(Editor's note: Clarified that a reduction in state aid to the University of Toledo consisted generally of federal stimulus money administered by the state. That aid has expired."
There’s no cause for panic yet over a $13 million shortfall that appears to have emerged in the University of Toledo’s budget. But the university needs to do more than hope the situation straightens itself out by averting enrollment decreases in the spring.
Columbus also needs to pay attention to UT’s financial shape, understanding that investing in the state’s future does not mean shifting more of the cost burden for higher education to individuals through tuition increases or forcing universities to cut academic programs.
A loss of federal stimulus money could account for more than three-quarters of UT’s shortfall. That aid, which was administered by the state, has expired. In John Kasich’s first year as governor, state aid to UT fell from $123 million to $112 million. It was cut $10 million more for the current fiscal year. Other universities have also faced cuts.
The shortfall at UT represents a decline in projected revenues of as much as 2.5 percent. UT’s overall budget amounts to $800 million, including $530 million for nonclinical education programs operated primarily on the main campus.
A month before UT President Lloyd Jacobs revealed that revenues had fallen off pace, the campus chapter of the American Association of University Professors offered a much brighter outlook. Based on audited financial reports from 2006 to 2011, a consultant told the association that UT “is in a very good financial state.”
The administration cites lower fall enrollment for the shortfall — the result of its decision to be more selective in admissions. But the faculty union says the university expected fewer students. The union claims that instruction accounted for only 28.5 percent of operating expenses in 2011, down from 42 percent in 2006.
The university believes its strategy to raise admission standards will provide budget continuity this spring. With better students, more of this year’s freshman class will stay in school, helping UT avoid the seasonal dropoffs that have plagued it in recent years. Nearly one in three UT freshmen drop out before their sophomore year.
For now, UT plans to achieve most savings through attrition, not layoffs.
UT’s recent decision to freeze undergraduate tuition and fees for the 2013-2014 academic year should be lauded, as should its new incentives for more on-campus housing. Other pending initiatives will help retain students and make higher education more affordable. But they will be hard to sustain if shortsighted cuts in state aid continue.