We have arrived at a critical juncture for PSU's educational mission and financial footing, and it is our duty to stay informed of the current situation and its potential implications for our academic community.
PSU’s Financial Challenge
PSU's Education and General (E&G) budget is strained, with a deficit of $18 million for the current fiscal year. The administration has labeled this a "structural deficit," implying a persistent financial shortfall rather than a temporary setback. This trend is concerning, as we've witnessed expenditures exceeding revenues by $17.5 million last year and $17 million the year before (prior to factoring in Federal COVID-19 relief).
As of last month's Board presentation, the administration reported that PSU's E&G reserves stood at just over $97 million, which is $6.5 million more than they reported to the Board in June (and more than a rounding error!). However, covering the budgeted $18 million shortfall will deplete these reserves to $79 million, a figure that still falls $10 million below the Board's policy-mandated minimum threshold. This threshold is calculated as the funds necessary to cover 90 days of expenses in the absence of other revenue. The remaining $79 million will only cover 80 days of expenses.
The Board's Demand and Its Implications
The administration has told the campus community that the Board of Trustees is demanding the closure of this budget deficit by the start of the next fiscal year (July 1, 2025). They claim the Board will not approve spending from PSU's financial reserves to cover deficit spending beyond the current year. In a future communication, we will point to other reserves held by PSU, based on an analysis of the university’s audited financial statements by Howard Bunsis.
But we must also question the legitimacy and transparency of this mandate by the Board of Trustees:
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The Board's formal approval of the university budget occurs at its June meeting, still eight months away.
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While some Board members expressed opposition to future reserve spending during last June's meeting, there was no formal resolution to this effect.
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Other Board members voiced reservations about the wisdom of such drastic budget cutting within a single year.
If the Board has indeed mandated an $18 million cut from the E&G budget by the next fiscal year, it appears to have done so through unofficial channels, bypassing a formal public vote. This lack of transparency is deeply troubling and merits further scrutiny.
The Impact on Academic Units
Our academic colleagues are now facing the brunt of these financial pressures. The Office of Academic Affairs has issued directives to academic units to identify "financial sustainability targets" – a euphemism for budget cuts – totaling $12.5 million.
We should all be deeply concerned about the potential impact of these cuts on our members, our students, and the overall quality of education at PSU. Is the university’s so-recently-adopted strategic plan really guiding these decisions? Or is this yet another iteration of ill-considered targets handed out to Deans and Chairs who must now decide what will be cut and who will lose their jobs?
We will be vigilant in monitoring this situation and advocating for transparency, fairness, and the protection of our academic mission throughout this process. We urge all members to stay informed and engaged as we navigate these challenging times together. Your voice and participation are crucial as we work to ensure that any financial decisions made prioritize the core values of our institution and the well-being of our academic community.