Thursday, September 12, 2013

College Accounting

The University of Memphis is looking to close a $20 million gap.

Posted By on Thu, Sep 12, 2013 at 4:00 AM

Every once in a while, the college football or basketball season and the 24/7 recruiting wars are rudely interrupted by a public service announcement from an appendage otherwise known as the university.

The University of Memphis has such an announcement, and it concerns a $20 million "gap" in its finances due mainly to declining enrollment and reduced state revenue.

"We don't have a deficit," said David Zettergren, vice president for business and finance. "We are not allowed to have a deficit. We had a balanced budget in the spring, and we will have a balanced budget in the fall."

click to enlarge Brad Martin
  • Brad Martin

He described the situation as a "gap" instead and said the university is doing several things to "shore it up" including restructuring workloads, voluntary buyouts, and "efficiencies" on the administrative side.

"We have done voluntary buyouts in the past, but we need to do more," he said.

University faculty and staff were made aware of "the gap" this summer. On Tuesday, an email from interim president Brad Martin went out.

"A reconfiguration is required to address the funding gap and meet community work force demands, while also ensuring that tuition remains as low as possible," it said. "Beginning immediately, all vacant positions (including faculty, staff, part-time instructors, and temporary appointments) will be subject to a strategic hiring review process. This review will evaluate whether to move forward with filling positions based on the implications for enrollment growth, productivity, and overall institutional efficiency."

The announcement comes in Martin's third month on the job and when the financial fortunes, if not the won-loss ratings of the football team, are on the rise. Despite losing 28-14 to Duke, the Tigers drew an announced crowd of more than 40,000 to Liberty Bowl Memorial Stadium in head coach Justin Fuente's second season opener. Fuente and basketball coach Josh Pastner are the university's highest-paid employees.

Academia, however, does not have the luxury of television money and boosters to pay for buyouts and more English professors. And, as the football program has shown, it is risky to raise prices for something people don't want at the old price. In June, the Tennessee Board of Regents raised 2013-2014 tuition and fees at the U of M to $8,666, highest among the six universities it governs, including Middle Tennessee State, Saturday's football opponent.

"Enrollment is down a bit, and that impacts our budget," Zettergren said. "It is a critical piece of the revenue stream."

Enrollment fell 2.7 percent last year, to 20,901. Zettergren did not have an exact number for this fall, but in a meeting last week with Mayor A C Wharton, President Martin said enrollment was lower than it was in 2009.

Student tuition and fees account for two-thirds of revenue and state appropriations for one-third, Zettergren said. A tuition increase is not seen as a good idea at a time when enrollment, especially among males, is declining. The university's focus is on retaining and graduating more students, which triggers more state funding that is now based on graduation rates and outcomes, just like public elementary and secondary education.

"As state money has decreased, we have had to increase tuition," he said. "We are in the middle of our peer group and feel like tuition is still a good deal. We really want to hold the line."

Martin's executive team, he said, does "not want to alarm people" but does want to communicate the seriousness of the situation to the broadest audience in a campus forum in October.

The University of Memphis is participating in "Graduate Memphis," a project started in 2012 by Leadership Memphis and the Memphis Talent Dividend to increase the number of adults with college degrees.

The thrust of the program so far has been on the benefits to individuals and the city. The new message, with some urgency, is on the benefits to the universities and our biggest one in particular.

Now back to our regular programming.

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