A follow-up on Bethel's fiscal cliff

September 26, 2013 | 11 a.m.

What's next in the administration's plan to revive Bethel from financial distress?

News | Chris DeWuske

Last spring, Bethel announced its second fiscal cliff in four years, also increasing its tuition by 3 percent. As the lowest tuition increase in over 30 years, the institution sought to find ways to keep Bethel affordable for its students. Staff and senior administrative positions were eliminated and faculty members were offered early retirement severance packages.

According to President Jay Barnes, “All of us at the top end took a pay cut voluntarily, effective June 1.”

Gary Long, current president of the faculty senate, has been pushing for more shared governance between administration and faculty. On March 22, he and Rollin King—then-president of the faculty senate—went to Jay Barnes.

“Things had to change,” asserted Long. “The cabinet needed to hear the distressed voices of faculty about leadership.”

An invitation was extended to the cabinet to attend the next senate meeting, and as a result, Bethel’s finances were placed on a secure web page so the data could be assessed.

“None of us understood finances,” Long said. “Only a few.”

Bruce Olsen and Chuck Hannema, professors of business and economics, began to review it in order to begin to understand the financial situation.

To make it through the shortfall, the university was divided into six segments, which included the CAS, Seminary, and CAPS/GS programs. These segments were called prioritization reviews, and Long was one of seven to oversee the changes that applied to the CAS program. $1.64 million had to be cut from CAS for the 2015 fiscal year. Department of Psychology Chair Joel Frederickson helped interpret slices of data and how programs interacted with different variables to discover what Bethel’s strengths were.

According to Long, answers to questions like, “What is a program? How does it interact with the gen. eds.? How many students have come through? What departments are interconnected at a core?” arose from this data analysis, according to Long.

These answers allowed the segment committee to discover how finances could be best allocated.

Most recently, NYCAMS was shut down, partly due to the average $300,000 debt it incurred each year. Long predicts that other unpopular programs with few students will be removed as well. However, he also believes that Bethel should be allocating more of its resources toward academics and instruction.

“When universities go forward, if they have to make cuts… teaching and research are the last things that should be touched.”

Bethel University’s shortfall is a result of overestimating enrollment. By the numbers, the CAS program has been steady. Compared to other universities, the slight drop in enrollment was to be expected with the country's 2008 financial crisis. Though fewer high school graduates have been attending Bethel, other age demographics have been growing to include more diverse learners.

“The planning a few years back had us going up to 3000 students,” Long said.

Currently, there are approximately 2,650 students enrolled in the CAS program, 150 fewer than in the 2013 fiscal year. The disparity hit Bethel hard with its $10 million dollar shortfall, particularly due to the projected enrollments rather than the trending population decline.

Questions have been raised about where funds are allocated. Fiscal 2014 was budgeted for 2,723 students at the full-time tuition of $31,620. Of that tuition per student, $18,304 is allotted to the CAS program. The remaining generated tuition is dispersed throughout the entire Bethel system.

According to Director of Financial Aid Jeffrey Olson, some of those unfunded monies are used in the form of gift aid.

However, only 36 percent of the $18,304 that is used by the CAS program is designated for instruction.

Long would like to see Bethel “move the needle,” increasing the amount that is earmarked for academics each year.

“The student’s education here is paramount,” said Long. “You’re not here to ultimately play broomball. You get to play that while you’re here, but you’ve come here for your degree.”

The faculty senate is currently drafting a resolution to put more funds towards academics. Long wants Bethel to shift its focus more intently to student instruction, rather than sports, food and student life.

“Our spending tends to be to make the hangouts look good,” said Long.

According to Bain and Company, Mitt Romney’s former management consultant, “Many institutions have operated on the assumption that the more they build, spend, diversify and expand, the more they will persist and prosper. But instead, the opposite has happened. Institutions have become over-leveraged… In addition to growing debt, administrative and student services costs are growing faster than instructional costs. And fixed costs and overhead consume a growing share of the pie.”

With the construction around campus, students are questioning where the money is coming from, considering the budgetary shortfall. According to Long, donors are more inclined to create a legacy, and the best way to accomplish that is to donate facilities. He believes that given Bethel’s current situation, donors should think about direct giving, possibly to an endowed chair or other academic cause.

Aside from programs that are being cut, students should see minimal change in their campus life. Bethel wants to teach out those students with discontinued majors. Students also should not see too much of an increase in their tuition. Since the 2008 financial crisis, Bethel’s financial aid has doubled from $16 million to $32 million. On average, the university is seeing a growth of $3 million per year.

“We’ve tried to put more Bethel money into the mix to bridge the gap for families,” said Barnes. "Especially families where the primary wage earner lost his or her income.”

While other colleges are promoting education by two-year tuition freezes, Bethel does not receive money from the state coffers. It needs to look for a different solution to help keep costs down.

“We’re also looking at [doing] what Concordia of St. Paul did and dropping their tuition,” Barnes said. “Most of them that have done that have not been successful in the long run at maintaining that. So we’re trying to figure out what parts of that might work for us and what pricing model might work for us.”

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