 3 percent of WVU’s revenues, it was important to share the reason for the deficit and actions to be taken in order to avoid it.
In his speech, President Gee stressed that if WVU is among the first of its peers to address the current landscape of higher education, that it will emerge stronger. Before making any proposed changes, he recommended that WVU consider its First Principles – put Students First, embrace its Land-Grant Mission and the people that it serves, and Differentiate itself by investing in the initiatives that uniquely serves their campus community and play to its strengths.
In an email about the announcement to Inside Higher Ed, President Gee said “moving forward, we are evaluating everything – from our operations to our academic programs to our services. We are repositioning ourselves today so that we can be a responsive, relevant university system of the future.”
Mr. Knox interviewed Tom Harnisch of the State Higher Education Executive Officers (SHEEO) association who said that he expected more flagships to follow in WVU’s footsteps. “Even the big institutions are going to have to get smaller. It’s just a reflection of a new reality,” Harnisch said.
Mr. Knox wrote that Rutgers University announced a $125 million deficit and its president has called for “multi-year solutions and structural reforms.” Similarly, Penn State University faces significant budget cuts and layoffs to make up for a projected $150 million deficit. Both of these institutions are the flagship universities of their states as is WVU.
Rick Staisloff, founder of consulting firm rpkGroup provided added commentary. Mr. Staisloff noted that public institutions are facing a crossroads, and most have taken one of three approaches – “denying the necessity of serious cuts, attempting to put off the issue by temporarily filling budget holes left by dried-up federal aid, or reworking their long-term plans and sloughing off nonessential expenditures.” He added that he thinks it’s long past overdue for institutions to take the more strategic view.
Mr. Staisloff stated that making institutions lean will make them stronger going forward. The less bloated a university is, the more it can afford to invest in programs with a demonstrably positive impact on students’ employability and social mobility. He cited a recently completed University of Kansas (KU – and another flagship state university) project that eliminated 42 low-enrollment academic programs to assist in making up for a projected $75 million budget shortfall.
Kelly Allen, the executive director of the nonprofit West Virginia Center on Budget and Policy, said that she fears the proactive actions of WVU to pare down expenses will embolden state legislators to withhold future funding. She also worries that shrinking the university will hamper recruiting efforts rather than improve them. Ms. Allen may have a point in that the West Virginia legislature and its governors have slashed higher education funding by $156 million over the past decade causing tuition to rise 58 percent.
President Gee may be prescient or he evaluated and compared the current situation to other situations he has experienced during his 40 plus years as a university president. Regardless, there appears to be consensus from many fronts that his proactive initiatives to pare down expenses is aligned with what many other states will be required to do over the next decade.
Perhaps the larger implication from Mr. Knox’s article is what is not said. If state flagships are planning for projected budget deficits due to enrollment declines, what are the non-flagship institutions doing? In many states, legislators favor budget allocations directed to the flagship universities. Smaller public institutions often scramble for additional funding.
It’s possible that we will see more initiatives like the Pennsylvania State System of Higher Education consolidation of six public institutions into two announced in 2021. It’s always worth remembering that states have statutory balanced budget requirements. When economic times are tough, states prioritize funding K-12 education, Medicaid programs, and state employee pension plans. Higher education is not an entity whose funding is mandated by state law. Assuming public college enrollments decline as projected, state funding to its public colleges and universities will decline as well.