As we look toward the future for Bethune-Cookman, we face new challenges as our traditional sources of revenue decline and we look for new ways to address the needs of our students and meet the University's mission.
Why Start the Project Now?
Earlier in April, all Faculty and Staff had the opportunity to learn more about why B-CU is undertaking the University Analysis and Planning Project by listening to Dr. Ron Dowdy present the Case for Change. This presentation outlined B-CU's projected financial situation. The University is starting the project now in order to stay ahead of the finance issues and be fully prepared.
In presenting the Case for Change, Dr. Dowdy outlined several key points about B-CU's financial situation:
- The University is receiving less from traditional funding sources, and that trend will continue. As B-CU looks at all its traditional sources of funding – federal, state, United Methodist Church, United Negro College Fund, and grants – all of them are reducing their funds to universities. Federal and state governments are balancing budgets by, in part, reducing funding for universities. Other income sources, such as grants, the United Methodist Church and the United Negro College Fund have reduced their contributions to us as they battle the effects of the economy. But unlike past downturns where funding bounced back to normal levels as the economy recovered, we do not anticipate increases in these funding sources in the future. We believe these cuts are permanent.
- B-CU is tuition dependent. As B-CU's other revenue streams decrease, tuition becomes a larger piece of the University's total revenue. And there is a limit to how much we can increase tuition and still attract students. Therefore, simply raising tuition to fill in the revenue shortfall is not a viable option.
- SAP will result in some students not returning next year. While the exact number of students won't be known until next fall, a conservative estimate is 150 students will not return next fall as a result of SAP. Because B-CU is a tuition dependent school, the University feels the revenue impact of each student who does not return.
- B-CU is currently on solid financial footing, and this project is designed to maintain the University's positive financial status. The University has a high bond rating (which few institutions have), allowing B-CU to borrow money for capital improvements at a favorable interest rate. This bond rating is an important financial tool for B-CU. Waiting to deal with our financial situation until a later date will jeopardize our sound financial status and ultimately require deeper cuts than if we address the situation now.
- B-CU's expenses are increasing. While revenue has decreased, our expenses continue to increase and they are projected to continue increasing next academic year if we do not take steps now to control them. With our projection of fewer students attending next year, expenses should be decreasing, not increasing.
What Does All This Mean?
The result of these issues is that B-CU's expenses will exceed revenue sometime during the next academic year. To stay financially sound, we cannot spend more money than we bring in. Therefore, the University must reduce its expenses to a level that is lower than its revenue.
While B-CU has faced revenue shortfalls in the past, this one is different. University Leaders do not anticipate funding from federal, state or private sources will return to their prior levels when the economy improves. This means that B-CU is facing an ongoing revenue reduction. In addition, students who cannot meet SAP requirements will continue to leave the University each year. Fewer students translate to less tuition and lower revenue.
The University Analysis and Planning Project will use faculty and staff input to help B-CU reduce its expenses. And because reductions will need to happen throughout the University, faculty and staff from each major area of B-CU have volunteered to participate in this project. This project is critical to the University's future and mission.
B-CU is not alone in facing a revenue shortfall. Universities across the United States are facing large budget reductions as a result of federal and state spending cuts. The message from federal and state government is clear: They will provide less money in the future for higher education. Taxpayers and parents are questioning whether the money being spent on higher education is really worth it. To survive, and ultimately thrive, universities across the country must reduce their cost structures and that change must happen quickly.
For more information: See the Articles section of this blog for more information on how other universities across the country are responding to federal and state budget cuts in an effort to get ahead of the issue.
What is coming next: Update on the project Work Groups