I want to take a moment to follow up with each of you about recent communications from President Schulz the last couple weeks regarding the University’s budget strategy. As he indicated, each unit area must contribute to reducing the aggregate deficit spending across the University by $10 million during the current fiscal year. Based on university-wide revenue projections, this deficit-reduction translates into a 2.5 percent reduction in spending.
It is important to note that this reduction will not be transferred back to the central university budget for spending elsewhere. Instead, it will be saved at the unit for which they were allocated to increase reserves for that area. For our area, these funds can be put to use strategically in the future to bolster fundraising and alumni engagement efforts. Overall, University Advancement is in a very good position to weather this current budget situation. Following are some specifics about how our division is handling this reduction in spending.
Thanks to the diversification of revenue sources and prudent fiscal management, the impact of this reduction on the Foundation’s day-to-day operation is minimal. In addition to funding that the University allocates to our central development operation annually, the Foundation receives most of its funding from the 1.5 percent distribution on the endowment and other fees, which have benefitted from very strong market performance during the last two years. As it ramps up over the next few years, the recently enacted advancement fee on gifts will further diversify WSU’s development resource structure, providing even more flexibility to respond to our biggest opportunities as we prepare for the next campaign effort.
The University does allocate funding to the WSU Foundation annually to support our central development operation. The 2.5% reduction in spending applies to this funding source, resulting in a total reduction of less than $80,000. This reduction has already been accounted for primarily through savings related to existing vacant positions and other accruals.
The Foundation’s support for unit-based development efforts are not affected through this reduction of spending and no cuts to current levels of support are planned. That said we understand that each college, campus, and unit area’s budgetary situation is different, so we recommend you check with your area’s leadership for clarity about whether or not the reduction of spending will affect funding from the college for development activity.
Please know that the WSU Foundation continues to advocate strongly that units continue to invest in their development operation and, in fact, unit leaders should plan to ramp up that investment in the next few years to be in optimal position for success in the next campaign. We also continue to encourage those units who have unspent restricted endowment distributions to use those funds per the terms outlined in the gift use agreements. Although we cannot reallocate these funds from their specific designation, it is possible some of these funds will be able to offset the effects of the budget restrictions for some unit areas when used for their intended purpose.
WSU Alumni Association
The WSUAA is also in strong financial condition and maintains a healthy reserve, thanks to diligent budgeting and prudent management of resources. WSUAA has reduced PBL spending by 2.5%, as required, by limiting staff overtime for overtime-eligible employees. This reduces staff availability for some services and events and puts additional strain on overtime-exempt employees who will need to absorb the additional workload. Despite the reduction, all efforts will be made to maintain overall programming and services. No reductions in staffing are planned.
The WSUAA’s five-year plan states that we will eventually need to add staff in order to support the WSUAA’s membership drive and the next campaign effort.
We will evaluate plans for future positions carefully prior to hiring and will likely pay for them with WSUAA self-generated funds rather than funding from Washington State University.
University Advancement is well positioned
University Advancement is positioned to weather this budget crisis. That said, we must continue to be prudent about our spending in the near future to ensure our continued fiscal health. All open positions will be carefully reviewed to ensure we are stewarding our resources in the most strategic way. In some cases, we may need to hold off on some of those hires if it makes sense to do so. I also encourage all of us to be mindful about how we are spending resources in our own areas and to consider cost-effective alternatives should they be appropriate and still achieve the same goals. I will send you updates from time to time should our situation change.
The next couple years will be challenging for WSU as we come together to tackle this budget deficit. The University—and our advancement operations—will be even stronger for it. I thank each of you for all you have done to help us ride this storm and I appreciate all the work you continue to do to make a difference at Washington State University every day.
Lisa D. Calvert
Vice President of Advancement
CEO, WSU Foundation