We have had a very successful start to the academic year. From the opening of the eSports facility in the Student Center to Watermelon Fest to the first week of classes, the campus has been busy and productive. We continue to work collaboratively on academic reorganization, and we have held several successful off-campus events engaging alumni and friends in the celebration of our 150th anniversary. I’m grateful to all of our faculty and staff for ensuring a smooth start.
Even as we move forward, we must be mindful of our resources. Our goal is always to balance our expenses with our revenue to live within our means. We have successfully operated with a balanced budget every year with the exception of fiscal year 2016, when the state did not provide a full appropriation.
A look at revenue sources
Each year, in order to balance our operating budget, we must take into account our two primary sources of revenue: state appropriations and tuition.
Let’s start with state appropriations, which is the good news. As you know, the state increased the appropriation for higher education by 5 percent. (This does not include additional funding for capital projects, including facility renovations and deferred maintenance projects.) Even with the increase, our fiscal year 2020 appropriation is still 5 percent below what SIU received just five years ago, but it is a good start as our legislators work to reinvest in its colleges and universities.
However, state appropriations are just part of the story. The rest of our operating budget is driven by tuition revenue, which is in turn driven by enrollment. We have been up front that we anticipate a decline in enrollment once again this year, due in part to a large graduating class and in part to decline in some groups of students – a decline that will be significantly reduced when compared to recent years.
While there will be some good news to be found in our enrollment figures when we release official totals next Wednesday, the reality is that any decline due to any cause means less tuition revenue. This year, the decrease totals more than $10 million based on our tuition projections for both fall and spring semesters.
Doing the math
Our increased state appropriation totals $96.9 million. Our tuition revenue is projected to total $76.5 million, a decrease over last year. Added together, you will see that our operating budget for this year is $173.4 million. This represents a decrease of $6.9 million over last year, reflecting $3.7 million more in appropriations offset by $10.6 million less in tuition revenue.
Unfortunately, this means that we must reduce our expenses by 3 percent in order to balance our budget. I have asked the vice chancellors to develop plans for reducing budgets while doing everything possible to minimize the impact on staff.
I realize that this is painful news given the $31 million we have already cut from our budget since 2015. We have made a lot of sacrifices and difficult choices, but we have successfully preserved our commitment to our mission.
We can also take heart that in spite of this challenge, we are able to waive more than $40 million in tuition in the form of scholarships and financial aid each year. We continue to put students first.
Beyond the balanced budget
I said earlier that we have maintained a balanced budget every year with the exception of fiscal year 2016, when we did not receive $73.4 million in anticipated state appropriations. That year, to maintain operations, we used funds from multiple internal, unrestricted sources that we are repaying over time. We are in the third year of a seven-year repayment plan.
While this puts additional stress on our budget and bottom line, it does not affect our commitment to balancing our budget this year. It also does not affect our ability to deliver on the educational promises we have made to our students. We will continue to move forward.
As we continue to proactively address our enrollment and related budget challenges, we are also taking steps that will position the university for the future. In fact, many people on campus and in the community tell me that they can feel our momentum.
Among the signals are new programs, including nursing, occupational therapy, physical therapy, business analytics and others that will attract students and benefit the region. Nursing alone will attract about 300 students per year when fully implemented.
Other signs are the active reinvigoration of our academic structure to create more collaboration that will benefit teaching and research in addition to reducing costs; our commitment to the continued hiring of faculty – 23 this year and 35 planned for next year; and the confidence of our alumni and donors as evidenced by their on-going generous support.
We are not stopping or changing course. While it will take time, we are taking the right steps to position ourselves for our next 150 years. I am especially encouraged by the continuing dedication of our faculty and staff in enhancing our students’ success as well as our recruitment and retention efforts. I look forward to extending the positive energy surrounding the opening of the fall semester throughout the year and beyond.