The University’s Budget Deficit

The University of St. Thomas has run a deficit of $8 million since the beginning of 2019, according to Vice President for Finance Spencer Conroy, an increase over the 2018 deficit of $7 million quoted to the Independent by Vice President for Communication and Marketing Jeff Olsen.

Fundraising and the UST community as a whole, however, have helped lower the 2019 net deficit to about $2.5 million, according to Conroy.

Meanwhile, UST President Richard Ludwick is making changes to UST’s outdated business model through an ongoing university-wide restructure.

“It is a shared vision, and it will take many hands in a shared effort to bring it to reality,” Conroy wrote in an email to the Independent.

In an interview with the Independent, Conroy said the budget is measured annually by departmental requests. 

“The budget grows from year to year depending on expenses; in regards to expenses, they must obtain budget requests from all departments in order for each department to operate,” Conroy said.

According to Conroy, 60-70% of the University’s budget goes towards employee salaries. Other expenses help provide students with the “UST experience,” and include giving scholarships to students who could not afford to attend otherwise, he said. 

 “All of these pieces fit together to create either a surplus or deficit number.”

Conroy said the deficit must always be funded from “somewhere.” Typically, the University draws those funds from donors, additional fundraising, occasional additional endowment draws, or from cash reserves saved from years when some of UST’s graduate programs were popular, he said.

Nonetheless, fundraising ultimately should be directed at building new services or facilities, not making up an operational deficit, Olsen said. 

“We shouldn’t be in a position where we are spending more on the operational side and then using fundraising money to mitigate that,” he said. “Instead we want to be in a position where we can use all the fundraising money to help kind of shape a new future for the University.”

Sometimes, too, funds raised by the University are restricted and can’t be used for operations, Ludwick noted.

“Even though we raised that much money, it didn’t necessarily hit the operating bottom line,” Ludwick said. 

The deficit was already a problem when Ludwick arrived at UST, and he has been focused on changing UST’s current academic business model since then, Olsen said.

He said no one is at fault for the deficit; rather, it is a result of the University needing to shift its focus to meet changing market needs. 

 “As the expenses of the University continue to go up over time, also the way our programs are aligned were not bringing in the revenue that matches with how much we are spending,” Olsen said. 

A few years ago, for example, the Master of Education and the Master of Business Administration programs were larger than they are now, he said, but such programs have seen a reduction in enrollment nationwide.

UST’s Masters of Education program had about 1,100 students in 2011, according to Conroy. Currently, it has approximately 450 students.

 According to Conroy, graduate students receive significantly lower financial aid packages from UST compared to undergraduate students. A drop in graduate enrollment, therefore, has an outsize impact on the budget. 

 “As we’re losing graduate students and graduate revenue, the increase in the undergraduate side wasn’t enough to make that up,” Conroy said.

Now, Olsen said, the University needs to focus on identifying popular graduate programs and recruiting students for those programs.

Olsen said the University is determined to reach a balanced budget again and that UST’s Board of Directors is confident about reaching that goal.

“The community set the goals of the Call Toward Tomorrow; the community’s going to help make that happen with their ideas and all of their input,” Olsen said.

Conroy said the University will always have financial questions to consider.

“The important point is that change will either happen to you, or you can be a part of it; he said. “We want to be leading that change as opposed to being a victim of it.”