ASU financials cause concern


ALAMOSA — Low enrollment and low state funding means Adams State University is not as financially sound as it once was. Combined with a possible faculty retention problem and an upcoming audit from the Higher Learning Commission, the future is rocky.

“Earlier this year I characterized the position of the university as cautiously optimistic,” said Adams State University Board of Trustees Chair Cleave Simpson, who also sits as the chair for the board’s audit and finance committee, during the board’s Friday meeting. “Knowing what enrollment status is for fall of this year, I would characterize our position now as somewhat concerned with a general sense of urgency for the trustees, faculty and community at large.”

Chief Financial Officer Heather Heersink said that the university’s tuition and fees went down from $30.9 million to $30.3 million due to lower enrollment and the closure of the extended studies program from the Higher Learning Commission.

Because of that decrease the total revenues went down from $57.4 million to $56.8 million. Meanwhile, the total expenditures went from $68 to $81 million. However, that includes a roughly $11 million expenditure due to Colorado’s Public Employees Retirement Association (PERA).

PERA is currently not 100 percent funded so the unfunded portion is listed as a liability for ASU. Credit rating agency Moody’s and the HLC look at the institution’s financials with and without the PERA liability factored in.

“It’s a very painful effect on our bottom line,” Heersink said. “Colorado PERA may even result eventually in something like a downgrade of all of Colorado based on how unfunded our PERA pension is.”

Trustee Arnold Salazar argued that the line item misrepresents the financial situation because the expense will never fall back on the university.

“That is a very common theory,” Heersink responded, “and I would believe that to be the case, personally. There are others who believe that the state may fix PERA by making the liability fall back on us.”

Employees of the Huron Consulting Group were also present at the meeting to give an overview of their financial report from February. According to the report, ASU’s cash flow was 2.5 percent in the 2015 fiscal year and 6.6 percent in the 2016 fiscal year, instead of Moody’s median minimum threshold of 10 percent. Cash flows need to increase by at least $3 million annually to improve the university’s financial standing.

Huron estimates that ASU needs to enroll 100 additional undergraduate students for $1 million in revenue.

“The bottom line is we need more money,” Salazar said.

ASU President Beverlee McClure said that they could enroll more students if they fix issues internally, such as scheduling conflicts. “I would venture we’re one of the few universities in the nation that offer no evening classes, no weekend classes and no compressed programs,” she said.

“We have been buying time and that time is out. We have to do something differently.”

However, the report only used data from the 2015 fiscal year. Since the report the university restructured their debt, saving roughly $900,000.

“Fiscal year 2015 was our worst year that we’ve had in a long time,” Heersink said. “In FY 16 we were buying time but we made a lot of progress...but you can see in FY 17 we aren’t as good as we were in FY 16, indicating our time is somewhat running out. Undergraduate enrollment is down 6 to 7 percent. That makes it a little more urgent. I’m not crying wolf but I’m urging some caution.”

To aid the finances the university may have to enact the contingency plan that they are currently drafting. The final plan could include salary reductions, attrition, or other cost-cutting measures. Approval to create the plan was granted by the board in August.

Depending on what the plan entails, that could partially solve the university’s faculty retention problem. During Faculty Trustee Robert Benson’s report, he mentioned from an informal survey that an estimate of 35 to 40 percent of faculty, independent of tenure status, are actively looking for employment at another institution. The majority wishes to leave not because of issues such as the Higher Learning Commission’s audit, but because of better pay.

“The biggest problem with faculty retention is not just losing bodies but we’re also losing brain trust, skills, expertise and that bond that students have with faculty,” Benson said. “Historically it’s 15 to 20 percent and that’s usually just the junior faculty.”

Interim Vice President of Academic Affairs Matt Nehring mentioned that ASU currently sits at the bottom of College and University Professional Association (CUPA)’s list of average salaries for 89 institutions.

“When we have a promotion process that sets up someone to go from 75 to 80 percent of their peer salary when they’re an associate and then suddenly they’re a full professor and fall back to 65 percent,” said Nehring, “there’s something wrong in that process that we need to fundamentally address.”

If the plan means faculty are let go then the remaining employees could theoretically receive a higher salary. “This is one of the top priorities of this reallocation plan,” said McClure.
“We have got to get enrollment up, figure out other revenue streams, right-size our institution and get our retention rate up,” McClure said. “All of that has to happen, not in silos, but simultaneously as we go.”