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Update: ETSU to continue growth despite $3.7 million budget shortfall

Kayla Carter • Jul 24, 2013 at 7:39 AM

East Tennessee State University President Dr. Brian Noland announced Monday how the university plans to continue growth despite a $3.7 million budgetary shortfall expected in the fall, which is the result of a 3 percent decline in enrollment.

Noland described the actions the university plans to take as “short-term” initiatives that will help in the long term.

“It is not an effort under way that is a series of cuts,” Noland said. “It is not an effort that’s under way that’s a point of panic. It’s an effort under way by an institution to strategically align its resources and its expenditures.”

All major departments and academic units have been asked to reduce their budgets by 1.5 percent, which equals a $1.9 million savings.

A hiring freeze is expected to save $750,000 initially and $1.5 million for the year.

“No one’s losing their job,” Noland said. “There are no reductions in staff.”

A mandatory computer replacement policy has been extended from four to five years and the replacement of motor pool vehicles has been delayed, which creates a combined savings of $410,000.

Cell phone allowances for all employees with salaries that exceed $50,000 will be eliminated, which is expected to save $80,000.

“The university will not authorize expenditures for new cell phones, and iPads will not be purchased for individuals by state or foundation funds,” according to Noland’s budget announcement letter. “This action means that we are suspending reimbursement of employees for personal purchase of those devices — though we will, of course, continue to purchase university-owned devices.”

Depending on enrollment, a freeze will be implemented on the current model for entrepreneurial revenue distribution, which Noland explained is an incentive for academic initiatives not located on the main campus. An example is a class taught in Kingsport or other cities in the region where a faculty member is reimbursed at a higher rate than if that class took place on the main campus, Noland said.

“We’ve grown exponentially in the entrepreneurial areas,” Noland said. “So, the change that’s here just simply says the revenue differential between the fee level that was charged last year and the fee level that was charged this year comes back to the main campus to help address the budget situation that we find. But, it was an incentive plan that was put in place to help grow and diversify enrollment across the region and online.”

Higher education budgets today are less dependent on state funding and more dependent on revenues like tuition and fees, which are the primary means of revenue for ETSU, Noland said. Thus a reduction in enrollment creates less revenue for the university.

“Over the past three years, we have not met our enrollment targets,” Noland said.

Decreases in enrollment are a result of fewer transfer students and first-time freshman. Students not completing their degrees is also factored into the equation.

“This is the second year in a row in which the number of first-time freshman has declined,” Noland said. “We have to do more to focus our efforts on ensuring that students that begin their college experience at ETSU have a successful experience and walk across the stage and receive a degree.”

Noland explained that money already acquired, set aside and designated for initiatives like the parking garage and football program are not included in the unrestricted revenue lost from enrollment.

“There are restricted and unrestricted revenues,” Noland said. “The funds for the parking garage have been encumbered for a number of years.

“Funds for football come from dedicated student fees for athletics. So when the students took action on athletics, those fees are restricted for those purposes. We cannot by Board of Regents policy pick those fee revenues up from a restricted category and move them to an unrestricted category.”

The football program is projected to boost enrollment, which could ease future budgetary shortfalls, Noland said.

“The enrollment declines that we have experienced have been historic,” Noland said. “The enrollment decline that we are expecting this fall is totally unrelated to football. If we did not have a football program, I would still be standing here today making this decision.”

“I anticipate that not only with football, with the fine and performing arts center, with new academic programs that are positioned within the 125 efforts ... we will move through this temporary position and position ourselves for growth not only next year but in years to come.”

Formed in 2012, the Committee for 125 works to develop plans and visions for the school through 2036, the year ETSU turns 125.

Noland said it’s not in the university’s best interest to cease investment growth, but the university instead should uphold its mission statement to serve the region and people at the university.

“What we are doing today is supporting that mission statement and putting our resources around our faculty and around our staff,” Noland said. “The short-term actions that we have taken today allow us to make another round of investments in equity funding and another round of investments in base support for our faculty.”

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