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USF, universities around country struggle with budget woes

TAMPA — With the fall semester looming, the intoxicating buzz of newness settled in at the University of South Florida. Students hung posters, ate pizza and strung balloons to ring in another year of college life.

Away from those hopeful scenes, the university's business side waded through USF's financial issues. One high-level leader resigned amid the give-and-take over spending. Memos went out, explaining that tight times were the "new normal."

USF provost Ralph Wilcox addressed the faculty Aug. 22.

"I have been sounding the caution bell about the changing fiscal reality in higher education, especially public higher education, over the past several years," Wilcox told the staff.

He repeated a quote he shared with them two years ago: "We cannot simply bury our heads in the sand and nostalgically dream of a return to public higher education's salad days. We might do well to heed H.G. Wells' advice: 'Adapt or perish.' "

• • •

When it comes to college and money, the headlines have focused on student debt, which has topped $1 trillion nationally. Tuition has steadily increased as Americans struggled to find jobs, prompting students to question the value of a degree.

But public universities — ivy-coated bastions of stability, economic propulsion and the greater good — were suffering their own woes.

Federal stimulus money has run out, and the government's automatic budget cuts have tightened the competition for grants. States still fragile from the recession are not funding universities like they used to — the Center on Budget and Policy Priorities found every state but North Dakota and Wyoming are spending less per student than before the recession.

American higher education is on an unsustainable path, according to a report last year by consulting firm Bain & Company and private equity firm Sterling Partners. It said one-third of all colleges and universities have significantly weaker financial statements than they did several years ago, with more liabilities, more expenses and thinner safety nets.

Moody's Investors Service in August found revenue growth at public universities had slowed from 4.8 percent in 2011 to 1.7 percent just a year later. And Moody's issued a negative outlook for the entire sector.

"The last four or five years have been very difficult," said Dean Colson, chairman of Florida's Board of Governors, which oversees the State University System. "We've seen almost a billion dollars in cuts. We were able to make some of that up with some tuition increases. But even after you subtract out the tuition increases, you're still talking about a couple hundred million dollars in cuts, while at the same time adding about 35,000 new students in the system. … So you've got to change the way you do business."

At USF, a prolonged period of state cuts totaled more than $120 million, including $50 million in one year. From 2008 to 2011, the full operating budget went from comfortably black to severely red. USF leaders turned to cash reserves, which dropped 42 percent from 2011 to now.

Students filled the void the state left. At USF in Tampa, the yearly tab for undergraduate, in-state students rose from $3,990 to $6,410 in five years — still among the nation's lowest. Other Florida universities imposed similar hikes.

"I've seen my tuition go from $75 a credit hour to over $200 a credit hour," said Christopher Cano, 30, who has been getting degrees at USF for 10 years. "The faculty and students at USF are more resilient than a lot of people give them credit for, and we've been able to adapt to the situation. But eventually it's going to come to a breaking point, and you can't get blood out of a turnip."

This year, Gov. Rick Scott vetoed a proposed 3 percent tuition increase. Lawmakers restored $300 million in cuts at state universities, but it wasn't enough to make up for recent years' losses. The atmosphere got more competitive when the state named Florida and Florida State universities "pre-eminent," awarding them millions for performance in graduation, research spending and more.

While USF strives to keep up in those areas, it also wants to maintain its excellent bond rating by rebuilding reserves. Good bond ratings lead to better pricing when the school needs to borrow.

"The bond rating is a proxy for the financial condition of the university," said USF Chief Financial Officer Nick Trivunovich. "The bond rating is important to us from a reputation standpoint. We consider ourselves on par with UF and FSU." If it worsened, he said, "it would be like we fell."

• • •

Satisfying both the balance sheet and the human element of a university does not come without painful changes.

The plan at USF is still evolving. In July, USF president Judy Genshaft suggested increasing cash reserves by 5 percent in one year, as well as placing a hold on new hires. She also announced enhanced merit raises for high-performing staff.

Genshaft heard plenty of feedback. Graham Tobin, vice provost for strategic and budget planning, resigned to return to teaching, saying in a letter that he couldn't support the cuts.

"It's not unusual for an administrative team to have differences of opinion, and it's healthy," he said in an interview. "The budget is critical. … But we haven't established what is an ideal balance."

In August, Genshaft said the school would replenish cash reserves over three years instead of one. She said the longer time frame was needed to find efficiencies and new revenue sources.

"If you looked today, I would say there's not a lot of fat here at the university," Trivunovich said. "It's a new paradigm. It has to be a part of the culture."

In that new culture, professors will not have as much freedom to travel. Many will pick up extra classes, using time they might normally take to write books. Deans will need to work harder to justify expenses.

In reports to the state, USF has listed ways it is trying to save money. Among them: Moving student-teacher evaluations online for a savings of $23,500 a year, planting donated trees for a savings of $10,000, and turning up building temperatures slightly and not running heating and air on the weekends at USF St. Petersburg.

"People don't argue with the goal," said Gregory Teague, president of USF's faculty senate. "Part of what will evolve as part of this process is, I think, a more widespread understanding on both sides."

Savings are just one part of it. Universities must find new revenue sources. Online classes have potential. Attracting more out-of-state and international students also can bring in money.

"I think higher education 30 years from now is going to look very different than it is today," Colson said. "But it's still very inexpensive to get a baccalaureate degree in Florida if you want to take the paths that are available to you."

Tobin comes from a humble background in England. He worries about students around the country who aren't wealthy losing access to education.

"We've got to invest in higher education," he said. "I'm not saying we're anything special, but in a way, we are. Because we are educating the young."

• • •

With the fall semester starting last week, USF St. Petersburg biology professor Deby Cassill devised a way to maximize time and money, integrating class projects and research that might result in publication.

"This is an economic downturn," she said. "Whatever the cause, right or wrong, it's a reality. I have been more than willing to double my class load and forego salary increases. In fact, I would have taken a decrease if there was a chance I could keep my job because I love what I'm doing."

To kick off the semester, Cassill's students started studying the geometric probability of mating success in rhinoceroses.

"When times are tough, it's really when we get creative," she said. "What can we do to survive? And every animal has to ask that question."

Stephanie Hayes can be reached at shayes@tampabay.com or (813) 226-3394.

USF, universities around country struggle with budget woes 09/02/13 [Last modified: Tuesday, September 3, 2013 12:56am]
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