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What led to a major budget deficit for the College of Arts and Sciences

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campus_PMTwo years after Ohio State’s conversion from quarters to semesters, the university’s largest college might be feeling impacts beyond academic calendars in the form of a projected $10 million budget deficit.

The College of Arts and Sciences — which encompasses nearly 80 majors, 38 departments and more than 2,000 faculty and staff members — has a fiscal year 2015 deficit of $4.6 million. The amount is projected to grow in fiscal year 2016 by $5.4 million.

Click to enlarge

Click to enlarge

That will mean budget cuts, the exact effects of which remain uncertain.

David Manderscheid, who took over as Arts and Sciences dean in 2013 from now-Provost Joseph Steinmetz, told The Lantern that he sees two causes of the budget deficit: an unanticipated decline in the college’s credit hours this past year, and the college’s reliance on a tuition increase that didn’t happen.

He said in an April 9 meeting with faculty in Independence Hall, where the college’s chief administrative officer John Nisbet also spoke, that the lack of a tuition increase was a major factor.

“We’re in a position now in the college where if we (had) gotten the 2 percent tuition increase, we wouldn’t have been having these serious discussions, but what happened was we were skating too close to the edge,” Manderscheid said. “What happened was, when we didn’t get that 2 percent increase, all of a sudden we get a $4.5 million deficit for this past year, and if we don’t get a 2 percent increase for this coming year — that’s not clear either way — then we have another $5 million.

“I think what we’re really seeing here is we need to do things differently. We need to stop operating on hope that more money will come in and take care of our budget, while at the same time pushing to get increases to our budget.”

The Board of Trustees discussed tuition increases for next academic year in its meeting earlier this month. In-state students are looking at a potential maximum increase in tuition of 2 percent for the 2015-16 school year, but it will ultimately be determined by the support given to state schools in Gov. John Kasich’s proposed budget. Last year, tuition was frozen for in-state students.

Students are charged instructional fees based on the number of credit hours they take each semester. For fiscal year 2015, credit hours are up across the university, Manderscheid said, but in Arts and Sciences, credit hours are down 1.6 percent.

That decline is not new. Credit hours dropped 13.9 percent for 2013, and only increased 2.39 percent in 2014, according to a presentation from the April 9 meeting.

Libby Eckhardt, Arts and Sciences’ chief communications officer, said that drop happened for several reasons:

  • changes in general-education requirements that were introduced at the semester conversion;
  • a national trend of students toward science, technology, engineering and mathematics majors and courses; and
  • the increasing number of students arriving at OSU with some college credits already completed.

Manderscheid told faculty April 9 that the college received a letter from former Provost Joseph Alutto and former chief financial officer William Shkurti that said the college would be held harmless by semester conversion.

“It’s worth the paper it’s printed on to be honest with you,” Manderscheid said. “We have pushed on this issue, we submitted a letter to … Provost (Joseph) Steinmetz in December saying by our best calculations, semester conversion cost the college $3.1 million in permanent budget, and we asked for that and we documented it.

“We have not received a response on that in terms of a dollar amount, but what we have been told is that, ‘Yes … we agree, there is some cost to semester conversion. The college was not (held) harmless.’ In fact, a number of colleges were harmed and a number of colleges did better.”

Manderscheid said the college was told such harm would “be considered as part of the rebasing of budgets” expected for the next fiscal year.

“The answer being, well, if we’re gonna have to take from somebody then we’re gonna need to do this very carefully, because they don’t have … that $3.1 million sitting around,” he said. “It has to come from someplace else.”

Meanwhile, Arts and Sciences has essentially run out of the cash reserves that it was using in the past five years to make up for its expenses outweighing its revenues. As a result of the projected $10 million fiscal year 2016 deficit, the college is making a 3.75 percent reduction in its present budget allocation — referred to as PBA, the college’s general funds budget allocation — to decrease expenditures. At the same time, it will look for ways to generate $15 million to $22 million in cash annually.

If successful, the college can reset and create a sustainable path forward, according to a presentation given at the faculty meeting.

Manderscheid said at the meeting that solutions could include hiring faculty more strategically, seeking funding from sources beyond the government, and increasing credit-hour production by various means, such as offering more GEs and distance learning classes.

Manderscheid told The Lantern that faculty will likely not be let go as part of the budget cuts.

“We’re trying to not fire people,” Manderscheid said. “On the other hand, we won’t hire as many lecturers as we have in the past.”

