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BOT Finance Committee meeting focused on budget concerns

Trustees were briefed on the financial impact of COVID-19 on state and University budgets Thursday, primed to act as needed.

May 11, 2020

JSSB exterior surrounded by trees with spring buds.The Finance Committee for Metropolitan State University of Denver’ Board of Trustees held a special meeting last week to discuss budget concerns as a result of the COVID-19 health crisis, among other topics.

Chief Operating Officer Larry Sampler and Associate Vice President for Finance George Middlemist, Ph.D., shared the latest budget update, as recently detailed in an email to the University community from President Janine Davidson, Ph.D.

Middlemist noted that the latest estimates show the state having between a $3 billion and $4 billion budget shortfall. “In a budget crisis, states tend to cut higher education at a disproportionate rate,” he said. “That’s mainly because we are perceived as having other levers to balance our budgets.”   

As a result, he said MSU Denver will likely need to absorb a 17% reduction in state funding for fiscal year 2020-21. That substantial cut, combined with a projected enrollment decline for both summer and fall, would mean that the University needs to cover a budget shortfall of approximately $14 million.

Middlemist shared some of the actions University leaders are weighing to address that projected gap, though he cautioned that no official decisions have been made.

In the first phase of the process, vice presidents and deans in each area identified potential cuts for FY20-21. That process flagged $6 million that could be cut and included everything from travel budgets and vacancy savings to changes in workloads and class sizes.

The next phase of cuts being evaluated relates to personnel, which comprises 70% of the University’s budget. Middlemist’s team is running numbers on various tiered pay-cut and furlough scenarios, as well as options for early retirements.

Davidson acknowledged that the University expects a tough year ahead, but that every decision will be made strategically, transparently and while weighing the impact on faculty, staff and students.

On May 12, the state will present a new economic forecast. At that point, the University should have a clearer pictures of state funding. MSU Denver-specific decisions for fiscal year 2020-21 will be made at the BOT meeting in early June and announced to the University community by mid-June.

Chair Barb Grogan expressed her gratitude for the team that has been working on this project. “It is important for the board to know what all the variables are so we will be able to react in real time,” she said.

Student audit on risk management

As has become a tradition at MSU Denver, the finance committee meeting also featured a presentation by a student auditor. Each semester, students in a graduate accounting class conduct an audit of programs and policies at the University and present their findings to the board. This semester’s project was particularly apropos as student Laiba Saqib put together the framework for an enterprise-wide risk management process.

Saqib was tasked with creating a replicable process that the University could use going forward. She alpha tested that process with two campus groups: the facilities team and her classmates in the accounting program. Each group used the framework she developed to identify risks in their respective areas and the university as a whole, then put them in priority order by vote.

The project was so successful that the University hopes to implement it starting in the fall, with the goal of holding workshops with every department on a two-year rotating basis. To start, a charter and accompanying policy will be created. Then a committee will be formed to maintain the process over time, with the ultimate goal being able to ensure the University is prepared to face whatever the future holds. 

Topics: Board of Trustees, Funding, Health, Inclusive leadership, Safety

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