HIGHLAND HEIGHTS, Ky. – Northern Kentucky University President Geoffrey Mearns could have asked his board of regents to blunt the effects of a $9 million budget hole by drawing on long-term reserves.
But he likened that strategy to a person whose salary was cut drawing on his retirement savings to maintain his spending.
Instead, Mearns decided it was time for NKU to face the financial crunch head-on with a combination of tuition hikes, job cuts and a 5 percent cut to nearly every division within the university.
Without dissent, the board of regents approved the package Wednesday, including:
- A 4.75 percent tuition hike for resident, undergraduate students and comparable increases for most graduate programs, an estimated $3.35 million increase in revenue.
- A 5 percent cut in the budgets of every division except those of legal affairs (a 1.5 percent cut) and government and communications relations (a 0.6 percent cut), a $7.4 million cost reduction. That will include the elimination of about 50 jobs, some by attrition, some by layoffs.
The painful medicine gives the university a structurally balanced budget – in fact, a projected $1.6 million annual surplus – at a time when enrollment is flat, pension costs are rising and the state continues cutting funding.
Despite a record number of freshmen, total enrollment last fall was down 400 students compared to fall 2012, resulting in $2.2 million less revenue than budgeted. Undergraduate enrollment was down 1.7 percent and graduate enrollment dived 6 percent.
The numbers were a little worse in spring, with enrollment down 1.9 percent.
"We are not yet performing at the level we need to at retention," Mearns said in an interview with WCPO. Over the last decade, retention has fluctuated between 66-68 percent, which is 3-5 percent lower than universities NKU competes against.
Mearns is in the process of assembling a new leadership team, including three new deans among six dean positions. Led by Sue Ott Rowlands, provost and vice present for Academic Affairs, the administrators will begin work on a comprehensive plan to boost enrollment and retainment across the colleges.
While some decline was deliberate – including admitting fewer students into the law school because of a glut of lawyers in the country – other colleges saw enrollment dip despite efforts to grow, Mearns said.
"We have to take a differentiated approach for each program and evaluate the causes and develop solutions for each program," he said.
A dip in the college-age population in the region and nationally will complicate the problem, though Mearns found silver linings within that census material, pointing out that a rise in student achievement within Kentucky will mean about the same number of high school graduates will be considered college ready as there were in recent years despite a dip in total high school graduates.
And the dip is a relatively short one. The high school class of 2020 is expected to be the largest ever for the United States, he said.
With Baby Boomers beginning to retire in larger and larger numbers, state pension costs are soaring, and NKU's is no exception. Retirement payouts will soar by $4.8 million, and the state is only covering half that cost, saddling NKU with the burden of finding $2.4 million within its budget to make up the difference.
Kentucky's contribution to NKU's general fund is expected to dip another $739,000.
Mearns and other NKU leaders have been shouting from every available rooftop about the disparity in funding among the state's universities and how NKU receives far less money per student than others. Kentucky State, for example, receives nearly triple the funding -- $11,579 for each full-time student – while the second lowest funded is Western Kentucky, with $4,526 received per student compared to NKU's $3,860.
The university has been fighting for a more equitable system that links funding to outcomes – graduation and other measures of success.
Joe Wind, vice president for government and community relations, said Wednesday that major progress has been made with the formation of a steering committee comprising university presidents and Kentucky Council of Post-Secondary Education staff members researching a funding formula that rewards institutions with the best outcomes.
Still, a recommendation to change funding will have to clear the general assembly and governor, who are likely to be inundated with lobbyists looking to prevent any funding reductions among the better compensated universities.
Mearns said Kentucky can look to Mississippi and other states that recently changed to outcome-based funding strategies.
"I remain hopeful in advance of the new (two-year state budget) that we can
get a model in place," he said.