He said the departments in the College of Arts and Sciences have been told to bring in fewer new graduate students. “But we won’t fire graduate students or anything like that,” Manderscheid said.

Some college faculty members, however, said they are significantly concerned about such a large deficit.

Ulrich Heinz, a professor of physics, said the faculty meeting with Manderscheid introduced some answers to questions, but “none of the answers were actually pointing to a solution.”

“I don’t know where this is leading. I’m seriously worried,” Heinz said.

Heinz said the main problem was the drop in credit hours taught in Arts and Sciences.

With every credit hour taught, there comes a state subsidy, Heinz said, so fewer hours mean less money from the state.

“There was nothing done to compensate for that loss,” he said.

In a follow-up email, Heinz explained that students pay tuition for the total number of credit hours they register for, and the state subsidizes the cost of teaching from taxpayer funds according to the total number of credit hours taught.

Those, he wrote, are the two main income streams from which the colleges pay the salaries of the faculty, staff and lecturers. The colleges actually keep less than half of the funds — the rest flows back to central administration to fund various programs.

Robert Perry, a physics professor and vice chair for undergraduate studies, said the way scholarships are funded is another main cause of the deficit. Overall, he said, “it’s an extremely complicated issue.”

Scholarships are credited the same way as tuition money sent to the college, but there is no actual exchange of funds. Colleges must still pay a 24 percent “central tax” — made up of a university-mandated 19 percent tax that goes to infrastructure and a 5 percent tax that goes to the provost’s reserve — and student-services assessment on scholarships, as if that scholarship money was actual tuition.

“That’s actually just one piece of a much larger problem, but I just don’t understand why anybody has not looked at that and said, ‘Well, there’s one clear problem,’” Perry said.

Harvey Graff, a professor of English and history, said in an email that he has seen previous Arts and Sciences deficits in his 11 years at OSU, but this is “the highest, with the least clear acknowledgement and response.”

“The problem is university-wide but ASC is hit especially hard and is not responding openly and responsibly,” he said. “The budget situation — and the failure to discuss it and deal with it openly and responsibly — worries me greatly.”

Manderscheid told The Lantern he hopes there will be a tuition increase this year.

“I think many people were surprised that there wasn’t a tuition increase. Now … if we think there’s gonna be a tuition increase and there isn’t one, we shouldn’t be surprised,” Manderscheid said. “I mean, hopefully there will be a tuition increase because I think our costs are going up in the college, but if not, we have to deal with it.”

The plan for now, he said, is to create that “sustainable college budget” this year, so that there won’t be cuts next year or the year after.

“Something that has happened over the past few years (is) one cut this year, one cut the next, and that’s very discouraging,” Manderscheid said.

Because the drop in credit hours was partly related to students trending toward STEM majors, that’s meant an increase in credit hours for one of the three Arts and Sciences divisions — Natural and Mathematical Sciences — while the Arts and Humanities and Social and Behavioral Sciences divisions have struggled more.

Perry said success in the Natural and Mathematical Sciences division has been used to buoy the other two.

“We haven’t been losing money; we just have money taken out of our budget to cover their budgets,” Perry said.

Manderscheid played down competition between the divisions.

“Just as we’re a bunch of colleges that are part of one university, the three divisions are part of the College of Arts and Sciences and that’s the strength of the college,” he said. “You’ll see enrollments grow in certain sections of the college and you’ll see enrollments decline in certain sections.

“That happens with time, students’ interests and majors change, so we have to adjust our budgets to accommodate that interest so we can educate the students.”

This story was made possible by the generosity of The Lantern and Ohio State alumna Patty Miller. 

25 comments

  1. Yet we pay the football coach 6.5 million dollars a year! That’s one man, each year! SIX AND ONE HALF MILLION DOLLARS! Multiply that by his 5 year contract… WHAT! Thirty-two and one half million dollars is what OSU can afford to pay just one coach. Oh, BTW, most faculty got one half of one percent for a raise this year. Not even one percent.
    So the next time you get all excited and rally around your football team and those meatheads who don’t care one drop about a college education, keep in mind the Art and Sciences deficit of 4.6 million and the fact that just one coach gets paid $32 million

  2. Hey, Prof V — Coach Meyer’s salary does NOT come from the university operating budget. It comes from revenues that he generated, in part, from winning football games. In other words, he EARNED his salary by motivating those “meatheads” to excel, thereby generating an income stream. How much money have you actually generated this past academic year by your efforts to offset your salary? Hmmmm.

