MSU has $1 Million Plus Left to Cut to Fill FY 2018 Gap

Apr 10, 2017

Missouri State University President Clif Smart says $1.24 million in cuts to academic departments remain to balance out next year’s budget. Scenarios on how to do that, including reducing enrollment incentives for online course instructors, were discussed Monday during a town-hall style forum that drew some 350 spectators.

MSU, like all state four-year public institutions, is working to reduce 8.9 percent of its FY 2018 budget as proposed by Missouri Gov. Eric Greitens due to a state revenue shortfall. At Missouri State the percentage equals $8.2 million, $7.48 million affecting Springfield and the remaining nearly $468,000 coming out of the West Plains campus’ budget.

On Monday, Smart told the crowd the university has so far determined how to cut all but 1.2 percent of what’s necessary, with the remaining belt-tightening up to the school’s eight colleges and academic units.

What’s Been Cut so Far

As signaled in February when the Board of Governors raised student tuition, Smart says the 2.1 percent hike for undergraduates, along with more than 4 percent jump for other students and bump in fees, is expected to increase revenue by $3.4 million.

“By doing this less than half of the [whole] cut is being replaced with tuition money. And I think that’s an appropriate formula and recognizes that affordability remains a critical issue for our students,” he said.

That tuition increase is reflective of what most other public colleges and universities are doing across the state, he said.

Some 350 people packed the Plaster Student Union Theatre for Monday's town hall.
Credit Ryan Welch / KSMU

Smart added that because of MSU’s enrollment growth in recent years, including a strong outlook for this fall, the school is in much better shape to address certain areas of its budget. It also helps soften the blow of an unbudgeted increase to the MOSERS pension fund.

Another $2.8 million is being slashed from non-academic and provost’s areas. That includes eliminating 20 open positions to the tune of $939,000, the largest expense in this area. Smaller costs savings range from travel reduction and not renewing billboard advertisements to eliminating the Jefferson City Internship Program and the Ozarks Celebration Festival.

The cuts do include layoffs. Smart says six staff on the Springfield campus have been let go, with another three on the West Plains campus. He did not say which departments those layoffs came from. In addition, five employees in the International Programs department have had their pay decreased. In all, the changes represent $685,000 in payroll expenses.

“75 percent is in people – in salaries and benefits – and so in any kind of significant cut we do people are going to be impacted, unfortunately.”

Smart added that there’s no plan to boost salaries or offer cost-of-living increases in next year’s budget, something it has done in each of the past four fiscal years.

What Remains to Cut

After non-academic and provost’s area cuts, 1.2 percent in cuts ($1.24 million) remain for MSU to fulfill the 8.9 percent gap it is facing next fiscal year.  

Each academic college has a budget committee, and each is working independently with their dean to reduce expenditures.

Victor Matthews, dean of the College of Humanities and Public Affairs, explained that a majority of his colleges budget is made up of salaries.
Credit Ryan Welch / KSMU

Through that process, one idea was presented Monday; reducing the $55 incentive per 3 credit hours for online course instructors. The practice has been in place for some 20 years. Since 2011, the number of courses delivered online has risen from about four to 16 percent. Today, the incentive program makes up more than $2.1 million in faculty payments plus fringe benefits.

“And so the question was would it make sense instead of reducing college budgets… could a part of that reduction be dealt with by reducing the incentive pay to online instructors who teach those courses,” said Smart.

One-third of Missouri State’s faculty teaches an online course, says Smart. He notes that the percentage of courses taught online is similar amongst both full-time and per-course instructors.

Attendees Monday were asked to vote on four options: Make no changes to the incentive pay and find expense reductions elsewhere; reduce the incentive pay to $40 per student; reduce it to $30, or none of the above. Options two and three would reduce incentive pay by $590,000 and $984,000, respectively, thus shortening the $1.24 million budget hole for academic departments.

The votes were used only to gather data for the budget committees and were non-binding.  Options two and three, reducing the incentive pay, were the top two vote-getters.

Some at Monday’s town hall questioned if the incentive reductions would be revenue neutral.

Smart acknowledged that if online course enrollment went down then the full savings from the incentive reduction might not be realized.

Attendees were asked to vote via their smartphone on 4 non-binding options for academic departments to cut expenses.
Credit Ryan Welch / KSMU

Some spectators suggested factoring in seniority when it came to holding steady or lowering online course incentive pay, while others asked about returning to that level after the budget rebounds.   

Other alternatives to reducing the remaining $1.24 million, Smart said, could be raising tuition in areas that are not capped statutorily. For example, in-state undergraduate tuition is capped, out-of-state tuition is not.

“There is still, we  think, pretty significant  room for growth in recruiting students from the surrounding states… so we can certainly take a look at that again.”

Some spectators also questioned current pay scales at the administrative level and the need for certain positions altogether.

What if Final State Budget Cuts Less?

While Gov. Eric Greitens has proposed an 8.9 percent reduction to higher education, the budget the Missouri House passed last week offered a better outlook for colleges and universities – a 6.5 percent cut.

“If that were to become law that would kick us back a little more than $2 million,” Smart said.

But given uncertainly on what may come out of the Senate, and there’s no history from which to gauge Gov. Greitens’ veto or withhold decisions, Smart says MSU will align its budget on the governor’s projections.  

If the school got money back, he says, that creates many options.

“We can fill back in cuts, we can rehire people that have been laid off, or we can give the remaining employees that are here a mid-year pay raise. Or any other option that you want to think about.”

MSU Athletics

None of the cuts presented Monday were connected to the more than $1 million trimmed by MSU’s Athletics Department, which included cutting its intercollegiate field hockey program. That announcement came last week.

“Athletics if funded on the auxiliary side – there is a transfer that goes into that,” said Smart.

The cuts, he said, came from decreasing revenue from primarily men’s basketball and increasing costs in a variety of areas. Athletics was roughly $2 million in the red, and Smart says discussions are continuing about how to fund the remaining gap.

The field hockey program includes 17 current and seven incoming student-athletes. Missouri State will continue to honor scholarships for all student-athletes currently participating in the sport. The students will also be able to transfer to another institution and be eligible to practice and compete immediately, if desired.

MSU will add the sport of women's beach volleyball, which has the equivalent of four full scholarships, and institute other departmental spending reductions.

“A piece of the decision to cut a sport – could have picked any sport you want – a piece of the decision to cut a sport is to keep from crippling all the other sports competitively,” he said.

What’s Next

An Executive Budget Committee meeting is scheduled for April 27. A draft budget will be presented to the Board of Governors in mid-May, at which point the Missouri Legislature will have approved its Fiscal Year 2017-2018 budget. The Board will then approve the budget at its June meeting.

Missouri State has made available video and the PowerPoint slides from Monday’s town hall, which can be viewed here