During the Faculty Senate budget forum Tuesday, accounting professor Howard Bunsis outlined why there is no need for layoffs, givebacks or program elimination even with the looming cuts to state appropriations to higher education.
Bunsis delivered the presentation in the Eastern Michigan University Student Center Auditorium and gave audience members a “road map” showing how EMU’s current financial situation is strong.
EMU is in good shape as of June 30, 2010, according to Bunsis, a conclusion based on the 2010 audited financial statements.
The statements show at June 30, the university had assets totaling $567 million, liabilities of $336 million, and the net assets have since increased.
The EMU audited financial statements show the university had $56 million in unrestricted net assets, $28.7 million in unrestricted cash, $56.7 million in investments—this amounted to a total of $85.3 million in liquid resources, Bunsis said.
The faculty senate presentation showed the university has revenues greater than expenses each year, strong reserves and liquidity, strong cash flows and strong bond ratings. Bunsis said all of this would still be true in 2012—even after the decline in state appropriation.
“There’s no crisis in the year we’re in, but what’s the response?” he said. “Cuts, cuts, cuts. How is it possible that a 15-percent cut from the state is not a crisis for EMU? It’s simple math.”
Bunsis said he believes sources of revenue such as Pell grants, auxiliary revenues and federal grants and contracts are overlooked when factoring the budget.
“These are sources that get ignored,” he said. “All we hear about is a $10 million hole, but that’s not the case. First of all, they’re ignoring funds. It’s not Eastern Michigan General Fund University, it’s Eastern Michigan University.”
If a budget hole were to exist, other things should be cut before laying off employees, Bunsis said.
“Even if there is a budget hole, cut the number of administrators, cut their salary,” he said. “Do all of these things before considering cutting non-administrative employees, salary givebacks and cutting academic programs.”
Bunsis compared the 2010 administrative compensation at EMU to other comparable universities, such as Central Michigan University, Western Michigan University and Grand Valley State University.
According to the document prepared by the Michigan House Fiscal Agency, entitled the 2010 Administrative Compensation as Percent of Total Compensation, EMU’s administration received more compensation than any other university in its category.
The EMU Business and Finance: Fiscal Year 2012 Position master, shows the budgeted administrative costs for 241 administrators in different departments within the university will be $22.7 million.
Bunsis questioned where the money in the Designated Fund goes. Bunsis pointed out page 47 of the 2010 EMU Financial Statements says, “Designated Fund is used to account for funds designated by the University.” The statements show in the 2009-10 operating expenses, the Designated Fund accounted for 1.5 percent or $4.8 million.
“What does that even mean?” he asked. ”That means they can put in whatever they want. If we’re going to cut stuff from the general fund, shouldn’t we look here first?”
Bunsis said the EMU administration has a “General Fund and one page approach.”
“Right now the administration has a one page approach, it’s the same thing every time,” he said. “That’s the way decisions are being made at this university. It’s the wrong approach. We’re missing a quarter of the university to make cuts off of that piece of paper. Again this is not improper, but let’s look at the whole thing. What’s been handed out is not enough.”
Bunsis said he has an issue with how some items were not budgeted, according to a copy of the EMU Business and Finance: Copy of Wage History with Savings report. The report shows Continuing Education and sabbaticals did not have a budget on several lines.
“What bothers me is, you don’t budget anything for Continuing Education fall and winter, but you actually paid people,” he said. “If you’re going to pay people, put it in the budget. I just have a problem with this. For sabbaticals, there’s no budget until 2011. That’s no way to run anything.”
Bunsis said the budget is “all over the map and all over the place,” especially when looking at the 2011-12 faculty salary budget and faculty savings.
“Every year, if they don’t know you’re leaving, they put you in next year’s budget,” he said. “There is no attempt to look at the historic numbers. What happens is the over-budgeting of faculty costs. I think this demonstrates that there needs to be some cleaning up.”
When asked if the administration has reached out to the faculty to determine if or when a discussion will take place to analyze the budget, Bunsis said they have, but the conversations don’t amount to much.
“These discussions are typically fruitless,” he said.
Susan Moeller, president of EMU-AAUP, said they were not informed about the 0-0-0 initiative.
“We found out about it in the paper,” Moeller said.
Economics professor David Crary said the bottom line is the university is still set to make a profit despite it all, and there’s no reason to cut anything dealing with the core mission of the university, which is to educate students.
“The university has ample reserves for dealing with this type of issue,” he said. “If they really want to save money, there are other areas.”