Forum Hears Input on Budget Cuts, Challenges
On March 20, the University of the Pacific held a forum to discuss difficult decisions that the University will need to make over the next year in order achieve a balanced budget for the long-term.
The forum was led by President Pamela Eibeck and Vice President of Business and Finance Ken Mullen, who spoke of a tight budget situation and outlined the need to cut spending by approximately 10 percent while at the same time adjusting faculty and staff pay to be more competitive.
This percentage was determined by the Institutional Priorities Committees (IPC), which is a group of faculty, students, and administration members dedicated to formulating budget recommendations that ensure long-term financial sustainability.
“To be a thriving university, we need to make two important and significant adjustments,” President Eibeck said. “First, our budget. Pacific’s financial health is strong. Our endowment is growing, our bond rating is solid, and we’re raising funds. But our major financial vulnerability is that we’re spending more than we bring in each year.
“An additional challenge that we need to address is our compensation. I am committed to paying our faculty and staff fairly, because our talented people are our heart and soul of this university. The board approved a faculty and staff compensation philosophy that targets the University’s compensation to the midpoint of market… When you put those two things together, reducing our spending and improving our compensation, it means that we need to take approximately 10 percent reduction from our spending.”
President Eibeck said that the University has suffered from lower enrollment rates, facing fierce competition from online schools and other universities in the state. She explained that Pacific has held tuition increases to about half of what they used to be, while also increasing the amount of financial aid provided to students. She noted that the struggles the University face are not unique to Pacific, but the result is that there is less money each year to invest in things like benefit increases and merit increases.
Vice President Mullen explained that IPC determined it would be most prudent to take $2.3 million from Pacific’s Strategic Investment Fund (SIF) in order to balance the Fiscal Year 2019 (FY19) budget, then spend that year strategically planning cuts that will be enacted in Fiscal Year 2020.
Part of the $2.3 million coming out the SIF will be used for a one-time payment of 2 percent of base salary to faculty and staff who earn $80,000 or less, and part of the funds will be used to cover the gap between the University’s income and spending.
The March 20 budget forum followed a lively March 8 meeting of Pacific’s Academic Council, in which faculty were briefed on the forthcoming budget reductions. It was at that meeting that the resignation of IPC Chair Dr. Jeffrey Miles was announced, with the professor citing a lack of transparency from Pacific’s administration. ASuop President and IPC member Grant Kirkpatrick had expressed similar sentiments of frustration with his experience on IPC over the past few months.
Those concerns continued to be expressed during the budget forum. Dr. Cindy Osberg, Political Science professor and IPC member said, “When I joined IPC I thought that we would really get a detailed insight into the budget. What you saw today, with a little bit more, is what we really see. And I think we as faculty members and the students…have consistently pushed back for more information in terms of being able to understand what is going on in the budget. And we haven’t gotten that response in the terms of the detail we’ve been asking for.”
Vice President Mullen conceded that Pacific’s administration “can do better” with sharing information with IPC, but questioned what sort of detailed information IPC members were requesting.
“We surely want to share as much information as we need for decision-making… Over this next year we are gonna have to do better with that. But again, with purpose,” Mullen said.
Additionally, Armando Borrego, Philosophy ‘21, was concerned over students’ accessibility to such information, “I noticed that there’s not a lot of students here. Part of that has to do with [I believe] the fact that this was scheduled at an inopportune time during the school week… I ask that these types of meetings and this kind of information is made more accessible to the students because at the end of the day, the students should have a say and the students should be aware of how their tuition dollars are being spent.”
Another student present, Chain Shields ‘18, spoke about the University’s accountability with regard to the budget situation it finds itself in.
“I think that the reason that there’s so much frustration in this room is not just because of the economy of the United States right now, it’s not just because of the state of higher education right now. I think it’s because this university has had values and made decisions that have led to this point. I think the $4 million Athletics mistake was not a coincidence… I think the University has consistently made choices to lead to the valuing of certain departments over others,” Shields said.
While multiple audience members brought up the controversial Athletics overspending that occurred last year, President Eibeck and Vice President Mullen stressed that the issue has been dealt with and that Athletics is currently on track for a balanced budget.
“There’s a lot of areas we can do better in. I’ll acknowledge that,” Mullen said. “I am the one who’s accountable in my division to make sure that happens… Whatever cuts it is we have to take, we’re going to take them, and we’re going to do business better.”
President Eibeck and Vice President Mullen stressed that no decisions have been made as to where the budget reductions will occur, but they intend to thoroughly explore the options available. In particular, changes in benefits and retirement programs will be explored. President Eibeck also discussed analyzing successful efficiency measures taken by other institutions. She cited the steps taken by McGeorge School of Law, which downsized while increasing experiential learning to make the school more attractive to potential students.
Last year, the Board of Regents approved a $259 million budget at its May 2017 meeting. That budget, developed by the IPC, assumed a projected total revenue of $263 million. The majority of the University’s revenue is net tuition.
IPC’s recommended budget for FY19 has been approved by President Eibeck, and will now need to be approved by the Board of Regents at its April 26-27 meeting. Following that meeting, a second public budget forum will take place on May 7 in Grace Covell Hall from 3pm to 5pm.
The University stated it will announce specific budget reduction targets and more details about this process in August.