Low enrollment poses problems for Bethel’s budget

February 21, 2013 | 11 a.m.

School looks to cut back and stay ahead of new trends in higher education 

News | Jon Westmark

Bethel takes stock of its brand

Photo for The Clarion by Drea Chalmers.

In a combination of financial dynamics that some are calling a perfect storm, Bethel has announced a large revenue shortfall for the back-end of the current fiscal year, and is projecting a similar outlook for the next term, a common theme as schools continue to adapt to changing educational landscape.

In an email sent to faculty and staff, President Jay Barnes cited decreased enrollment in both the Bethel Seminary and the College of Arts and Sciences, annual financial aid increases, rising health care costs and initial payments on bonds as some of the reasons for the dilemma.

In the email, Barnes stressed that Bethel’s enrollment is particularly important to the university’s success. Tuition and room and board revenues made up about 90 percent of the 2011-2012 fiscal budget. The current term saw CAS enrollment dip by 60 students from last spring, in part due to a larger mid-year graduating class than projected. Though this is only a 2 percent decrease, it amounts to $900,000 less tuition revenue for the semester. If the enrollment trend continues in the fall of 2013, it will compound the problem because of an already smaller base.

The seminary has also seen a decrease. Since 2008, its enrollment has dropped by 20 percent. In the winter semester alone, there were 134 fewer full-time students compared to four years ago, which translates to $600,000 less tuition revenue. 

The total projected shortfall for the current fiscal year is $6 million, with an estimated contingency relief of $1.9 million. But if the current trend continues in the next fiscal year, this equates to a $7-10 million deficit, or about 7-10 percent of the annual budget.

Dealing with deficits is nothing new for Kathleen Nelson, senior vice president for finance and administration. When she arrived at Bethel during the 2009-2010, she helped to balance a 3-4 percent shortage. “The question of our survival is not a question,” she said. “We’ve got to take a look at our budgets and our revenue opportunities and make some hard decisions.”

Nelson is part of President Barnes’ cabinet, which is largely responsible for recommending courses of action during financial difficulty. So far, the cabinet has proposed a voluntary separation incentive program for staff and faculty who are near retirement, a freeze of base salaries for staff and faculty, possible changes in benefits and reductions in programming and personnel to help lower expenses.

A similar separation incentive program was offered in 2010, with roughly a quarter of eligible staff and faculty accepting the deal.

Recommendations for potential programming cuts begin in their respective departments, often with faculty input, before being brought to the cabinet, which then reviews the recommendations based on set criteria. According to Rich Sherry, executive assistant to the president, these criteria range from quantitative factors like national and local demand for the program to qualitative things like how the program contributes to the mission of the school.

Revenue bolstering initiatives are also in the works, but usually take longer to develop. One example is the Physicians Assistant program, which, pending accreditation, is set to have its first cohort next fall after two years of budgeted monetary preparation. “The program helps our brand – our reputation,” Nelson said. “It fills a niche in the marketplace and there’s strong demand for it.”

Finding niches in the shifting college marketplace is something that Bethel is used to, according to Sherry. “Twenty-five years ago we had to move in a direction that would ensure the economic health of the university,” he said. “We started an undergrad and almost immediately began to add graduate programs, and now we have an Ed.D., a doctorate in education.”

Today, he sees two major trends in high school education that have contributed significantly to Bethel’s enrollment situation. The graduation rate is down in Minnesota, resulting in fewer prospective students, and the state’s demographics are shifting toward a population without a family tradition of going to college.

He also described a trend toward “swirling” education or taking a mixture of AP, PSEO and online coursework before enrolling full-time. According to Sherry, it is common for freshmen to come in with 30 college credits – a full year’s worth. This is not necessarily a new norm. “I think the biggest change has been the economic situation,” he said.

More credits coming in often means that students do not stick around as long. “In the past, we pretty much always knew when we enrolled a number of freshmen how many would graduate in four years, but that’s become more unpredictable in recent years,” Nelson said.

Nelson experienced this first-hand in January, after 20 more students graduated than she and her staff projected. “We do our best work and sometimes the economy throws us something we weren’t anticipating,” she said.

But with the current projects helping to ensure a broader base of interest, and Bethel’s history of adapting to new trends in education, Nelson is confident in the school’s ability to continue striving forward. “We are doing comparatively well,” she said. “But that doesn’t mean it isn’t hard.”

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