Staring down the cliff

March 28, 2013 | 11 a.m.

With cuts likely in the next year, faculty and staff are left guessing about their fate

News | Jon Westmark

Staring down the cliff

As information about impending changes circulates, faculty take stock of the situation.

While students were busy filling out their surveys and taking tests for assessment day, many faculty and staff stayed busy by discussing Bethel’s financial situation with administrators in a “Backstage Pass” event in the Underground.

The event came as a response to a growing number of inquiries from staff and faculty about the details of Bethel’s plan to resolve the fiscal shortfall, which was discovered and announced in late January. At the event, administrators presented data based on common concerns and fielded additional questions.

The school faces an estimated $7-10 million shortfall by the end of the next fiscal year. In spite of this, Bethel has committed itself to just a 3 percent tuition increase this coming fall – the lowest percentage increase in 30 years. “Part of our challenge is, we were used to doing 6 percent tuition increases routinely,” President Jay Barnes said. “That won’t work. That will never work again.” This means that pending new sources of revenue, the school will need to make difficult decisions about where to create room in the budget. The event gave administrators, faculty and staff time to communicate about where that money will likely come from.

According to faculty senate president Rollin King, one of the faculty’s primary concerns was the suddenness with which they found out about the budget deficit. “The administration, to some extent, knew about the increasing debt, but the faculty pretty much did not, so in January and February we were advertising positions that had been approved by the administration,” he said. King also said that many faculty members have wondered why administration was overly optimistic in its projections of enrollment, health care costs and pension costs among other things.

Bruce Olsen, an accounting professor and the faculty senate vice president-elect, agreed that some of these problems could have been identified with more realistic projections about cost. “Whenever I’d put together a projection in the business world, I’d have a best case, a most likely case and a worst case,” he said. “I would never work off the best case, and I think [Bethel] has been working off the best-case projection.”

In light of these concerns, one thing the senate has been pushing for is better communication between the two parties. In addition to the faculty benefiting from understanding what cuts will be made and why, the administration could also benefit from increased communication with faculty. “There are some street smarts about what is going on that you have from just being with students every day,” King said.

One important piece of information that the senate has been trying to procure is the amount spent on direct faculty-to-student instruction. “Our job is to advocate for the faculty members,” King said. “We’re trying to establish that if there are cuts made to faculty compensation and faculty-student ratio, that they’re justified and that the problem isn’t actually somewhere else.”

The Office of the President releases an annual report, which details the sources and destinations of the school’s finances. According to the 2011 report – the most recent report available – about $38 million, or 40 percent of operational expenses, went to classroom instruction. The rest went to institutional support, academic support, student services and auxiliary services.

Faculty compensation cuts have already been made. In addition to an initial wage freeze, Bethel recently announced changes to the two retirement plans that are offered. For roughly half of faculty, those who receive monthly payments into their retirement fund, the change is relatively straightforward – a drop from 10 percent to 3 percent of wages into a tax-advantaged retirement fund. “It’s a big cut in wages, when pay is frozen and your retirement benefit is cut by 7 percent,” King said. “My wages in August will be 10 percent less than I had every reason to expect they would be in February.”

Between the wage freeze and benefit cuts, administrators estimated $6 million savings without cuts to any programs or faculty. However, despite the immediate payoff, King does not view the revised retirement packages and wage freezes as realistic long-term solutions.

While many faculty were upset by the reduction retirement contributions, Mike Holmes, a professor in biblical and theological studies, thinks it may be the lesser of two evils. “What you look for is if they’re trimming in ways that spare the most personnel,” he said.

Another initiative that has been brought up is the Voluntary Separation Incentive Package, which amounts to a lump sum and continued benefits for those who retire early. Although the VSIP package has been promised to be more lucrative than Bethel’s standard severance package, this plan could potentially save money if the faculty who take the offer are not replaced or are replaced for less money.

Holmes, a 31-year Bethel veteran, was offered a VSIP but does not plan to accept. “With all the economic uncertainty, the idea of retiring early is a little scary at this point,” he said.

