Following months of careful review of the financial issues at Jackson State University, interim President Rod Paige announced Tuesday the completion of a comprehensive Budget Reduction and Recovery Plan designed to improve efficiencies and move the university toward fiscal stability.
The plan includes implementing a hiring freeze, suspending all internally funded travel, eliminating all unfilled positions, reducing spending on commodities, discontinuing several terminable contracts, resizing satellite campuses and academic and administrative restructuring. Further, to achieve the necessary cost-cutting goals, the university is implementing a reduction in force that will bring the FY2018 budget in balance and allow the university to focus on rebuilding depleted cash reserves.
“We did everything possible to avoid implementing a reduction in force. However, due to an additional $4 million in cuts to our state appropriation in FY2017 – and $1.8 million in additional cuts projected – it became inescapable,” Paige said.
Forty-two filled positions have been recommended for elimination through this process; affected employees will receive a 30-day notice. These included positions reduced due to the restructuring of academic and administrative units, resulting in the elimination of one dean, seven department chairs and one program coordinator. No faculty was included in this reduction. The total cost savings from these reductions are an approximate $2 million.
The earlier elimination of 65 vacant positions, including faculty and staff who retired or resigned, equate to more than $4 million in savings, bringing the total reduction in payroll costs to $6 million.
“I know these are tough changes, but they will leave the university in a much stronger position financially and will increase the efficiency of the institution,” said Paige.
The university solicited input from a broad representation of the campus community to develop efficiency measures and make recommendations that are included in the Budget Reduction and Recovery Plan. Five campus advisory groups, called Advanced Development Groups, were established to study and recommend efficiency measures in academics, business and finance, enrollment management and administration.
Paige said, “I have been impressed with the willingness of so many members of the JSU family to sacrifice personal and unit interests for the welfare of the institution. Everyone is committed to our students and their success.”
As previously acknowledged, continued expenditures from a budget based on unrealized revenue projections reduced the university’s cash reserves over the past five years by 89 percent, dwindling from $37 million in FY 2012 to $4.2 million in FY 2016. The primary factors contributing to the shortfall were increased debt payments and an increase in scholarships given, among others. With dwindling state and federal aid, the university took the necessary steps to support its students through increased investment in student aid, which contributed to the budget shortfall. Ongoing factors have caused further utilization of cash reserves to meet expenditures.
The actions taken to reduce the FY2017 budget and operating activities have had a dramatic impact on the university, and the recommendations for reductions to the FY2018 budget are painful but necessary.
With regards to the total operation, the university has incurred operating losses from 2013 to 2017 averaging approximately $12 million per year. Significant cost-cutting measures implemented in the last half of FY2017 will help minimize this trend; however, it will take several years to reverse the impact of $48 million in losses incurred in the prior four years.
As the university moves forward to address these financial issues, the foremost consideration is that our students continue to receive a first-class education and a degree that is valued in the global marketplace. Administration, faculty and staff are committed to meeting these expectations and ensuring the academic programs and educational opportunities remain at a high level. This is demonstrated by the fact that, while overall spending is down, the percentage of funds dedicated to academic spending is up.
“Because the overall objective is to streamline operations so the university can function as efficiently as possible, all units and administrative divisions will have to manage with fewer resources for the next few years,” Paige said.
How long these constraints will remain in place is dependent on the time necessary to rebuild the cash reserves to a level appropriate for a university of our size and mission. These measures will not diminish in any way the quality of education our students receive.”
Long-term goals include crafting a strong strategic plan to include higher fiscal performance, developing a plan to diversify revenue streams and address capital needs and implementing an enrollment plan that aligns JSU faculty-student ratio and average cost per student to peer institutions. Additionally, implementing an integrated budget and accounting system with a strong reporting function and launching a capital campaign to support the strategic plan are included in the Budget Reduction and Recovery Plan.
Please click here to view the Budget Reduction and Recovery Plan.