Recently, a member of the St. Cloud State faculty talked about how the Potter administration is playing games with financial reports. This is the faculty member's explanation of the games the Potter administration is playing.
Lying with Statistics: Statistics Don’t Lie But Those Using Them Can
by Silence Dogood
Last February, the SCSU administration was planning for a 2.4% drop in enrollment for this year. By April, the number reported to the Budget Advisory Committee was an enrollment drop in the range of 2.8-3.2%. According to an email sent by Provost Malhotra on September 19, 2013, "When we completed our budget planning for FY14 in April, we planned for an FYE reduction of approximately 4.0%." [Just as a side note it would be interesting to know when the change from 2.8-3.2% to 4.0% occurred and when it was communicated to the Faculty Association and campus community. This is just another example, of which there are many, where the administration has not felt the need to communicate important information with the Faculty Association.]
Unfortunately, the predicted drop in enrollment is going to be larger than the 4% drop that the administration planned for and some think the new prediction may follow the pattern of earlier predictions and under shoot the actual decline which might be significantly larger—only time will tell. In light of a pattern of under estimating the enrollment decline it is hard to understand how President Potter, at Meet and Confer on September 5, 2013, could be so adamant that "The drop will be 5%!" Remember a 5% decline is more than 100% higher than the original predicted decline from last February (2.4% vs. 5%).
From February to the end of April, the predicted decline in enrollment grew from 2.4% to 4% and the latest prediction for the FY14 is a 5% decline. Remember nearly everything reported by the administration to date has been a prediction and the administration's track record on making predictions hardly inspires confidence. Very simple math shows that the administration's latest prediction of a 5% decline was only off by 1% from the April prediction. However, what this really amounts to is an error in the prediction of 25%. So, clearly, the administration's ability to accurately predict enrollment is not outstanding.
In his September 19th message to the campus community, Provost Malhotra did share that summer enrollment was down 5.4% and that year to date enrollment comparing the enrollment this Fall with last Fall was down 5.3%. His prediction for Spring is that enrollment will be down only 4.7% so that the overall enrollment for the academic year will be down by 5.0%. Based on the past track record of predictions, it would not be hard to 'predict' that the enrollment for Spring will be down by more than 4.7% predicted by the administration. However, for simplicity, let's just assume that enrollment for the year will be down by 5%.
At the most recent Meet and Confer on September 5, 2013, the administration presented a document that indicates that there is a need to cut the budget to cover the lost tuition dollars from the administration's now predicted 5% drop in enrollment. The total amount to be cut is $2,861,117. Unfortunately, nothing in the document indicates where the money is to be cut.
One percent seems like something so small that it might almost be insignificant. According to the September 19, 2013 email sent by Provost Malhotra, "We are taking the necessary steps to adjust our current FY14 budget for the additional 1.0% enrollment shift, which equals about $620,000. With a total operating budget of more than $210 million, this represents a reduction of about 0.3%."
First, instead of calling it an enrollment decline, it is now called an "enrollment shift." I don't know about you but if enrollment had declined by 15% over the past three years, I think I'd look for a new way of describing it—some call this "spin." Clearly, "shift" sounds so much better than "decline."
Second, it really isn't an "adjustment" of $620,000, because as presented at Meet and Confer, $2,861,117 needs to be cut from the FY14 budget, which even according to the administration's own figures is a 1.72% decrease—this is significantly larger than the reduction of 0.3% Provost Malhotra cites. However, it seems clear that the Provost and the budget folks are not on the same page because at Meet and Confer it seemed like the budget cut of $2,861,117 took care of the 5% enrollment decline. However, two weeks later, the Provost is saying that the additional 1% decline in going from a 4% to a 5% decrease will mean and additional $620,000 must be cut from the budget. We are only left to wonder whether we will be cutting $2,861,117 or adding the $620,000 to this number for a total cut of $3,481,446. Clearly, this is not entirely transparent!
In the same email of September 19, 2013, Provost Malhotra states: "Our organization is healthy, our reserves are stable, and we are confident we can deal with the budget impact in FY14 without any staff cuts or retrenchment." It is important to remember that SCSU has had successive declines in Fall enrollment of 5.9%, 4.5% and now 5.2% (using the administration's own prediction for this fall), so one might certainly question whether or not our organization is "healthy." A drop of over 15% in enrollment during the past three years might make even the most ardent supporters of President Potter start to swallow hard.
With all of the cuts from the past three years of declining enrollment, one might wonder where the money (either $2,861,117 or worse yet $3,481,446) is going to come from. With over $1,200,000 necessary to cover the shortfall for Coborn's Plaza, $240,000 annually for three years for additional police protection, $150,000 annually for three years for the Confucius Institute, debt service for the new ISELF complex, as well as international travel to Malaysia and Turkey, it is hard not to think programs on campus are going to feel the pinch again.
Ultimately, the question is: Does the data show a "healthy" institution heading in the right direction or not? Remember statistics don't lie (only statisticians).
What's triggering the troubling financial figures is a dramatic drop in enrollment, coupled with some foolish financial decisions. St. Cloud State President Earl Potter III signed the contracts for filling the Coborn Plaza apartments, building the Confucius Institute and paying for City of St. Cloud police officers.
These are foolish decisions. Agreeing to fill an apartment complex is foolish. Agreeing to fill it for 20 years is extremely foolish decisionmaking. Agreeing to fill an apartment complex for 20 years, then agreeing to a 3% per year escalator clause for the life of the contract is something a freshman business major isn't stupid enough to do.
Still, that's what President Potter did.
According to St. Cloud State's financial records, the Confucius Institute is costing the University $150,000 a year. As for St. Cloud State paying for three police officers at the cost of $20,000 per month, it's questionable whether these officers are needed. What isn't questionable is whether it's SCSU's responsibility to pay for the officers. It isn't because it's the City's responsibility to pay for them.
When a university makes this many foolish financial decisions, it isn't a healthy university. When it makes this many foolish financial decisions while enrollment is dropping 15% over 3 years, that university is teetering on the brink of financial calamity.