Dear Colleagues,
As the 2022-2023 academic year comes to a close and we complete plans for next year, many of you have shared with me that you have questions relating to the impact that our overall budget planning is having on your own and your unit’s planning for next year. I write today to try and answer some of those questions and share how Academic Affairs made decisions relating to next year’s budget.
As you know, PSU and Academic Affairs have been experiencing budget decreases for a number of years now, reflecting continued declining enrollments and increasing expenses. As a result, the budget allocation process in recent years has been a challenging one for all of us. This year was no different, as we faced another institution-wide reduction in allocations and increased expenses due largely to inflation and compensation increases. Allocations this year were made particularly challenging by Board guidance to limit spending from reserves so as to sustain the institution’s overall financial health.
I appreciate the constructive collaboration across all Academic Affairs units and the Faculty Senate Budget Committee (FSBC) as we made difficult decisions about the FY24 allocation. As I outline below, those allocations were made with intentionality, following stated criteria that have informed Academic Affairs budget decisions throughout the past years.
Background
The university’s preliminary operating budget for FY2023-24 is a 1.3% reduction from the previous year. Academic Affairs received a preliminary general fund budget of $206,834,662. This total is a combination of a general fund (GF) recurring allocation of $192,534,662 and a utilization of bridge funds that is capped at $14,300,000. Academic Affairs was required to realize the overall 1.3% reduction and incorporate all compensation and inflation increases into that total allocation.
To make allocation decisions within Academic Affairs, we utilized the annual Integrated Planning of Enrollment and Budget (IPEB) process as a framework for discussing enrollment, strategies to support retention and recruitment, and budget situations for each unit. At the start of the IPEB process, I affirmed priorities that I have used and communicated consistently across Academic Affairs in decision-making relating to budget actions, including the Hiring Pause, the Strategic Investment Fund, and IPEB. Those priorities are:
Sustaining or enhancing student persistence, retention, and graduation
Sustaining or enhancing SCH/revenue production
Sustaining or enhancing Academic Affairs’ ability to develop a financially sustainable future
Sustaining administrative/operational competency
Sustaining or enhancing the equity and racial justice goals of the university
Leveraging opportunities for external partnerships or investments
Due to the need to make an overall reduction in Academic Affairs expenditures, there was no path to cover all the cost escalations for any unit or to respond positively to the many constructive requests put forward.
Final allocations were determined based on the materials provided by units as well as feedback from the FSBC and IPEB meetings. I appreciate the detailed work that went into the development of the IPEB reports as well as the thoughtful feedback from the FSBC. All of this information and discussion informed final decisions. Allocations across colleges/schools were differentiated based on the above criteria, including updating enrollment information from FY23. Final base budget allocations across schools/colleges ranged from 0% to -5%.
Moving Forward
Many of you have expressed frustrations relating to the limitations that these budget decisions are having on unit operations. I understand that frustration. After continued years of enrollment and budget reductions, decisions about reducing expenses are impacting activities that have long been valued components of curricula and programs.
As you confer within your units and schools/colleges, I ask that you make decisions following the priorities that have been utilized across Academic Affairs in decision-making, emphasizing actions that support student success, maximize overall enrollments, improve operational effectiveness, further our racial equity and justice commitments, and position PSU to respond to external funding opportunities that align with our goals and values.
I realize that moving forward with these discussions will require faculty dialogue and planning. To support units in having necessary discussions, I will be gathering department chairs and academic deans across the institution to discuss our budget challenges and make available tools to support decision-making.
The Faculty Senate Educational Policy Committee (EPC) shared concerns that the inadvertent impact of some of the decided reductions may impact degree programs. The EPC highlighted the importance of the moratorium process as one mechanism for units to address these impacts. I look forward to working with the EPC to support units in undertaking these important conversations.
I appreciate those of you who have communicated your frustrations and concerns with me. I am sure that you represent the voices of many of your colleagues. I commit to engaging in an ongoing partnership with the Faculty Senate, particularly the Faculty Senate Budget Committee, as we work together to address these financial challenges. I will continue to work with all Academic Affairs units and the Faculty Senate Budget Committee as further information becomes available.
Best,
Susan Jeffords
Provost and Vice President for Academic Affairs
