Revised Deficit Forecast: Reverse the Layoffs

How did the projected budget deficit for the year suddenly shrink by more than $3 million?

At the Board of Trustees Finance and Administration Committee meeting on Thursday, April 3, we learned that the projected Education & General (E&G) fund deficit has declined by about $3.1 million relative to what was budgeted last June (see F&A Committee slidedeck, slide 12), which is good news. Partly this is due to greater-than-expected earnings by the Public University Fund (a joint investment fund) – despite lower state support for PSU – and partly due to less-than-expected personnel expenses, mainly benefits. PSU’s Budget Office consistently over-budgets benefits – called OPE for “other personnel expenses” – so we usually expect to see this cost estimate reduced during the course of the fiscal year.

The non-E&G deficit is now projected to be $1.3 million greater than originally budgeted, which is not good news. Although the expected net losses from auxiliary operations remain unchanged – including losses of $4.4 million from Athletics and $2.0 million from University Place Hotel – the projection is due to a decline in non-E&G revenue from the University’s non-credit programs (slide 13).

The University’s cost savings from laying off 17 of our nontenure-track faculty next year will be $2.2 million, including OPE — substantially less than the projected $3.1 million reduction in the E&G deficit. PSU-AAUP joins the Faculty Senate in calling on the administration to set aside freed-up E&G reserves to retain the faculty it plans to lay off in June (see Resolution of No Confidence in the “Bridge to the Future” Financial Sustainability Plan). Use the next academic year to conduct a more strategic review of academic programs with the full involvement of faculty in a legitimate shared governance process.

We also call on the administration to resume negotiations with the union on cost-saving measures like a voluntary FTE reduction and early retirement incentives.