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College facing deficit for 2017-2018 academic year

Beloit College is facing an operating budget deficit of nearly $2 million for the 2017-2018 academic year. Beloit College president Scott Bierman and several others addressed the issue at the Academic Senate meeting on Wednesday, Nov. 8 in front of an audience of students and faculty members. The meeting took place at 4 p.m. in Richardson Auditorium.

“We are committing ourselves to solving this deficit problem over a two-year period,” Bierman said. “We’re trying to give ourselves time to solving this deficit problem as smartly as we can… We are committing ourselves to generating as much demand for the college as possible, so that as large of a share of the deficit reduction can happen through increased revenues through tuition revenue and gifts to the college.” 

Bierman started by listing facets in which the college is succeeding.

“The quality of a Beloit education has been and remains absolutely exceptional. There is good evidence that the liberal-arts-in-practice paradigm is a smart approach,” he said. “It’s mission-centric, [and it] dovetails with evidence about what really matters in a college experience in having [a] quality life and quality career.”

Despite this evidence, however, not everyone sees Beloit in this light, according to Bierman.

“Beloit is seen by an awful lot of prospective families, despite what we believe is true, as way too substitutable with American colleges,” Bierman said. “This substitutability has the potential to create great tuition revenue volatility.” This is a factor contributing to Beloit’s deficit, as “small changes in how [Beloit] is perceived generate large changes in number of students and willingness of students to pay for a Beloit education.”

“This past year has shown us that there is significant variability in our enrollment cycle,” Bierman said, “a decent fraction of which is outside of our control.”

Beloit’s projected operating budget deficit for the 2017-2018 school year is currently close to $1.7 million, but Bierman acknowledged that value could grow if “things were to go badly this budget cycle.” As such, the college is aiming to develop plans that would allow for a $2.5 million reduction to act as a cushion in case this year’s deficit increases.

This is not uncharted territory for the school, as Beloit has seen its expenses outweigh its revenues in each of the past several years. According to the Audited Statement of Activities adjusted for depreciation and debt payments presented at the Academic Senate meeting by Chief Financial Officer and Treasurer Stacie Scott, the college experienced an operating budget deficit of $1,675,777 in the 2012-2013 academic year; $1,228,718 in 2013-2014; $1,129,146 in 2014-2015; $1,097,019 in 2015-2016; and $2,588,566 in 2016-2017.

Deficits of years past have usually been resolved via resources such as endowment loans. However, according to Bierman, the school has “nearly run out of incremental degrees of freedom for solving a budget deficit either through existing pots of money or through endowment funds.”

“We have aimed ourselves at fundraising for the next few years– maybe longer than that– that is all about budget relieving,” Bierman said. “We’re in the early stages of thinking about this; we’re in the process of developing a set of principles that can be used to govern our prioritization of ideas and we are in the early stages of developing a set of ideas which we will certainly be engaging in the community to get smarter ideas.

“There is a pathway to demand creation and budget reform that can work together,” he continued. “[There is an opportunity] for us to refocus things that are most important to the college and provide us with incremental energy and realizing those better-focused directions.”

The next Academic Senate meeting is scheduled for 4 p.m. on Wednesday, Dec. 13 in Richardson Auditorium, where the issue will likely be expanded upon.

“I think that this is a pivotal moment in the college’s history,” Bierman said. “There are a lot of ways that we can go forward that can position us exceptionally well right now, [but] there are a lot of ways going forward that can damage us badly.”

2 thoughts on “College facing deficit for 2017-2018 academic year”

  1. Pingback: Beloit College deficit rises to $7 million after unexpected low enrollment – The Round Table
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  3. Al Hannah says:

    Beloit offers an exceptionally good education, both academically and in application of academic principles through LAPC. However, Beloit does not do as good a job in differentiating itself from other similar liberal arts colleges. As President Bierman stated, the college can be too substitutable with other colleges, resulting in smaller enrollments.
    When Beloit offered the Beloit Plan, the college stood almost alone in the national educational landscape with what it offered. The school’s strong departments – particularly English, anthropology, geology, and others, attracted students to apply and enroll. These days, Beloit’s marketing voice seems muted and sounds like 100 other fine liberal arts colleges around the country.
    Various factors affect college enrollment, including negative on line reviews of the school seem to center around negative views of Beloit, Wisconsin and the crime rate on campus. Further, Beloit is more generous with financial aid and attracting first generation students. More students transfer out, as well. And no doubt, other factors contribute. Perhaps, offering 50 majors may spread the college’s resources too thinly and dilute what Beloit can attract and sustain.
    While Beloit is an academic institution, it is also a not for profit business and has to pay attention to its fiduciary matters. If Beloit attracts more students, whose families can pay the entire expense or at least more than in the past, it would lessen the deficit problem over time. Obviously increased fundraising is part of the answer.
    I look forward to seeing the plan that will address the budget deficit in August 2018.
    Best of luck,

    Al Hannah, ’68

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