Before the pandemic, Kansas State was already strapped for cash. Budgets ran leaner as enrollment fell year after year. When COVID-19 came, it ravaged the university’s finances further.
Between refunds issued for spring housing contracts, plans to hold tuition flat, state budgetary concerns and the cost of reopening campus, the university sits in a multimillion-dollar hole.
“Certainly, anytime you see a decline in enrollment, there’s going to be a subsequent decline and we’re going to have to right-size our budget,” vice provost for strategic enrollment management Karen Goos said.
Additionally, the freshman class size is about 65 percent that of the senior class, the financial impacts of which could linger, Ethan Erickson, chief financial officer and director of budget planning, said.
“If you think about the traditional four-year cycle of an undergraduate student coming in, when you have smaller classes, you’re going to feel that throughout the next four-year cycle,” Erickson said.
That being said, K-State’s overall enrollment decline — at about four percent — wasn’t nearly as high as was anticipated, Nathan Bothwell, speaker of the student senate and senior in political science and communication studies, said.
“That [decline] is in line with the previous years,” Bothwell said. “We’ve been between like three and five for the past few years, so the fact that enrollment was only around that, I thought, was very positive news in terms of just the overall budget situation.”
Normally, the biggest threat to the university’s budget is the declining enrollment or uncertainty with state funding, but the pandemic turned the area of concern to a different part of the university’s budget.
“The pandemic has impacted us in a lot of different ways, and it has impacted different revenue streams than we normally would have,” Erickson said. “The pandemic really broadened the revenue streams and greatly impacted some of those areas that we normally would have just been on the tracks and were chugging along.”
The biggest hit came to K-State’s auxiliary revenue. These are monies made through extra revenue streams — Call Hall, the K-State Student Union, McCain Auditorium, on-campus restaurants and more.
“The pandemic comes along, and it disrupted so much of the normal business environment that we have as a university,” Erickson said.
All told, K-State lost somewhere around $96 million from declining revenues and increased expenses between the end of fiscal year 2020 and fiscal year 2021 so far. The rest of the fiscal year, Erickson projects, could bring about another $15 million hit.
Around $8.5 million of the extra expenses came from purchasing personal protective equipment, testing materials, cleaning supplies and other resources needed to prevent COVID-19 spread on campus, Michelle Geering, public information officer, wrote in an email.
For some units, Erickson said, that could spell uncertainty for the future.
“It’s also long term impactful because then units are using their reserves that they might have, in order to continue operations or that’s leading to other budgetary changes,” Erickson said. “I do think there’s going to be longer term consequences and we’ll have to think [about] how to do things differently now.”
But it’s not all bad news, Bothwell said.
“I don’t think it’s entirely doom and gloom,” Bothwell said. “I do think that there’s been some like pretty positive developments in the long term, that are showing that … we will be able to recover and get back to something resembling normality.”
Erickson agreed. For one thing, he said, the existence of the budget modernization process eased the process of restructuring the budget for the current fiscal year.
“It was a way for us to determine … how to allocate our diminished resources,” Erickson said.
Before the implementation of the new budget model, Erickson said, budget cuts likely would have been initiated “across the board” to cut costs. Now, with the modernized process, K-State could target specific areas using a decision-making framework “based on the activity level” of each unit, he said.
Despite all the negatives the pandemic brought with it, Erickson said some good came out of it as well. Specifically, distance education and remote working might become a bigger part of how K-State operates in the future.
“We are finding out that there are ways that we can do business that maybe we wouldn’t have considered before,” he said. “We rose to the challenge and were able to see that we can do things in this fashion, so I think it’s been good in some regards.”
One thing is for sure, Bothwell said — K-State will come out of this crisis.
“In no conversation that I’ve had have I had anyone who’s said that this is the death of the K-State. It just is leading us to make some hard decisions and to really prioritize things a lot more,” Bothwell said. “Budget stuff and enrollment, a lot of it’s very cyclical — it goes up for certain reasons, it goes down for other reasons. I think we’re just still in the downward phase of the cycle, but I do believe they’ll go up at some point.”