Board announces University operating budget, tuition increase

Thomas Celona

The Board of Trustees officially approved the University’s operating budget for the 2010 fiscal year on Feb. 10, supporting the proposed $359 million budget and a 3.5 percent increase in undergraduate tuition.

The Board’s decision comes after a six-month-long process to determine the institution’s fiscal needs for the upcoming year amid one of the most turbulent periods in the economy.

“Given this economy, it was probably the most difficult process we’ve gone through,” said Ken Valosky, vice president for Administration and Finance.

Despite the nation’s current financial woes, all involved in the budgeting process report that they are satisfied with the operating budget they have produced, which includes the lowest percentage increase in tuition since 1973 and a 9 percent increase in University-funded aid.

“Despite the impact of the economy on the University, our primary goal was to have as moderate an increase on tuition as possible and to increase financial aid,” Valosky said.

The newly approved plan sets the University’s operating budget for the new fiscal year – which begins in June – at $359 million, up from 2009’s $352 million budget.

The new budget includes a 3.5 percent increase in tuition for all undergraduates.

Rising seniors and juniors will pay $37,210, while rising sophomores and members of the incoming class will pay $38,240.

Additionally, there will be a 2.5 percent increase in room and board, bringing the overall increase for tuition, fees, room and board to approximately 3.2 percent.

This will be the first year that all classes will have laptops included in their tuition.

In addition to this increased revenue, the budget includes more funding for financial aid.

“We’re increasing undergraduate financial aid that is University-funded by 9 percent to $55 million next year,” Valosky said.

This rise will bring the total of all forms of undergraduate financial aid offered to $61 million.

Valosky stressed the importance of this increase in financial assistance.

“It’s our desire to be able to meet the full demonstrated need [of all students],” he said.

While this is currently not a reality given the budget, the goal of meeting all demonstrated financial need is a component of the University’s ongoing strategic plan, according to Valosky.

A letter explaining the increases in tuition, room, board and financial aid was mailed to parents on Feb. 13.

While these exact figures have been figured out, the announced budget still includes factors which have not been completely determined.

The first of these is an increase in salary for faculty and staff.

“We have a provision for a 3 percent salary increase, but it can range from 0-3 percent,” Valosky said. “We have not yet made a final decision on the increase.”

While the salary increase has yet to be determined, the University has decided that it will not be hiring any new faculty or staff, except in the Office of University Development. “We know that for the long-term benefit of the University and its students, we need to increase fundraising,” Valosky said.

Additionally, final numbers on health insurance have not been determined, according to Valosky.

The University has not yet completed a renewal and is anticipating that it could come at a 10 percent increase.

Another main component of the operating budget is that the University will not be borrowing any money toward capital spending as it has done in years past.

“We want to make sure we implement steps in a very measured manner that doesn’t cause us to put the University at financial risk,” Valosky said.

Despite this hold on capital spending, the University will continue with steps in its planned physical renovation. Over the coming summer, Fedigan Hall will be completely renovated.

The estimated $4.2 million cost of the project will come from Facilities Management’s annual budget.

“Even during this difficult time, that should be a visible symbol that we remain student-focused,” Valosky said.

This process, which brought the newly approved operating budget to fruition, began last summer with the work of the Administrative Budget Committee.

This year’s committee was composed of Valosky; Dean of the College of Liberal Arts and Science Rev. Kail Ellis, O.S.A.; Dean of the College of Engineering Gary Gabriele; Dean of Enrollment Management Stephen Merritt; and representatives from Athletics, the Center for Multicultural Affairs, the Division of Student Life, Financial Affairs, the Office of Academic Affairs and UNIT.

“We work on major assumptions,” Valosky said. “Then, once we have agreement on those assumptions, we make a model.”

This year, those fiscal assumptions were seriously challenged by the struggling economy.

The nation’s economic problems affected the University in two main ways: investment income and the University’s endowment.

“Investment income was a big challenge for us,” Valosky said, noting that returns have now dropped to under 0.5 percent, causing an impact on the budget in terms of millions of dollars.

“We’ve seen our endowment decline,” Valosky said. “We’re not immune to that, but we’re not dependent on the endowment. It constitutes only about 5 percent of the University budget.”

Additionally, when assessing the endowment, the committee looked at its performance over the past 12 quarters, which helped give it more realistic expectations.

During this process, the Administrative Budget Committee worked closely with the University Senate Budget Committee, which is composed of faculty, staff and students.

“The Senate Budget Committee was very patient with us as we worked through the economy’s impact on the University, as we had to rework our assumptions,” Valosky said. “There’s no doubt that this was easily the most challenging year we’ve been through. Most of the concern centered on our families and their ability to access credit. We are tuition-dependent, so we take very carefully the stewardship of [the tuition dollars provided to us by] the parents.”

Once the Administrative Budget Committee had worked out its final budget, Valosky presented it to the entire University Senate, which unanimously recommended the budget to University President Rev. Peter Donohue, O.S.A., and to the President’s Cabinet, which also recommended the budget.

“The budget had broad support throughout the University,” Valosky said. “I think it’s a fair outcome for all.”