Butler University officials used money from two funds to make up for a $2.28 million deficit in this year’s projected budget.
$1.145 million from last year’s surplus will be used in part to cover the deficit. The remaining $1.135 million will come from a contingency fund, a sort of cushion for the university budget.
Several contributing factors—including an error in calculating financial aid, a record-size freshman class, a change in the physician assistant program, the Atlantic 10 conference change and multiple capital expenditures—resulted in the deficit.
President Jim Danko and Bruce Arick, vice president of finance, explained the situation to some of the 36 faculty senators on Tuesday.
Danko explained that while the deficit is not something they were expecting, it is a “manageable challenge.”
The university’s total operating budget is more than $180 million, so the money used from the surplus makes up roughly 0.6 percent of that budget.
“A million dollars is a lot for anyone,” Arick said. “We just have to keep in mind that it’s not even one percent of the total budget.”
The university’s largest budget line items cost the university more than $2.5 million.
The university lost more than $740,000 to unexpected costs with tuition, financial aid and final enrollment numbers.
A “confusion” between the university and its consultant, Hardwick Day, resulted in a loss of $455,000 because there was a discrepancy on what funds can be covered by financial aid.
Each year, the university has to estimate how many students it should budget for the coming year.
“We have to make assumptions based on history,” Arick said. “We’re never going to nail it.”
Sometimes the university will bring in more than expected and will end up with a tuition revenue. Other times the university overestimates the number of students who enroll.
Danko said that Butler offers more money than other universities to attract more students each year.
“We put more money on the street to make sure we get a quality freshman class,” Danko said.
The differences between
estimates and the actual enrollment contribute in part to the remaining deficit in the tuition revenue category.
EXTRA FRESHMEN BRING IN EXTRA COSTS
Though a record-size freshman class did bring the room revenue up to $375,000 and the capacity up to 98 percent, it also increased costs for the university.
The larger freshman class cost the university an additional $345,000 in operating expenses.
The costs include additional instructional support, student services, residence halls operations, information resources and extra housekeeping and supply costs.
PA PROGRAM ADDS COSTS
Over the summer, the physician assistant program proposed increasing its number of student openings from 50 to 60.
This increase required a new non-tenure faculty member, whose salary and benefits will cost the university an additional $105,000.
Arick said he estimates that the university will bring in an additional $300,000 next year from this venture alone.
ATLANTIC 10 SWITCH
The university expects to see an increase in ticket, concession and sponsorship sales because of the switch to the A-10. The estimated increases would not balance out the added costs of travel this year.
Arick estimated that the athletic operating expenses would increase to $800,000, leaving the university with a nearly $600,000 price tag for the conference switch.
The athletics department has decided to pick up the $300,000 membership for joining the A-10.
Butler will pay $400,000 over the next four years through 2016-17.
Unexpected costs in capital improvements added up to a $795,000 price tag for the university.
The university paid $150,000 in improvements for the freshman class, including the purchase of extra residence hall furniture, classroom chairs and Atherton soft space.
When university officials decided to fix the entrance to Jordan Hall, they were hit with a $480,000 estimation. What started out as a cosmetic fix to the academic building is now a project that could fix the physical integrity of the structure.
“It’s an expensive fix,” Danko said. “But it’s going to be beautiful when it’s done.”
Other capital expenditures include parking garage consulting, the hot water system in Atherton, a recital hall ceiling, a chilled water leak and other projects.
While there are funds to cover this year’s deficit, Danko said everyone needs to take precautions with budgets.
There was discussion about whether the 2.5 percent raise pool would be released to faculty members this year as planned.
The salary raises that are due will still go on after considering the timing of the events.
“It’s manageable, but it’s going to make some things tough,” Danko said.
It is not yet clear how this could impact next year’s budget, but Danko said there is still plenty of time to see what will happen between now and then.
“I couldn’t possibly tell you what the implications are at the moment,” Danko said.