Pending the results of this plan, there will be faculty and staff cuts made. “We’re looking at things on the order of 1 million tentative dollars’ worth of reductions for this current fiscal year, and maybe something two times that next year in our current modeling,” said Joe LaLuzerne, a senior vice president. Barnes elaborated that some relatively small or expensive majors will likely be eliminated a year from now, though current students within those majors would be able to finish their degrees.

The faculty handbook states that all faculty members must be notified by December of any termination of a continuous contract. Since the budget shortfall was discovered in January, no faculty who signed a continuous contract can be released for the 2013-14 academic school year. It also means that administrators have the opportunity to do a full review of programs over the summer before making academic cuts. Although plans for the Academic Review Committee don’t currently include a faculty representative, Olsen hopes administration will reconsider and give faculty a direct influence over any potential program cuts.

Faculty whose contracts will not be renewed will likely be notified in early fall, which is often the time to look and apply for other teaching jobs. Despite these safeguards for faculty, the wait also amounts to a time of drawn out uncertainty about their future.

Bethel staff members do not have such a guarantee, and cuts may have an immediate impact. According to King, Provost Deb Harless has indicated that significant staff cuts will likely take place before May 31, with another round next year. Barnes acknowledged that it’s likely that every university department will sustain personnel cuts. “That will mean that they will have to stop doing some things that they have been doing,” he said. “That’s hard because in our model, we view things like Campus Ministries and Student Life as vital to the educational quality that we have, so they’re not easy decisions.”

These decisions will be based not only on seniority, but also with regard to the unique needs of each department, according to Cara Wald, the director for human resources.

With faculty cuts imminent and a hiring freeze enacted in most academic departments, many professors have expressed frustration at the continued search to fill another administrative position, Vice President for Enrollment Management. The Executive Leadership Team already has 19 members, and many faculty said they were confused about why so many administrators are required.

“From a faculty standpoint, I think there’s a concern that we have too much administration. It just doesn’t seem like we need to have that many people at those levels,” Olsen said. “It’s that upper level administration that, for a school our size, we’re somewhat top-heavy, and that’s a perception from a lot of faculty.”

Holmes wasn’t quite as surprised by the number of administrators. He says that during his time at Bethel, the number of state and federal regulations on colleges has grown significantly and that all those rules require a system of oversight. Still, Holmes said, it’s at least worth a look. “When you get that many administrators at a school this small, you wonder,” he said. “It’s an obvious question to ask, but asking it doesn’t imply an answer.”

While the College of Arts and Sciences administration has grown, Barnes said the total number of administrators for the university has been reduced in recent years, due to consolidation in CAPS and Bethel Seminary.

Though King acknowledged that it will be difficult to see friends and colleagues go, he was encouraged by the fact that Barnes and his administration “are not eager, to say the least, to continue going into debt.” For King, this is shown by the fact that in the next board meeting in May, Bethel administrators are expected to present a balanced budget. The board issued a similarly stiff resolution in 2008, in lieu of comparable financial difficulties, toward the seminary, which had been losing money consistently for years.

Until the current plan is determined, however, the faculty members are left in an uninformed limbo. “It does strain a community like Bethel,” King said. “We operate on trust to some degree – it’s an important part of the place – and when we just don’t know what’s going on other places and when times are tough, people start to get suspicious and concerned and trust starts to erode. That’s going to be a challenge moving forward.”

Philosophy professor Sara Shady was particularly discontented about the faculty’s wait-and-see status. “There just seems to be a large disconnect between what administration are doing and what faculty thinks and understands about those decisions,” she said. “Morale is really low. Very low – the lowest I’ve seen it in 11 years, and it’s sad to come to work every day. I love the classes that I’m teaching, I love my students, I love my job. But when you come to work, the only thing that everyone is talking about all day long is, ‘What have you heard? What’s the news?’”

Barnes said that he understands the difficulty ahead and advises students to “Pray, love your faculty and don’t throw rotten tomatoes at those of us who have to make hard decisions.”

Both Barnes and King were ultimately positive about the current financial problem’s effect on students. “We work with friends, if any of our friends have to get fired, of course this is traumatic, but from the perspective of the institution, it doesn’t mean that the institution’s about to evaporate,” King said. “I hope that the students aren’t panicked about this. You may just not get your swimming pool.”

Matt Kelley contributed to the reporting of this article.

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