Where We are Financially: Cause for Optimism
Where We are Financially: Cause for Optimism
This has been a year of ups and downs, as is so often the case at FPU, but increases in enrollment, and therefore income, along with some hopeful trends for the future, give cause for optimism.
First, we’ve been blessed with some exceptional news: grad and degree completion are each about $2M ahead of budget! Thanks and credit to Jon Endicott and his enrollment team—they’ve done a fantastic job. Grad recruitment enrolled 347 new students—65 more than was budgeted for; and DC recruited 410 new students—70 above budget. Returning students were also higher than budgeted.
Traditional undergraduate enrollment is down slightly, with tuition revenue projected to come in about $900K short of budget, driven mainly by a shortfall in returning students. We have a retention task force looking into this. In addition, we fell 15 students short of our new freshmen goal, enrolling 200 instead of the 215 budgeted. The enrollment staff is working to make up some of this with a push for additional transfer students this spring.
Our relationship with the OPM, the company we engaged to help grow our online presence, ended earlier this year. While this was initiated by the OPM, both the OPM and FPU agreed that this was simply not the right time for our partnership. Unfortunately, this came with a cost. We had incorporated the OPM’s $3M net revenue projection into our budget, but given the time lost during the transition and the need to develop a new roadmap for building our online programs, I am projecting net revenue of $800K—a drop of $2.2M. As painful as this is, and as hopeful as I am that we will do better, it is too early to justify a higher projection.
Ending on a good note, when we combine these circumstances, and some others not included here, our total revenue is up $1M, from $59.7M budgeted to $60.7 projected. This success is due to hard work by many people, only some of whom are recognized above. Thanks to all of you who have in one way or other served the cause of recruiting and retaining students.
On the expense side, faculty salaries are up (in part expected with increased grad and DC enrollment requiring more sections and teaching hours) and our costs for benefits and service contracts are higher than budgeted. We are looking for opportunities to reduce expenses, but in the meantime we expect total expenditures to be about $1.5M over budget.
Having originally budgeted a $500K surplus, we are now looking at breaking even this year. But compared to my expectations when we first learned that the OPM would not be working with us, this is great news!
Looking to the future, I am encouraged.
- With TUG we anticipate a slight decline in four-year students, based on a lower number of expected graduates from local high schools. On the other hand, the partnerships Dr. Joe and Jon Endicott are building with regional community colleges should result in increased transfer students, and we expect new efforts overseas will result in an increase in international students. Our TUG population could reasonably grow from its current 1,053 into the 1,100-1,150 range.
- I see grad and DC holding steady at their increased levels—many studies indicate that these markets will continue to be strong in the coming years.
- We learned a lot from our OPM experience, and with Peter Rios bringing new vision to Academic Innovation I fully expect our online programs to grow significantly in the coming years. He is currently leading the effort to determine whether to expand our online presence by investing in internal resources or by going with another online management provider, or some combination of the two; either way, we will grow. In the meantime, we have brought the development and marketing of online programs in-house.
- I also believe that the new thinking Peter and Peggi Kriegbaum are bringing to Office of Continuing Education will bear fruit. While CE is relatively small, it runs very lean, and its net financial contribution to the university is one of the highest among all enrollment areas.
If all of the above scenarios come to pass, and if we combine them with disciplined control of expenses and ongoing review of our programs, we have the potential to generate an appropriate surplus. What then?
Dr. Joe has made long-term sustainability the cornerstone of his strategic priorities, and identified two elements—a strategic cash reserve and timely care of deferred maintenance—as key financial components of this cornerstone. They are absolutely essential to protecting the university against unexpected situations, whether externally generated (e.g., changes in state or federal financial aid) or internal (e.g., failure of a major mechanical system). With our cash reserve currently below the $10M we need, and deferred maintenance in the millions of dollars, a significant portion of any surplus will be applied to these priorities.
We remain committed to restoring the retirement match ($600K/yr) and salary cuts ($400K/yr) as soon as we have determined that our enrollment and overall revenue/expense balance can reliably sustain them in addition to contributing to our cash reserve and deferred maintenance needs. We will revisit our financial status in the spring and may be able to provide more specific information on restoration at that time.
So, the ups and downs have leveled out for the moment. With this year’s success in enrollment and cause for continuing optimism in this area, along with plans to spend and save wisely, there is reason to believe that we are turning a corner financially—in a good way!