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.”