Last week ended with two actions—one by the Governor and one by the Council on Postsecondary Education (CPE)—that complete the most significant set of remaining financial variables needed to make more fully informed decisions regarding our budget for the coming fiscal year.
On Thursday evening, the Governor allowed HB265 to become law without his signing. That bill, passed by the General Assembly on the last legislative day of the session, provides for a one-year freeze in our KERS contribution at this year’s level. That bill was a companion bill to HB362, another one passed on the last day of the session that eliminated the option for NKU and others to exit the KERS system under relatively favorable and manageable terms.
The day following the Governor’s action, the CPE voted to set a two-year tuition increase cap for universities of 6%, with a limit of 4% in any one year. Understand, however, that this tuition cap represents the upper limit of any tuition increase over the next two years, not CPE’s recommended increase for all universities over that period. The CPE decision was made following two days of robust discussion among Council members, the CPE staff, and most of the university presidents. I participated in all discussions, including discussions on Thursday that went late into the evening.
These decisions now allow us to move forward with greater certainty in finalizing our budget planning for the coming fiscal year. The good news is that the largest single negative financial impact is avoided for one year—the $12.8M increase in our KERS contribution. The one-year reprieve provides us the opportunity to work with the pension system to identify ways to mitigate the adverse impact that pension costs have on our university.
Of course, there remain the other financial challenges for the coming fiscal year—fixed cost increases; the new Health Innovation Center opening with its attendant operations and maintenance costs; and the need for key investments in matters related to safety, compliance, high growth academic programs, and our planned fundraising campaign. In addition, there is strong interest in some compensation increase.
These factors will still require budget cuts and reallocations, even with some level of tuition increase. However, I estimate that these could be less than half of the $20 million range that we had feared. We must remember, though, that the pension contribution freeze is only for one year, and we may well face a significant KERS contribution increase in the following fiscal year. I am pleased that as we work to finalize our recommendations regarding our budget and tuition rates, incoming president, Dr. Ashish Vaidya, is engaging with us directly to help us shape the financial posture he will inherit when he arrives on July 1.
Because of the delayed decisions on key financial matters like KERS contributions and tuition increase options, our own tuition and budget decision timetable has been extended. These matters will not be acted on by the Board at this Wednesday’s Board meeting. Therefore, we will not hold a campus budget presentation on Thursday, May 3, as we had tentatively scheduled.
In coordination with our Board leadership, we are considering scheduling a special board meeting to address these matters on May 17, 2018. If that schedule materializes as hoped, we would plan to have our campus budget presentation the following day (Friday, May 18).
I understand and appreciate the level of anxiety you’re experiencing, given the uncertainty we’ve faced regarding the depth of the financial pressures we would have to manage. I also recognize that the mere delay in knowing the specific impact contributes to your anxiety. We will move as expeditiously and prudently as possible to finalize these important decisions to help settle the campus and return our focus to the important work ahead of us.
Thank you for your patience and support during this very trying time. And, thank you for your continued unwavering dedication to serving our students in the face of this adversity.
Gerard A. St. Amand
Northern Kentucky University
800 Lucas Administrative Center
Highland Heights, KY 41099