FSU Leaders Make Hard Financial Decisions in Wake of Budget Deficit

FSU Leaders Make Hard Financial Decisions in Wake of Budget Deficit

Aug 1, 2024 11:15 AM

Frostburg State University is facing major challenges to its budget this fiscal year and over the next several years, mostly because of decreased enrollment, state funding cuts and unfunded mandates. FSU's structural budget deficit for the current and future fiscal years stands at $7.7 million. As a result, senior administration at the University has had the unpleasant task of making some very difficult and complex decisions to resolve this deficit to ensure Frostburg's financial stability and viability.

"Many smaller, regional, comprehensive, public higher education institutions struggle with enrollment, and FSU is, unfortunately no exception," said Dr. Ronald Nowaczyk, Frostburg State University president. "There are fewer high school graduates, and the lingering impacts of COVID have convinced many students to stay closer to home." This year also brought about a unique situation with the extraordinary difficulties experienced nationally in the FAFSA (Free Application for Federal Student Aid) rollout by the federal government causing students to be uncertain about their financial aid and thus their college plans.

In addition to the loss of revenue from fewer students, the state originally cut FSU's budget by $1 million and did not fully fund other costs, including funding for cost-of-living adjustments and merit raises for all employees. The financial troubles faced by the State of Maryland continued to impact FSU. Just ten days into the new fiscal year, the State announced a significant cut to existing state budgets, requiring FSU to reduce state funding by an additional $546,000, leaving the cut to Frostburg at more than $1.5 million.

"Stabilizing and increasing enrollment is key to resolving Frostburg's financial challenges, but so is examining all operations to align our expenses with revenues," said Mr. Al Delia, Acting President/Vice President for Regional Development and Engagement at FSU. "We assembled a budget team over the summer from members of our shared governance units to assist leadership address these challenges. The two simple guiding principles we put forth in recommending actions was that they be in the best interest and mission of FSU and must minimize negative impacts on students."

FSU is part of the University System of Maryland (USM) and has been able to leverage the system's expertise and resources. Throughout the process of analyzing and evaluating the budget and ways to place FSU back on solid financial footing, USM leaders and the Board of Regents pledged their commitment to help the university through its budget challenges.

According to Delia, "USM has assured us that if we are able to implement a plan to resolve our deficit, they will provide us with financial support and flexibility to bridge the time it takes to resolve our challenges." Delia continued, "They are confident in our plan and are granting FSU one-time permission to defer, or make payments on our behalf, for certain university expenses in fiscal year 2025."

Even with those actions in place, FSU leaders knew they were required to take steps that they would prefer to avoid. Key elements of Frostburg's multi-year plan include an administrative reorganization, a reduction in faculty staffing, reductions to the athletics budget and scholarship reallocations, and university and unit operational reductions. "The process of reducing faculty staffing is a highly prescribed process led by faculty and will address an imbalance in the reduction to enrollment (36%) versus the reduction to faculty (14%) since FY 2010," noted Delia.

With this plan in place and assistance from USM, FSU will eliminate the projected budget deficit of $7.7 million in the current fiscal year. In FY26, after the USM assistance has ended, the FSU surplus is projected to be up to $3.2 million and up to $4.2 million in FY27. This very rapid financial turn-around will allow FSU to, once again, make sound strategic investments for the future.

Frostburg's projected deficits, surpluses, reductions, savings or revenues represent best estimates based on the information University leadership had available while developing their multi-year plan and are subject to change.

FSU leadership will hold three virtual town hall meetings over the next two weeks to address questions from faculty and staff and clarify information detailed in the budget plan.

Delia stated, "Together, as a campus community, we must work collaboratively to keep Frostburg State University moving forward. As we reaffirm our mission to guide us, we will continue to meet the needs and expectations of our students and their families."

Public link

Please use the above public link if you want to share this noodl on another website.