  3. Less money allocated to the college. These are just budget games that don’t mean anything and have no tangible affect on anything.

  4. Wah. Maybe someone from Econ department should be running the budget. Professors get paid what they produce. Most, with exception of the sciences, produce waiters that have a BA. Football team makes millions for the university. Hence the pay.

  5. They summed it up. Less revenue from classes and no tuition increase. Both of which could have been accounted for. Mgt. at that school clearly just takes things for granted. Possibly they need to think like a business.

  6. What a surprise that a public university department plans beyond its means and complains about when their plans aren’t met. The STEM fields are important and I do not deny the need to keep the department running, however, there is more than enough fat to trim from this behemoth. Relying on a tuition increase while constantly talking about college affordability is a contradiction of terms, but on the bright side, we see that the Department heads are concerned more about paying themselves rather than balancing their finances and achieving the missions of The Ohio State University: student education and engagement.

    It’s good to know how the University feels for its students, like a tick for its host.

  7. “The colleges actually keep less than half of the funds — the rest flows back to central administration to fund various programs.” If I were a detective, I think that this would be my first clue.

  8. Very well articulated and thoroughly presented article, Liz Young and The Lantern.

  9. Well, my son got a STEM-related BS a couple of years ago…and NO JOB. The problem at OSU is it’s too expensive, and the reason it’s expensive is 1) administration-heavy budgets, 2) needless building projects, 3) poor prioritizing, and 4) a focus that cares not a whit about actual education and research. As for football, whether it pays for itself or not is irrelevant…symbolically, it demonstrates what people really care about (hint: it’s not education).

    People get the higher education they deserve, and Americans have been utterly clueless about what’s really going on (and I’m talking to you, Buckeye-fans…).

  10. Do you think the firing of Jon Waters,Marching Band Director, has anything to do with the deficit ???

  11. Pointing fingers

    So, Manderscheid has gotten to the point where he wants to push the blame on Steinmetz?
    Don’t these guys even speak to each other in person?
    Our top level administrators have sunken to moaning about each other in publications… what does that tell you about what we are receiving for the high priced salaries we are paying them?

    There was plenty of time to course correct A&S over the years, but they’ve been making the wrong decisions the entire time, especially in administrative compensation, and look where its gotten us?
    http://thelantern.com/2014/06/2-professors-in-the-college-of-arts-and-sciences-get-new-positions-with-salary-boosts/

  12. Welcome to the real world professors. I am on my local school board where my neighbors and I govern a district roughly 5-7% the size of the college you are attempting to manage. Your organization is 15-20x as big yet your projected deficit is only 5-10x as big as ours. Thanks in part to an excellent STEM degree, I know that those figures don’t line up like they should. Reducing expenses a few million dollars should be easy for an organization so large. We’ve closed $2 million dollar gaps in the past. We’ll be able to deal with our problem. You should have little problem dealing with yours.

    We already expect the state will be giving us less money next year (before and after inflation) than we received this year. Unlike higher ed, we can’t charge tuition. We are required to educate children with what we are given by the state, all while the universities and colleges simply raise the price to cover gaps. Our state’s constitution (I live in TSUN) mandates free K-12. We can’t ask our students to buy the 9th edition of a $150-$250 textbook, one that includes little not contained in the 2nd and 3rd editions. Physics 131, German 104, and Econ 200 could all be taught with the same books I used, but I doubt they are.

    Thirty four years ago my first OSU tuition check was ~$525 which should have risen to $1356 today. That’s about the cost of one 3 hour class this summer, not a full load which costs more than $5000. Inflation should have raised that tuition by 158%, but it has actually gone up 858%. How can you justify the difference?

    Mel might be on to something. Dr. Mandersheid has been distracted for quite some time trying to help OSU keep its story straight.

  13. Unanticipated decline in college credit hours is a sham. STEM majors have become more popular because students interested in those majors have been targeted for acceptance by the admissions office. Not only did ASC already know that semester conversion would hurt their enrollment numbers, semester conversion also gave departments the opportunity to require fewer GEs for their majors, mostly from ASC classes. And then on top of that, the university decided to strategically enroll STEM students over humanities, arts, and SBS majors. There is no response to market forces and interest at work here, this is the university deciding to slim down ASC and then spinning effect into cause. All to the detriment of the students who graduate less prepared for the demands of a rapidly changing and ever-more-global workforce (because they don’t learn how to THINK), and who leave school less well-rounded, happy, and interesting than they otherwise could. The lack of transparency about the budgeting at OSU is disgraceful, and the half-truths they do bother to tell are ridiculous. THE EMPEROR HAS NO CLOTHES.

