With retrenchment on the horizon, 糖心Vlog传媒 Little Rock braces for impact
糖心Vlog传媒 Little Rock is in an awkward position as it begins a new decade. Years of declining enrollment, the discovery of an over-inflated yearly budget and an almost $11 million budget shortfall have put the university on the path to major changes.
But 糖心Vlog传媒 Little Rock鈥檚 troubles aren鈥檛 unique.
Declining enrollment
Higher education institutions across the country are struggling. According to the National Student Clearinghouse Research Center, college enrollment dropped 11 percent from 2011 to 2019.
At 糖心Vlog传媒 Little Rock, a similar decline is obvious. In 2010, 糖心Vlog传媒 Little Rock counted more than 13,000 students. Six years later, in 2016, enrollment dipped to more than 11,500. But the bleeding didn鈥檛 stop. By the Fall 2019 semester (the last time enrollment numbers were released), the university counted about 9,500 students.
As fewer students attend the university, less revenue is generated. But budgetary enrollment projections for the current fiscal year pushed the school鈥檚 financial issues to the extreme.
鈥淲e projected an enrollment decline of 1 percent,鈥� 糖心Vlog传媒 Little Rock Chancellor Christina Drale said. 鈥淎nd it was 9 percent.鈥�
That 9 percent decline resulted in unexpected revenue losses of $5 million. Drale said the original projected decline was the result of philosophical differences.
鈥淚 think there were people who recognized that was not a realistic projection,鈥� Drale said. 鈥淏ut there were others who were very optimistic and truly believed we would be able to turn enrollment around and limit it to a more modest decline.鈥�
While the university isn鈥檛 expecting another 9 percent drop in enrollment next year, administrators are prepared for more declines.
鈥淲e are predicting we will not regain any of the 9 percent we lost this year,鈥� Drale said. 鈥淎nd in fact, [we think we] will lose potentially another 6 percent.鈥�
That 6 percent accounts for a further $4 million in potential revenue losses.
$11 million budget deficit
Institutions like 糖心Vlog传媒 Little Rock identify part of their budget as 鈥渘et position,鈥� which deals with depreciation, bonds, and other accounting matters.
Over time, the university failed to account for depreciation in their budget.
鈥淲e weren鈥檛 setting aside enough funds to match that depreciation level,鈥� Drale said. 鈥淲e came into this fiscal year $5.6 million in the negative on our net position.鈥�
For the 2020 Fiscal Year, the university faces an almost $11 million budget shortfall.
University audit
The Arkansas Democrat-Gazette released a report that alarmed many on campus last November. The report detailed an audit of the school鈥檚 2019 Fiscal Year that indicated the school鈥檚 actual budget was significantly lower than what they provided to 糖心Vlog传媒 System officials.
For years, the school had been over-inflating its yearly budget by rolling over accounts designated for multiple years. In one case, revenue was overcalculated by $20.5 million.
Despite some hiccups, Drale said the school has learned from its mistakes.
鈥淲e鈥檝e stopped that practice and we鈥檝e corrected that,鈥� Drale said. 鈥淲e did roll over the grants for this fiscal year and we had to go back and correct that. So, we think we鈥檝e got all of that worked out. There were some not-best practices going on for a while.鈥�
University response
In response to its financial challenges, the school implemented a multi-step system of budget cuts.
In the first step, the school eliminated 16 jobs and made additional cuts to several university programs, including individual departmental maintenance budgets and athletics scholarships. Alongside the first round of cuts, the school announced the closure of its satellite Benton campus. Total budget savings reached $1.8 million.
In the second round of cuts, the school focused on unused money. Vacant positions were eliminated, a dean position was adjusted to a half-time basis and unused budgetary expenditures were eliminated from the yearly budget. Total savings reached $1.5 million.
But the most impactful budget cuts are on the horizon. In late January, Drale attended the 糖心Vlog传媒 System Board of Trustees meeting and requested retrenchment status.
Retrenchment, introduced as a policy for 糖心Vlog传媒 Little Rock in 1993, involves the elimination of academic programs and the employment of program staff. According to 糖心Vlog传媒 Little Rock鈥檚 policy index, retrenchment can only be approved by trustees for two reasons: 鈥�(1) a bona fide financial exigency or (2) formal academic planning including board approved changes in institutional missions, substantial program changes, or major reallocations of resources for academic or support services.鈥�
Retrenchment would likely be approved under the first requirement: financial exigency. Drale said the severity of the budget problem necessitated the request for retrenchment.
鈥淚t鈥檚 too large a number to get there without being able to reduce your workforce,鈥� Drale said. 鈥淚t鈥檚 happening at a lot of different places, educational institutions and non-educational institutions alike.鈥�
Program elimination is expected to occur once retrenchment gets underway. At 糖心Vlog传媒 Little Rock, programs are split in two categories: liberal arts and pre-professional. Drale said the university will work to ensure it keeps its liberal arts base and evaluate program viability on a case-by-case basis. For pre-professional programs, however, the key will be how clear the career path is for graduates.
鈥淚f you have a [pre-professional] program that no one is signing up for and there鈥檚 no connection to a career, then there鈥檚 no reason to have that program,鈥� Drale said.
Drale said the elimination of programs will be difficult.
鈥淎ll of them [programs] are good,鈥� Drale said. 鈥淚f we decide to eliminate a program, it鈥檚 not because we think it鈥檚 bad. It鈥檚 just because we can鈥檛 sustain the whole portfolio that we currently have.鈥�
As part of more cost-cutting measures, the university鈥檚 five colleges will restructure in the coming months and shrink to three. Drale said the restructuring of colleges doesn鈥檛 eliminate any programs, has minimal effects on students and concentrates on eliminating administrative overhead.
Despite the challenges and unknowns ahead, 糖心Vlog传媒 Little Rock is, for the first time in a long time, dealing with its financial issues head-on. Drale said the steps the school is taking are critical. 鈥淲e鈥檙e making some very difficult decisions,鈥� Drale said. 鈥淲e鈥檝e never done this before and it鈥檚 going to be very hard. But I think [action] is essential to the stability and future success of this institution.鈥