Administration has been working to keep the effects of a $7.5 million revenue shortfall from being felt on campus from last fiscal year, while also trying to predict next year’s revenue more conservatively in order to not make the same mistakes.
“We made some commitments based on the revenue that was predicted based on the finance department predictions that were ill-advised; really, and truly ill-advised, because there were not funds there to cover all those things,” said Executive Vice President and Chief Operating Officer T. Dwayne McCay.
That mistake was a simple one: the fiscal year runs from May 1 to April 30, but the two main influxes of money — tuition — are in August and January. The finance department, however, must guess at how much revenue the university will make, and they don’t know if they guessed correctly until they have the data to show for it in September, according to McCay.
“The finance department last year were overly ambitious with regard to guessing or estimating the revenue. And much more so than they should have been,” McCay said. “So that caused an over-zealous hiring of faculty.”
President Anthony Catanese wasn’t available for available for interview but released an emailed statement.
“The budget situation for FY16 is complete, and we will end the year on 30 April 2016 on target with no deficit. This is positive for students in that we can keep the tuition increase to a very small cost of living (HEPI) increase for FY17. Dr. McCay is finishing the FY17 Budget which he will administer,” he said.
Catanese also spoke to over 100 students at the Student Leader Luncheon on March 21, held by the Student Government Association, about the issue and answered many questions raised by students.
In order to take care of last year’s budget crisis, McCay and other members of administration reduced expenditures: he got rid of contingency funds and eliminated the surplus they were anticipating. McCay also has a significant research equipment fund that has $1.5 million per year in which he had to zero out, and he also did away with a faculty equity fund.
Along with zeroing these accounts out, tuition is going up 3 percent in Fall 2016 — but 2.1 percent is inflation for the cost of living increase, (the HEPI explained in Catanese’s statement).
“The other 0.9 percent is additional funds to help do some of the things that we’re trying to accomplish here,” McCay said.
Other ramifications include layoffs, which will not affect faculty that are “mission-critical,” according to McCay, which mean educating and doing research. The layoffs will affect only about 1 percent of the 1,200 or so employees at Florida Tech.
For this year’s uncertainty, the school administration is doing its best to not make the same mistake twice.
“It’s an interesting thing trying to do budgets for a private institution like this,” McCay said.
“Since the tuition is a big driver and the amount of tuition you collect, that’s a sizable fraction of the revenue,” McCay said, citing the fact that Florida Tech’s budget is $220 million. A $7.5 million shortfall is a big number, but not a large percentage.
“If you don’t sit down next Fall and we counted you, then we budget revenue that doesn’t exist and it doesn’t show up,” he said. “If you come back and you bring three friends, then that’s additional revenue.”
He said they’ve been conservative in their estimate and hope to be pleasantly surprised come Fall semester, but another factor in this are the economies around the world and the unexpected pullout from international student programs: all kinds of issues coming together to form one big problem.
“We had some cutbacks from Saudi Arabia and from Brazil but we weren’t counting on it,” Catanese said at the student leader luncheon.
According to McCay, Brazil’s Science Without Borders is being zeroed out, Saudi Arabia’s Abdullah scholars program is sending less Abdullah scholars globally, Kuwait government is sponsoring fewer students, and Aramco is sponsoring fewer students.
All these programs and sponsorships bring several students that the university isn’t counting on for next Fall semester anymore, and administration is focusing on domestic recruiting as well.
While focusing on domestic recruiting, they’re also enforcing academic standards now more than ever.
“Last year was the first year since I’ve been here that I made a decision that no one is going to get in at less than the minimum requirements to be a student,” McCay said. “We will never, as long as I have anything to say about it, drop in our standards in regard to admission.”
It led to the smallest entering class, but the best entering class, recorded in history as far back as they keep data, he said. And because they weren’t ready for it, in terms of making predictions, they weren’t “adept at enforcement of the standards.”
The budgets are balanced and, according to McCay, no student fees are being touched, and no changes were made that would impact the students other than the tuition raise and a slight meal plan increase next Fall.
They will present the budget for the new fiscal year on May 1 to the Board of Trustees on April 22.