By: Katie Priest and Ava Uhlack, Nov. 12, 2024
The Division of Administrative Affairs revealed Cal Poly Pomona’s projection for an anticipated $24.6 million budget gap in the two-part budget town hall series Nov. 5 and Nov. 7.
This is an 117% increase from the projected gap of $11.3 million presented to the Academic Senate Sept. 4. It is also a 485% increase in comparison to the projected gap of $4.2 million on the CPP financial transparency website.
Both town halls led to robust question-and-answer sessions with a large California Faculty Association presence at the in-person meetings as well as remote viewers logged in on Zoom.
In the meeting, Carol Lee, the assistant vice president for budget, planning and analysis, showed personnel costs rising as one of the factors for the rise in expenses that contributed to the budget gap.
This was a point of contention for attendees. One even asked during the Nov. 5 meeting about the split between administrative personnel costs and faculty and staff personnel costs.
“One of the things that’s important to us is to not guess at the numbers,” said CPP President Soraya M. Coley in response.
Coley claimed this level of specificity could not be disclosed in the meeting but will be shared on the financial transparency website, which was promoted by the division during the meeting.
According to Cordona, Administrative Affairs will “continue to explore multiple approaches to attract students as we also address funding gaps.” Some of these approaches include shifting eligible expenses to designated funds and fees and maximizing the usage of all funding sources, according to the presentation.
One attendee anonymously asked whether any of MacKenzie Scott’s $40 million donation would be used to cover the gaps.
“MacKenzie Scott is philanthropic dollars; I call it the wow money,” said Coley. “We can go through MacKenzie Scott and not have anything to show for it except we get to the next year. What we are trying to do is use MacKenzie Scott for funds that will actually bring in greater attention or provide programs that we can’t support.”
Funds such as the Scott donation and other philanthropic dollars are classified as restricted funds, according to Michelle Cardona, the associate vice president for financial services, which is why they can’t be used to make up for the budget shortfall.
“They aren’t funds to be utilized for ongoing operations,” said Cardona. “They are strategic funds to place the campus in a better position for the initiatives we have on campus to get our campus name out there and to grow our campus.”
In the Nov. 7 town hall focusing on the reserves and designated balances, Lee gave a multiyear breakdown as to how the reserves will be bolstered in the coming fiscal years.
According to a new CSU requirement, the university must have 5% of yearly operating expenses reserved in the budget for cases of economic uncertainty. For CPP, the percentage of yearly operating expenses was determined to be $21.2 million, meeting the minimum requirement.
Despite meeting the requirement, CPP is below the CSU policy recommendation which asks universities to have three to six months of operating reserves in the budget. CPP has $97.5 million, or 85 days, of operation currently reversed for economic uncertainty, according to Lee. According to the amounts presented, a day of operations at CPP costs $1.16 million.
For the 2024-2025 fiscal year projected gap, some of the designated balance and reserves, in addition to other strategies, will be used to close the near-$25 million gap. According to Lee, $13.1 million of the $97.5 million in reserves will be used to cover compensation.
The projection for the 2025-2026 fiscal year is to have $47.6 million put aside, with $2.3 million focused on new tenure/tenure track searches for fall 2025 , $12.4 million for recurring expenses and $12.9 million for compensation backfill not covered by the CSU, according to the presentation.
Lee presented that should the state cut $20 million dollars, the amount left over in the reserves would approximate to $15.6 million at the end of the 2025-2026 fiscal year.
“Reserves are an indication of our financial stability,” said Lee. “Drawing down our reserves to pay for ongoing expenses such as supplementing employee compensation, mandatory costs or to backfill the state’s proposed budget cuts does create a structural deficit. Reserves are a one-time fund that help bridge a gap on a short-term basis.”
“Economic uncertainty” was referenced as the purpose of the $97.5 million within the reserves, according to the presentation. Economic uncertainty, defined by Lee, is anything unanticipated. State-cyclical recessions, among others, are considered economic uncertainty.
According to Lee, economic uncertainty is qualified as a use for the reserves should it be absolutely necessary.
Many attendees asked for more clarity and specificity on the numbers being offered. Additionally, there were concerns raised about how much the university had reserved in comparison to the deficits presented.
Some questions were also aimed at solutions for the deficits presented. Other questions were not answered during the town hall due to the presenters citing they were not specifically focused on what was being presented in each town hall.
– A collection of questions asked in the webinar can be viewed here –
According to Amon Rappaport, the chief communications officer for strategic communications who moderated the town halls, any questions that were not answered from either town hall will be responded to and posted on the financial transparency website.
Feature image courtesy of the presentation by Administrative Affairs
