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President Steve Morgan has called on a task force to identify problem areas with the school’s budget and re-allocate $8 million in the University’s operating budget during the summer and into the fall semester.
“I’m calling it the Action Task Force,” Morgan said. “They can talk as long as they want, but I think we need some action.”
Earlier this semester Executive Vice President Phil Hawkey issued a cautionary memo about spending constraints to the University of La Verne faculty and staff, which plays to the growing concern across much of the campus about the state of the University budget.
“Unfortunately we encountered large unanticipated expenses associated with the Athens operation, and the undergraduate student aid awards were higher than budgeted,” he said in the March memo to faculty and staff, “As we are entering the last few months of our fiscal year, our revenues will probably meet the budget, but we need to make sure that expenses don’t go over budget.”
On May 3, President Morgan reported on recent Board of Trustee actions including approval of the operating budget for 2005-2006 at $105.3 million (a 7 percent increase over this year’s budget). With that is the $2.5 million continued subsidy from the “quasi-endowment” fund, which functions like an endowment fund but may be spent at any time at the board’s discretion. These funds represent non-mandatory transfers from the current fund rather than a direct addition to the endowment fund.
The administration’s focus will be on “refining our focus,” “efficiency,” “effectiveness,” and “priorities,” according to Morgan’s report, which could mean cuts or reductions to programs.
But could it be too little, too late?
“Everything we spend money on, every source of revenue, is analyzed as we put a budget together,” Morgan said.
For the past few years, University priorities have included employee compensation and increasing competitiveness in employee salaries and benefits, investment in new faculty and staff and facilities, technological improvements like “smart classrooms” and the law school and its move toward accreditation, Hawkey said.
Although the board approved a 3.5 percent pay increase for faculty next year, this figure does not match up with the cost of living increase which would be just over 3.6 percent to keep up with inflation.
The task force will indicate where the University should focus its efforts now, Hawkey said.
Forming the 11-person team was in response to a push from the Board of Trustees to rectify two key factors: continuous withdrawal of money out of the “quasi-endowment” to subsidize the University’s operating budget (a main focus is the law school at $2.5 million next year) and the depreciation of the physical plant.
Donations from alumni and other sources to the endowment have remained relatively stagnant at about $4.5 million for the past few years; one reason could be University Relations’ relatively low spending on fundraising, which at about $1.6 million.
Hawkey attributes the lackluster fundraising efforts to the University’s past priorities.
“In particular, the University has seen itself focus on service and community and less on raising money,” Hawkey said.
This could change within the next year as the Action Task Force has the broad assignment to look at all aspects of the institution’s finances.
Among items possibly up for review are health care benefits, class size, instructor loads, salaries, units required for graduation, marketing and image, and more.
“What the task force is going to have to do is get involved much more at the department level, at the local level, to find out what’s really going on,” Yaffe said.
According to the University of La Verne’s 990 Form, a public document which every non-profit must file annually with the IRS, University spending has increased significantly over the past four years.
Legal fees in 1998 were $31,432, but by 2000 that number had jumped to $127,220. In 2003 legal fees reached $626,451. The extensive legal fees for abruptly closing the Athens campus caused many on campus to fear the financial repercussions.
“One of the most serious concerns of faculty is the question of accountability,” said Richard Gelm, chair of the political science department. “The administration has certain responsibilities and they should have been aware of the problems and paid attention to the situation,” he said.
It is the administration and not the faculty’s responsibility to oversee such programs as Athens, Gelm said.
“But it causes such a huge financial hit to the University that it will come at the expense of academic programs, faculty salaries and others that we’re trying to work on,” he said.
Since 1999, the institution has seen an overall increase in consultations, namely for accounting and legal matters possibly implying that changes are needed in how the University operates. In 1999, consultant expenditures totaled more than $348, 198.
In 2002, the top three consultants to the University were attorneys Dow, Lohnes and Albertson; Seyfarth Shaw Attorneys; and Albert K. Lira totaling $360,163.
The need for consultants is another possible area for review by the task force.
Until a decision on this matter is made, consultations continue with the recent use of Hardwick-Day, a company specializing in computer models that analyze students’ financial aid needs based on family income, academic background and other criteria.
The company was used five to six years ago in the Office of Admissions.
The consultants were brought back to help the University decide if the tuition discount rate is too great, Hawkey said.
Another element that could be up for review is administrative structure.
Issues like consolidation and lowering the cost of management are included.
Yaffe, who is a member of the task force, credits problems like the Athens closure – with its high legal fees – with a low number of academic administrators.
“We have all these extended programs like Athens and we don’t have the administrative structure to really oversee those things,” he said. “A lot of things do slip through the cracks,” he said.
Yaffe said that in reviewing the school’s budget, “We can’t look at one part of the institution without looking at all parts.
“The institution has undergone major changes in the past 20 years. It really has gone from La Verne College to the University of La Verne.
“A lot of those things that grew up to accommodate those changes are in conflict with each other. And at some point we do have to sit down and look at the overall structure of the institution,” Yaffe said.
Bailey Porter can be reached at firstname.lastname@example.org.