On Projections: Update on Budget and Enrollment

Each year, we build our budget based on future projections of enrollment. This is not unlike a small business building its budget based on the number of clients and projects it has, or a family building its budget based on the number of people in the household and the income they anticipate bringing home.

The University System of Georgia will base our budget for Academic Year 2017-18 on how our enrollment looked two years prior, in 2015-16. As we have previously shared, enrollment in our first year as a university was essentially flat—news we welcomed after several years of decline. Two weeks ago, several of our Vice Presidents and I participated in our budget hearing at the USG. Flat enrollment meant we essentially started from zero—spared a funding cut, yet not guaranteed anything beyond the resources we currently have.

At its meeting in April, the Board of Regents will set tuition rates. This will give us an overall picture of the resources we have to work with next year. Our EVP for Finance and Operations heads the internal campus budget review process, with budget hearings starting in March. Recommendations on how much gets allocated to different divisions, units, and programs resulting from that process will inform the final presidential budget proposal to the BOR/USG in May.

Our total budget is approximately $100M per year, for everything. About one third of that comes from state appropriations, determined by a formula that includes a large element of enrollment results.  The other two thirds is mainly E&G (educational and general), auxiliary, restricted funds, philanthropy, and any other revenues we can generate.

The vast majority of our E&G—84% to be precise—is spent on salaries and benefits, and E&G is directly and immediately affected by tuition income, namely enrollment numbers.  So, in both ways, enrollment directly and powerfully affects the bottom line.

Over the past six years we have seen a 30% drop in annual credit hour production, so the impact on us in terms of available resources cannot be overstated. And we remain the most affordable university in Georgia, so the dollars accrued by enrollment are lower than at other universities. In other words, volume of enrollment is a critical economic fact that impacts us mightily.

Therefore, as we progress through our budget process, we must remain ever vigilant of current and future enrollment. As I shared with you at our State of the University in January, spring enrollment was down slightly. As of this week, our projections for summer are also down.

We recognize that key to growing enrollment is ensuring that our academic offerings match the needs of our students. To that end, the university has engaged our Center for Applied Research and Education to conduct an immediate needs assessment and market study.

Gathering the data we need to make decisions that will improve enrollment in the long-term, however, ought not keep us from taking action now—deliberate, creative, innovative action—to make as much short-term headway as we can on enrollment. Just as a family watching its budget might engage in aggressive couponing, even as it engages a financial planner to make decisions about savings and investment, so too must we be both pragmatic and aspirational.

John F. Kennedy once described himself as “an idealist without illusions.” When it comes to projections for our enrollment and financial future, let us operate from that same place of realistic and optimistic striving.