Budget Crunching

Taking a closer look at ASU amid tough economic times

By Amanda Fox
LiveWire

Recent budget cuts have had Appalachian State University students, faculty and staff living under a cloud of worry about everything from course offerings to tuition, decreased salaries and layoffs.  Amid this seeming confusion, however, many people don’t realize that not every department on campus is being threatened. 

 This tale of two cities centers on a distinction between departments considered “auxiliary” and those which function from state appropriated funds.

Auxiliary departments on AppState’s campus, those that rely solely on self-generated income, are not directly affected by the roughly $8 million that has been taken from ASU’s state-appropriated operating budget. 

“Every dollar that we have comes from rent,” Dr. Thomas Kane, Director of Housing and Residence Life (HRL) said. “So we receive no tuition money from the state; we are a self-sustaining, receipt-generated operation.  We are a business within the university, and [the budget cuts] do not affect us directly.”

As long as every bed on campus is occupied, HRL’s business is going well, says Kane.  The department has an overall budget of about $19 million, with one of the largest portions of that going to salaries.  HRL also has about $10 million in reserve.

Athletics Director Charlie Cobb faces a similar situation.  The Athletics department receives funds from two primary sources: student fees and self-generated funds.  Self-generated funds can include ticket sales, contributions from the Yosef club and guarantees for playing games, such as the $400,000 Athletics received for playing the University of Michigan. Athletics has a budget of approximately $12 million, with slightly less than half of that going to salaries.

“The university gets money from two sources: tuition & fees and state-appropriated funds,” Cobb said.  “We’re technically not affected because Athletics doesn’t receive that money.”

Although these departments do not receive state-appropriated money, they are still being asked to observe the effects of the cuts on the other departments.

“We’re looking at essential and non-essential spending,” Cobb said.  “What can we eliminate, and what can we reduce?  One of the things we’re looking at is putting a mileage cap on where our teams can play.  If our women’s basketball team says they want to go play UCLA, that’s really not essential because there are a lot of schools we can play on a non-conference basis from Boone to L.A.”

Cobb says the department has found almost $400,000 worth of spending that can be saved for next year.

HRL is also trying to show sympathy by downsizing certain expenses.  

“What we’ve been asked to do [by the university] is be aware of the pain the rest of the university is having,” Kane said.  “An example is we’ve been asked to cut back on our travel, even though we’re full, and everything is good in housing, financially.  Our travel budget is $50,000 a year.  It’s not good that we would be showing off, that we could go anywhere we want, while the rest of the university is saying don’t do that.”

While HRL is an independent department, it still falls under the University’s influence, according to Kane.

“In all likelihood, we will be asked to subsidize some part of the university before the year is out,” Kane said.  “We’ve offered $100,000 for the Vice Chancellor to consider. If things got really, really bad, could they take more?  Sure.  It’s university money.  They could easily say, ‘we need a million.’  And we’d have to sit down and sharpen a pencil and figure out what aren’t we going to do this year that we had hoped to do.”

Dr. Lorin Baumhover, Chief of Staff of the Chancellor’s Office, indicated that might not be a plausible solution.

“They’re [auxiliary departments] precluded from doing that,” Baumhover said.  “It’s allocated; we cannot move those [funds] from one category to another.  That’s our agreement with you or your parents; this is what we say it’s going to go for.”

Greg Lovins, Vice Chancellor of Business Affairs, described the budget of ASU.

 “There are many different components of the budget at the university,” Lovins said.  “First of all, we receive money from the state of North Carolina through appropriations every year.  That amount typically will increase every year for salary increases and so forth.”

Another component is primarily receipts, like tuition and fees, says Lovins. 

The total requirements, the amount the university is allowed to spend for all expenses, such as salaries and benefits, utilities and supplies, is $205 million.  This includes the state-appropriated funds of $139 million and $66 million from other profits, such as tuition and fees, library fines and utility revenues.  In the current fiscal year, the main auxiliary units—HRL, Food Services and the Bookstore—have generated more than $80 million, bringing the university close to $300 million in total revenues. 

Some of the departments most directly affected by the budget cuts include the academic departments, which encompass the deans’ offices, the Registrar, Admissions and Information Technology Services; the Physical Plant; financial departments; the Budget Office; Student Accounts; ASU Police and Design and Construction.

“The receipt-supported areas are kind of like their own cost centers,” Lovins said.  “But when you get to the state-funded budget, the part that supports the primary academic mission of the university, about 77 percent of that budget goes to academic affairs to pay faculty and staff salaries.”

Approximately 17 percent goes to Business Affairs; two percent to financial aid payouts; one and a half to two percent to University Advancement and one and a half percent to Student Development.

Business Affairs is looking at ways to reduce operating costs to compensate for the budget cuts.  For the most part, this includes being more energy efficient: turning off lights and computers at the end of the day, turning thermostats down to 68 degrees, reducing travel and cutting back on equipment purchases.

“We’re being more thoughtful on how we’re managing our offices and classrooms,” Lovins said.

Other departments are also facilitating the drive to be more energy conscious and reduce the utilities bill.

Lovins has also been able to look at the budget and determine where money can be saved, such as not filling new faculty positions until absolutely necessary. 

“Every year we have vacant faculty positions,” Lovins said.  “And every summer we receive enrollment increase money of varying amounts, depending on how many more students we have.  A large part of the money we’re reverting this year is money we had allocated for those vacant positions.”

A significant concern for university employees is the consideration of layoffs or furloughs (meaning state employees would have to take a temporary leave of absence without pay). 

“There has been no formal discussion about layoffs or furloughs,” Baumhover said.  “There’s been no serious planning for that at this university, and nowhere has there been any serious planning for this in the UNC system office.  Has this been discussed?  Sure.”

But while administrators are working to prevent layoffs, salary increases for next year are not expected.

“What we’re hearing is that the General Assembly will not authorize salary increases for anybody,” Lovins said.  “When we get the word from them that there are no pay increases for those employees paid from state funds, we apply the same zero-percent increase to those in the auxiliaries.  We all want to be team players, and this is a morale issue.”

Fortunately, student employees have not been greatly affected so far. 

“Some student employees’ hours have been reduced in isolated cases,” Lovins said. 

Another question floating around is whether student employees could replace a staff position to be more cost-effective.

 “It’s possible that several student employees could replace a staff position, but that hasn’t happened yet,” Lovins said.  “If someone leaves, you might bring a student in to work a few hours a week to offset some of the workload.  I don’t know that that’s happened with any vacant position, but that’s an alternative.”

Overall, some people believe the university is not in a terrible budget position.

“I hope we’ve done a good job,” Baumhover said.  “We’ve had these two forums that we’ve invited people to, and we’ve addressed it thoroughly in those.  I think what we’re experiencing is a crisis in confidence.  But we’re going to be fine.  We’re still going to be the first-class institution that we are, and we’re making plans for the future.”

Kane seems to agree.

“I think the Chancellor and the Vice Chancellor have been really fiscally responsible,” Kane said.  “[Other schools] are scrambling and there’s real panic.  The Chancellor here has been very calming in saying we’re OK; it’s not a walk in the park, but no one’s going to lose their jobs.”