There are three primary reasons why NKU is moving forward with this plan now.
First, changes in enrollment mix and enrollment declines have resulted in decreased tuition revenue.
We saw the demographics of our students slowly start changing as the numbers of online learners grew. This masked some of the weakness of the traditional undergraduate enrollment. Over the last two years, the pandemic accelerated a decline in enrollment. This year we experienced declines in undergraduate (both new freshmen and new transfer), graduate (both traditional graduate and AOL) and in new Law enrollments.
Second, institutional aid is over-budget.
We are committed to honoring the financial aid commitments we made to all of the current students at NKU. The change in institutional financial aid is returning to approximately 2018 levels.
The main increases in aid came from the following:
Enhanced discounting for international and out of state students in an expanded EDGE program
Many more students eligible for merit awards due to test optional policies for admissions without adjusting award criteria
Creation/expansion of several scholarship programs offering considerable discounting to undergraduate students
Our decentralized aid awarding process resulted in more “stacking” of awards
Third, we have identified significant unbudgeted recurring expenses.
Over the past few years, we had unbudgeted expenses being funded by non-recurring funds, using the university’s carryforward practice. During this time, that practice resulted in using net position or reserves to cover those recurring salaries and expenses.
After a more in-depth financial review it was also determined that over the last five years, instructional costs increased 28%, institutional financial aid increased 46%, while tuition revenues increased 17% and state appropriations increased 16%
The large drop in enrollment from FY 22 to FY 23 was unexpected since our numbers looked stable until late summer. It was difficult to predict student behavior. While we hoped to reduce the institutional aid, we had commitments and unexpected large numbers of freshmen who qualified for significant discounts. For example, because of higher than usual high school GPAs, our highest scholarship, a 65% discount, was awarded to approximately 380 incoming students, instead of the normal 170-180.
Hindsight is always 20/20, but we have identified the short-term challenge early and are in a good position to be able to address it. We have already made a shift to hybrid learning, we are located in a vibrant growing metropolitan region, and we have degrees that align with the workforce needs and demands of employers.
This is a strategic repositioning of the university to address our future. The financial reductions are being addressed over three years including this fiscal year.
No. Without the decision to exit the pension system, the university would be in a much worse financial position. Thanks to the successful exit, we have eliminated over $200 million in liabilities from our balance sheet, strengthening the net position significantly.
Yes. Instructional costs have grown significantly faster than revenues. We are asking that deans, working with chairs, faculty, and staff in the colleges, to reduce instructional costs overall by about $4.5 million from our approximately $78 million annual pool for instruction. We will preserve tenured and tenure-track faculty positions and must look at two other pools of instructional spending: non-tenure track faculty and adjunct or part-time faculty. Between those two pools, we spend about $22 million annually. That means we must reduce instructional costs within that $22 million pool by about 20% over the next two fiscal years.
We have asked the deans, working with chairs, faculty, and staff, to hit reduction targets, bringing those instructional costs down or offsetting instructional cost reductions with other savings. That is an ongoing process that will continue for the next two fiscal years.
There will be modest reductions in staff in some programs/operations; however, we are working to minimize the impact on filled staff positions.
That is not part of the plan. Our strategy is to reduce the impact to staff and preserve tenured and tenure track faculty and continue to deliver upon our student-ready mission.
These changes are being made while keeping the best interests of students in mind. The plan may result in changes to the numbers of seats in some courses and will certainly reduce the total number of elective classes that are offered. But we also understand that course offerings must be designed so that our students can progress toward their goals.
Instructional costs have grown much faster than our revenues. In academic year 2017-18, for example, NKU employed 568 full-time faculty members and 536 part-time faculty members that generated 337,547 credit hours. During the academic year 2021-22, the university employed 610 full-time faculty members and 573 part-time faculty members that generated 349,699 student credit hours. Therefore the total number of student credit hours increased by 4% as the full-time and part-time faculty numbers grew by 7%.
The First Year Student Success Hub is a key student-success initiative that will positively impact student recruitment and retention and, thus, was an investment in our future financial sustainability.
Implementation of expenditure reduction and revenue enhancement strategies began this fiscal year and will continue through the coming two fiscal years. Financial aid strategies will largely begin with next year’s first-time students and will be implemented across four years. Other strategies, such as the Academic Commons proposal, will be refined this year and will begin operation for fiscal year 2024.
A work group including administrators, faculty, staff, and students charged with this work will begin meeting in November. That work group will issue a report in late February. That report will be presented to the Faculty Senate and Staff Congress, and any recommended reorganizations will be presented to the Board for consideration.
The Foundation, along with the Office of Financial Aid and the Budget Office, are proactively working to identify opportunities to utilize donor funds that follow donor intent. This is not only good business practice, but this is an important and critical donor stewardship step.
Athletics is doing its part to solve the problem. It is important to note that Athletics has revenue-generation abilities through ticket sales and donor support, and we are asking them to step up those efforts. Additionally, Athletics continues to identify ways to be efficient with its operations and spending to look for savings opportunities.
We are investing in a new brand-marketing campaign based on who we are as an institution and will be making new investments in digital marketing. We are also investing in admissions and recruiting, as well as a director of financial aid.
