Gonzaga University likely will lay off employees to balance its budget next year, acting President Harry Sladich said Thursday.
The university also will delay hiring a new Jesuit president until May at the earliest. That will give the 30-member board of trustees time to evaluate a new slate of finalists after at least one candidate dropped out.
“It’s hardly a crisis situation,” Sladich said. “We just have to start rowing the boat differently.”
But unless an unexpected number of new students - or a major unrestricted donation - materializes next fall, the university will need to trim its sails with a $1.5 million budget cut.
The board will consider several options for making cuts at its April 17 annual meeting, but administrators believe that reducing the payroll will be necessary.
Sladich said employment at Gonzaga likely will be reduced through attrition or layoffs. Exact numbers won’t be known until the board approves the 1998-99 budget.
The 111-year-old university issues paychecks totaling $29 million each year, or 45 percent of its $65 million operating budget. It has 800 employees.
Gonzaga’s $1.5 million shortfall is the difference between revenues generated from student tuition and the university’s endowment and the rising cost of operating the private Catholic school on the north bank of the Spokane River.
While Gonzaga has spent millions in recent years to modernize the campus with Internet connections, private apartments, a new art museum and new library - and even a Taco Bell cafe - enrollment has slipped.
Gonzaga had about 4,500 students last fall, down 200 since 1994.
Sladich said the number of students accepted for fall 1998 is higher than at the same time last year, meaning enrollment could rebound. But officials are unwilling to risk breaking a 22-year string of no deficits with a spend-and-pray budget plan.
“We could balance the budget if we wanted to tap the reserves, but does it make more sense to use the reserves for something else?” asked Charles Murphy, vice president for finance.
Faculty earlier this month were upset when Murphy suggested that salaries might be frozen for a second consecutive year at a time when Gonzaga is preparing to build a $22 million law school and is sitting on a growing, $75 million endowment.
Some teachers suggested hiring a lawyer and forming a union to protect their jobs and enforce administrators’ past promises for better pay.
Ron Large, president of the Faculty Assembly, said members have cooled off after receiving assurances from Murphy that they would have a voice in deciding how the university cuts its budget.
“It’s been a trying time for all of us,” said Large, an associate professor of religion. “But we’re still here doing our job on a day-to-day basis, and I don’t think any of this has had a significant effect on our ability to educate students.”
The law school, Murphy said, is a money maker. It annually contributes $1.3 million to Gonzaga’s general fund.
Delaying construction of the building could jeopardize the law school’s accreditation status with two national review boards, Murphy said. Gonzaga had promised the accreditation boards that the school would begin upgrading facilities this summer.
Administrators also are proposing to increase the rate at which they tap the endowment - from 2.9 percent to 5 percent annually. That could inject an additional $1 million or more into the operating budget.
Sladich said Gonzaga suffers from recruitment problems similar to other private institutions. With annual undergraduate tuition expected to jump to $15,960 next year, Gonzaga risks pricing itself so high that it must take money out of its accounts to subsidize tuition to attract students.
That’s begun to happen. Nine out of 10 of Gonzaga’s 550-member freshmen class received some financial aid this year, Murphy said. On average, Gonzaga subsidized each of the 489 students with $6,000 in tuition discounts.
Gonzaga spends $11 million of its operating budget to attract eligible students with tuition discounts.
“That’s higher than we would like,” Sladich said.
The board has blocked attempts by the administration to pass on rising costs to students by holding tuition hikes to the lowest level in 20 years, university spokesman Dale Goodwin said.
The other key issue facing the board is Gonzaga’s leadership. The board had hoped to announce Gonzaga’s 25th president at its April meeting, Sladich said, but at least one finalist has dropped out, forcing the board to interview others.
Because Gonzaga is owned by the Society of Jesus, the president must come from the Jesuit order.
Three finalists are vying for the post vacated one year ago when the board ousted the Rev. Edward Glynn for undisclosed reasons.
University employees speculate that the departure of Glynn scared off some candidates. Sladich said change simply takes time.
“It’s not easy to the turn the university ship around,” he said. “Sometimes it takes a couple of years.”