Despite cuts to faculty, efforts to privatize some services and the shrinking of its campus, the University of Akron still faces “significant financial challenges, which if left unaddressed, threaten to undo all of the positive changes that have occurred,” the university’s Board of Trustees agreed Wednesday.
As such, the board voted to support President Gary Miller’s recommendation that “all steps necessary be taken to substantially reduce the university’s budget challenges in the next two fiscal years.”
Those likely don’t include a reduction in force, something the university has already gone through twice, said Jill Bautista, the interim CFO and vice president of operations for the university. But in the evaluation phase, she said, everything is on the table.
“We’re really focused on tightening up operating expenses,” Bautista said. “Really, we’re looking at it all.”
The university’s $378 million in debt is larger than its $290 million endowment. And its expenditures are outpacing its revenues — in the 2023 fiscal year, the university had a $30 million deficit, which it covered by dipping into its reserves.
Steps have been taken to bring in more funds, including from privatization. The university made $55 million from privatizing parking, Miller said in a message to colleagues included with the resolution approved by trustees. It’s also exploring privatizing its nine residence halls, the source of $80 million of its debt load.
A vote on housing privatization is expected to come later this year. Proposals could include potential upgrades to the dorms or new construction.
“However, neither parking nor housing helps us with our structural debt problem — we are currently spending more than the revenues that we bring in,” Miller wrote. “This is due to many factors, but has risen to the surface for the Board and me now” because of factors that include a $4.8 million decrease in state payments to the university for instruction, a rise in inflation and uncertain enrollment numbers this fall due to delays in financial aid offers.
“The trajectory to full sustainability will require more than a single year’s budget realignment,” Miller’s letter said. “It will require a commitment to multiple approaches to all work activities.”
Some, like a hiring freeze, may be temporary, he said. Others may represent a new norm.
Looking across the university to reduce costs
Bautista said her office is looking at ways to reduce costs for supplies and services, advertising, equipment and other categories. She wants to reduce the cost of doing business within each department. The university also has plans to sell Quaker Square, the Martin University Center, Glenville Hall and some vacant land parcels east of Spicer Street.
In Miller’s letter, he said athletics, administration, colleges, departments and offices will all be among the areas targeted for savings. He said the university will be transparent about its need to make “hard decisions.”
A proposed budget will go to the Board of Trustees in June with some of those cuts and revenue additions, Bautista said.
“It’s about long-term financial stability,” she said. “We have to significantly reduce our expenses.”
Miller’s letter said he was working with internal leaders on the upcoming budget. Kate Budd, chair of the faculty senate, said in an email that she was appreciative of Miller’s inclusion of academic leaders in the conversations. She said that the group was “so early in the process” there was nothing of substance to say but that her focus is on maintaining the university’s high standards for academic excellence and on student needs.
Tonia Ferrell, chair of the University Council, echoed Budd in a separate email, saying the group had “yet to have the substantive conversations” that will occur before the budget is presented next month.
“However, I am very pleased that President Miller’s message to the campus community reinforced the importance of the shared governance process, and that the administration will work together with us and others to refine and explain the budget,” she said.
Miller and Bautista both noted the University of Akron isn’t alone in facing financial challenges. Notre Dame College, a private school in South Euclid, is closing at the end of this semester due to mounting debt. Cleveland State University is planning voluntary buyouts for faculty and staff amid a $40 million budget shortfall and falling enrollment.
“We’re not in a unique situation,” Bautista said, noting there were a number of “headwinds” facing higher education in general.
Over the next month, she said, leaders will build a plan that focuses on preserving the student experience and maintaining high standards.
“This is responsible decision-making for the university,” she said.