Washington State University’s new president says the school’s spending habits are “simply not sustainable.”
But he plans to change that.
Kirk Schulz, who officially started as president Monday, raised concerns about WSU’s financial situation in a letter posted to his website last month. The former Kansas State University president scrutinized decisions by WSU’s board of regents and the athletic department’s $13 million deficit. He said the university spends more than it takes in and relies too heavily on reserves. And he said administrators haven’t been using a “formalized” process to craft the biennial budget.
The letter drew media attention, and some writers expressed pointed opinions about WSU’s approach to growth and development. The Moscow-Pullman Daily News’ editorial board called the university’s reliance on tuition dollars a “monumental pyramid scheme.”
Schulz responded in an interview last week, saying journalists “over-interpreted” his assessment.
“It wasn’t intended to come across as ‘The university is in dire financial straits and we need to do something about it right now,’ ” he said. “When you’re a new leader, you look at what finances and resources you have coming in. And I’ve been talking to a lot of people in the senior leadership about the things we need to work on.”
At a time of record enrollment and rapid development, WSU is poised to spend a lot of money in coming years. The university recently funneled nearly $132 million into capital projects, including the 42,000-square-foot Spokane Teaching Health Center, which is slated to open in August.
Other projects worth $212 million are under construction, and another $240 million in projects are in the design and planning phases.
Schulz said the school hasn’t identified funding sources for many of those projects, and some proposals were approved by the regents “without a robust financial analysis.”
“We started out this budget cycle with a very low amount of debt,” said WSU spokesman Rob Strenge. “And we made a very conscious decision to leverage the university to get the growth that we wanted to see for all our students.”
WSU’s chief financial officer, Joan King, said the university has expanded to catch up with growing enrollment in the years since the recession. The university has gained more than 2,300 students since 2008 – a spike of 10 percent – for a current enrollment of about 25,700.
“We lost 50 percent of our state funding in a very short period of time, and at the same time we were bringing in a lot more students,” King said. “Now we’re in a different position to revise, review and develop our budget in a formalized way. Each president does things differently.”
Still, Schulz said in his letter, the university has been “spending down central reserves at a significant rate and will need to make some adjustments.” Specific figures weren’t immediately available.
Schulz said his letter wasn’t meant to criticize the regents or the presidents who came before him – the late Elson Floyd and interim president Daniel Bernardo. It’s about keeping people informed, he said.
“I think one of the things that I developed during my tenure at Kansas State was my belief in transparency,” he said. “We really tried to make sure that our elected officials, our students and our taxpayers really knew what was going on at K-State.”
Schulz said he looks forward to working in Washington, where lawmakers last year approved a 15 percent tuition cut and increased WSU’s operating budget by more than $70 million. During his seven years at Kansas State, he battled the Kansas Legislature over huge cuts in higher-education funding.
“I saw the budget get cut or stay flat just about every year – cuts more often than not,” he said.
Schulz, who serves as chairman of the NCAA’s board of governors, also said he’s working on a plan to balance the athletic department’s budget and will announce details in the coming months.
Coaching salaries, buyouts and debt service on $140 million in new football facilities left the department with a substantial deficit. Fundraising efforts have fallen short, and the school hasn’t made as much as expected from its contract with the Pac-12 Networks.
“We need to raise more money, simple as that,” said Bill Moos, WSU’s athletic director. “It’s everybody’s problem, and we all need to focus on finding a solution.”
Moos said he will look for savings in the budget wherever possible.
“We’re already next to the last in the Pac-12 in terms of expenditures,” he said.
Schulz insisted the problems he outlined are solvable. He said he’s working with top administrators “to use every taxpayer dollar and tuition dollar and private dollar as carefully as possible.”
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