Restoring the University’s fiscal health
WSU currently is addressing some budgetary challenges. While the challenges are serious, they are surmountable. By working together system-wide to reduce current spending levels and increase revenues during the next few years, the University will restore its fiscal health—enabling WSU to better meet the state’s future needs by investing in initiatives that will advance our teaching, research, and service mission.
What happened?
The University has spent more money than it has received for the past 4 years. The spending reflected a strategic effort to advance WSU’s mission by investing in several new initiatives, including expanded classroom space, the Elson S. Floyd College of Medicine, WSU Everett, new athletic facilities, and the new art museum, among other things.
The investments required the University to spend down its central reserves—which function much like a savings account—by more than $100 million the past 4 years. That reduced reserves from about $200 million in FY13 to slightly less than $100 million in FY17.
Last year, WSU spent $30 million more than it received in revenues.
How is the University responding?
In order to bring spending in line with revenues and to avoid reducing central reserves to very low levels, the University is implementing a multiyear plan to reduce spending and increase revenues.
For the current fiscal year (FY18), all areas of the University are reducing expenditures by 2.5 percent. Similar reductions in spending likely will be required for the next two years.
The goal is to reduce WSU’s annual deficit spending to $20 million this year, to $10 million the following year, and to balance revenues and expenditures in FY 2020.
Efforts also will continue to identify additional revenue-generating opportunities such as the partnership with INTO to increase the enrollment of international students and the addition of new online degree programs.
How will individual units determine which expenditures to reduce?
The University developed criteria to guide actions to reduce expenditures.
- Hold any vacant positions open for as long as possible.
- WSU spends 85% of its budget on personnel costs, so delaying hiring of vacant positions is one of the best ways to build reserves.
- Reduce or defer travel and other operating expenses that are non-essential.
- Discontinue services that are not fully meeting constituent needs.
- Consolidate services and units to reduce duplication and cost and to gain efficiencies.
- Do not award salary increases that are outside of those granted by the University through planned salary increase programs.
In addition, President Schulz has directed that senior administrators shall forgo the 1% salary increase that was awarded to faculty and staff this year and next fiscal year.
Are these actions resulting in budget cuts to individual units?
No. The money each unit saves by reducing expenditures will remain within the unit. Once annual institutional revenues and expenditures are balanced, units may invest their accumulated savings in new priorities and initiatives, such as the Drive to 25.
What’s next?
WSU campuses, colleges, and other major units are formulating plans to reduce spending, guided by a common set of criteria.
Chancellors, vice presidents, and deans outlined their approach to reducing spending to faculty and staff in their respective areas in October and November.
President Schulz is committed to making the discussions about spending reductions as transparent as possible. Faculty, staff, and students are encouraged to share suggestions, ask questions, and voice concerns going forward.
Regular communications to keep the University community informed about fiscal progress are planned.