Budget town hall explores PSU’s finances

On Tuesday, May 27, Portland State administrative officials held a town hall-style budget forum in the Smith Memorial Student
Union ballroom.

The forum saw two presentations, the first being a review of the 2013–2014 fiscal year, and another about the process of building the university’s academic budget for 2014–2015. The event was rounded off by a question and answer session.

Monica Rimai, PSU’s vice president of Finance and Administration, conducted the first presentation, beginning with what would become one of the themes of the forum.

“Portland State University spends more money than we actually bring in year over year for revenue, and so we have tapped what we call the fund balance—some people call it the reserves—in order to balance our budget,” she said.

Rimai said that for 2013–2014, the tapped amount was approximately $11.7 million.

The overall PSU budget is made up of five different fund types, the largest being what’s called the education and general fund or “E&G.” This is where the bulk of PSU employees’ paychecks are paid out from, and is also where tuition dollars and state money are allocated.

Rimai said that despite the use of reserve funds, the E&G was performing better than expected.

“There’s very good news here,” she said. “We spent less money and we brought in more revenue.”

The decrease in spending, Rimai said, was attributed in part to a slump in staff levels.

“People were not filling vacancies as fast as we thought they might,” Rimai said, adding that in addition to the subsequent decrease in spending on wages, spending on benefits was also reduced.

The increase in revenue came from a different mix of in-state versus out-of-state tuition dollars than was expected, with out-of-state students paying more to attend the university than their in-state counterparts.

That said, Rimai warned that the university’s habit of spending out of the fund balance could not be kept up forever, for two reasons.
“First, we’re spending it down faster than we’re replenishing it, so eventually we run out.

“Second, because the state requires…that we maintain a certain amount in our fund balance,” of between five and 15 percent of PSU’s
operating budget.

Rimai described the cuts that were needed to break the university out of this spending cycle, as well as to address a projected shortfall of $15 million for the 2014–2015 fiscal year.

“None of these were easy,” she said, referring to a chart depicting the cuts and other actions. Included in the chart was the continued implementation of PSU’s online learning fee, which is currently $40 per credit.

“Our hope was that we could eliminate it altogether in [fiscal year] 2015,” Rimai said. “We decided not to do that because it represents a significant amount of revenue, about $2.1 million.”

Another adjustment was the elimination of the subsidy provided to PSU’s football program. “The biggest user of the education and general fund’s subsidy in athletics is football, and the decision was made that they will no longer receive that subsidy,” Rimai said. The move reduces football’s budget by around $800,000 between this year and the next.

Open floor

After Provost Sona Andrews presented a closer look at the budgeting process in the Office of Academic Affairs, the floor was opened for questions. In addition to several questions about the university’s financial priorities, other questions explored the overall tone of the financial conversation on campus as well as some technical aspects of PSU’s budget.

Cameron Frank, a senior in English and an organizer with the PSU Student Union, asked what the university plans to do to increase the percentage of its budget dedicated to instruction.
“Furthermore, we would like to present you with an opportunity,” Frank said.

Several other students, rising while Frank was speaking, presented PSU President Wim Wiewel with a symbolic “reset button for the future of Portland State University,” which Wiewel pressed. In turn, he was presented by the students with a “Portland Nice” award to commemorate the moment.

“I really appreciate this approach to starting a conversation, and I look forward to continuing it more extensively,” Wiewel told
the students.

Frank said in an email that he and other students were worried that Wiewel’s April 11 promise to keep things from returning to normal following an 11th hour faculty contract agreement would end up left by the wayside.

“We therefore wanted to use the budget event as a way of taking a symbolic step towards crystalizing the promises [Wiewel] has made to PSU,” Frank said.

Patricia Schechter, a professor of history at PSU and an executive council member of PSU’s chapter of the American Association of University Professors, asked Rimai about the source of funding for faculty wage increases, noting that earlier in the presentation it had been said that PSU regularly accounts for three percent increases in expenditures.

“If that’s sort of anticipated and we register that number with various official bodies, how come when the contract is settled the money comes from the rainy day fund?,” Schechter asked. “Isn’t it sort of planned for?”

“We start the new budget from where we ended the old budget,” Rimai said. “So if we spent more the previous year than we brought in, that’s where we start the next year, and so we try to make adjustments from that.

“The question is, what do you do about compensation?” Rimai said. “Frankly you might cut it, because that is frankly the largest portion of our expenditure budget.

“That’s generally pretty unacceptable for this community,” Rimai said, adding that it would put PSU at a disadvantage for staff recruitment and that these budgetary changes are made over the timespan of years.

Schechter responded by saying that the topic was worth exploring further.

“In this exchange, I believe we identified an important area for scrutiny and the best of our shared governance process,” Schechter later said in an email. “In this sense, I was very glad with the outcome of the meeting.”

For more information about PSU’s budgeting and to see a copy of the presentation slides used at the town hall, visit pdx.edu/fadm