  14. College of Arts and Sciences faculty members are mostly tenured. That means that most of them are kept on the payroll regardless of their productivity. How many new courses have them offerred last years that attracted students not only from OSU but from others online? Let’s look at the real reasons why their credit hours are decreasing when the total number of students at OSU is actually rising. They need to look at their own operations first. Why do we need so many associates and assitant deans?

  15. Everyone suffers when colleges and departments are pitted against each other, competing for “credit hour production” to keep their budgets afloat, students most of all.

  16. As you all should know, Ohio State salaries are basically all public record. If you search the Ohio State salary database for 2014 for people who work for the Department “Arts & Sciences Administration” you’ll pull up 130 people who make a total of $9,400,575.76. (http://www.bizjournals.com/columbus/datacenter/datacenter-osu-salaries-2012.html)

    Let’s just cut the 26 employees who make less than $45,000 a year as dead weight—that already saves you $2 million over two years. This has some precedent in the College of Business where they cut 6.5% of staff saying, “. . . that many support functions now are being centralized in the main university and shared by several units.” (http://www.bizjournals.com/columbus/news/2014/06/11/ohio-state-fisher-college-of-business-eliminates-6.html) Looking across the entire College of Arts & Sciences (ASC) this represents less than 3% of their staff. (http://hr.osu.edu/public/documents/statistics/div/Arts_Sci_Summary.pdf)

    For everyone else in Arts & Sciences Administration:
    We cut the salary of anyone making more than $175,000 by 25%.
    Everyone above $100,000 by 20%.
    Then everyone under $100,000 by 17.5%.

    This saves you an additional $3.2 million over two years. This gives you $5.2 million over two years in savings. I’ve just gotten ASC 52% to their goal! Clearly Manderscheid needs to be leading by example and pursuing such “creative financing”. If Manderscheid is willing to force this type of austerity on his own office, there’s no doubt that the rest of ASC would be willing to accept it.

  17. I wonder if anyone has thought about that if tuition does indeed rise, then some students may need to take less credit hours in order to spend more time working to cover the tuition increase.

  18. I wonder what Geoff Chatas has to do with all this….?

  19. “Outsource everything!” – Geoff C.

  20. There are many issues that if a curious lantern or Dispatch reporter delved deeper would find quite interesting. Salaries of many administrators are way out of line. Bonuses for some of these administrators that are more than $100K per year!! This is on top of their $500K plus salary, all while the rank and file worker gets a 1% raise if we are lucky. Something needs to change at Ohio State. I will no longer be making any donations to Ohio State until their is a transparent accounting and discussion of finances and salaries. The only way these issues will change is if people vote with their pocket book. Wake up OSU Alumni and friends you are being duped!!!

  21. The numbers for admissions have been distributed and are in the public record. It is easy to see they are heavily skewed away from ASC students, and have been for at least the last 3 years –by design–, so much so that the other colleges are having difficulty meeting demand. This puts undue strain on everyone. This is no accident, and no national trend. This is a strategic decision, with political motives.

  22. What will likely happen; Budget cuts. Shifting more labor to low-paid university work-horses (i.e. teaching assistants, desperate grad students, adjuncts). Increase in tuition. At the same time keep bonuses for administrators, keep salaries up for the administrators. Major universities are no longer in it for teaching students, its a business and teaching is one aspect of it.

  23. I think “past student” is basically correct, but I wouldn’t limit the indictment to “major universities.” I believe universities of all sizes have bloated, overpaid administrations, to the detriment of the students.

  24. I agree with many of the comments above. We pay a sizable chunk of money to send our child to OSU, and yet that money doesn’t seem to be going to the faculty doing the teaching. The ones we know don’t get paid much; certainly a lot less than all of the Vice Presidents and Deans this place has.

    And there seems to be more and more bureaucracy every year. I saw an article that non-teaching staff (all together) outnumber regular teaching staff at OSU by something like 6-to-1, higher than just about any other state school. A faculty member in the article above said that over half of the money the Arts and Science College makes gets paid as a “tax” to the University Administration. I’m guessing a lot of that goes to pay all of those non-teachers.

  25. And here is announcement about tuition freeze. Cuts will be made.

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