In a five to three vote, the Wayne State University Board of Governors approved the 2021 fiscal year general and auxiliary fund budget at its virtual meeting on Oct. 30. Also approved were transfers from the rainy day fund to cover expected budget shortfalls.
Prior to the BOG meeting, the budgets were presented at the Budget and Finance Committee meeting, with the committee voting to recommend their approval to the BOG.
WSU experienced a shortfall of about $32.5 million for the 2021 projected budget, said Bryan Dadey, senior associate vice president of finances and deputy chief financial officer. This overspending was mainly not the result of the COVID-19 pandemic, but the “ongoing operating challenges” which include a decrease in tuition revenue and represented employee pay increases.
Colleges and divisions throughout WSU were asked to provide proposed cuts, said Rebecca Cooke, interim vice president for finance and business operations, treasurer and CFO. This information was used to develop a plan, with an average “5% cut among the schools and colleges and an average 7% cut for the divisions.”
The approved 2021 general fund budget minimizes the shortfall to about $15.7 million, including the shortfall from auxiliary services.
The new plan is accompanied by pay reductions, school, college, division budget reductions and pulling out of pay increases for non-represented workers, Dadey said. Cuts include 27 employee layoffs from Computing and Information Technology.
“When trying to cover a shortfall like this, you really can't avoid impacting positions, which is an important thing to note in any given year for the budget,” he said.
Layoffs from C&IT will take place at the beginning of 2021 and continue over the next two years to minimize the impact of reducing staff, said Rob Thompson, interim chief information officer and associate vice president for C&IT.
Members of the Budget and Finance Committee were unsure if the extended period of two-years to implement changes would accommodate for the fiscal year’s budget.
“The two-plus years is a long-term alignment of IT on campus when it comes to fully reconciling the IT services —having new services for departments in place, and new desktops and this kind of thing,” Rob Thompson said.
The office of C&IT should be prepared to implement the new services, equipment structure and new consolidated IT in the first quarter of the 2021 calendar year, Rob Thompson said. They should also know all of the new reporting lines, needs of the campus, inventory and discovery process.
A transfer of about $12.5 million from WSU’s rainy day fund was authorized to cover the 2021 general fund net operating budget shortfall, according to the report of actions. A second transfer of about $1.3 million was also authorized to cover the parking fund’s net operating budget shortfall.
Governors Dana Thompson, Sandra Hughes O’Brien and Michael Busuito voted no on the 2021 budgets, citing similar concerns.
BOG members were given the budget information the morning of the meeting, after O’Brien requested it from BOG Secretary Julie Miller, Busuito said. They were then given 20 minutes to review the material. The information given to BOG members was 72 pages and did not include indications where changes were made from version to version, O’Brien said.
“Comparing what we had before, it’s not the way to do business and we had to bring it to the attention of Julie before even it was considered that it was important for us to see it,” Dana Thompson said. “That’s not a professional responsible way of doing business and that’s why I voted no.”
BOG Chair Marilyn Kelly said the budget was worked on for months and not “dumped on the board this morning for the first time.” The budget has evolved, with the last parts finalized the morning of the meeting.
“We now have spent three hours going over any questions board members might have about anything that was new this morning. And in three hours’ time, it seems any board member who’s up on things should be able to make a reasoned decision,” Kelly said.
Putting together the budget was a month-long process, Governor Mark Gaffney said, with recommended changes from the BOG resulting in about six revisions to the budget.
“I just don’t think this is the way you handle a budget where you’re dealing with hundreds of millions of dollars of the people’s money. This is an irresponsible way about going about business and I think we let down the people when we do this,” Busuito said.
Although the budget has been established, there are still risk factors that could leave WSU with large shortfalls again, Dadey said. These factors include differences between the proposed budget and actual spending, contingency funding, insufficient funds for preventive and routine maintenance and capital improvements to existing buildings.
“You make assumptions. Sometimes you have variances with those assumptions,” Dadey said. “For this year, tuition revenue is going to be a significant item that could have a variance because we don't know what type of impact COVID-19 could have on winter or spring/summer.”
Colleges and universities across the nation are experiencing a decrease in student enrollment due to the pandemic, he said, but WSU’s efforts have paid off during this time and years prior.
“For Wayne, I think it is a really big success story,” Dadey said. “I'm actually just amazed at our recruiting and our retention teams and what they have been able to do over the last several years.”
The next Board of Governors meeting will take place on Dec. 4.
Alanna Williams is a correspondent for The South End. She can be reached at email@example.com
Cover art by Guneet Ghotra, graphic designer for The South End. She can be reached at firstname.lastname@example.org.