VCU announces $20 million budget shortfall

Jack Glagola, Contributing Writer

VCU announced earlier this summer that its budget shortfall, originally projected to be $25 million, has shrunk to $20 million, according to Karol Kain Gray, VCU’s chief financial officer.

The shortfall, which is similar to a deficit, has been allocated in the form of spending cuts in the Educational and General, or E&G fund, including administration, Gray said. The E&G fund is financed by taxpayers and student tuition, and is spent on salaries, utilities and maintenance.

“Now we’re driving a $20 million dollar negative number, and we’re gonna pass that out strategically to all our units, including administration. It’s not just academic,” Gray said.

Reallocations to different schools and colleges were determined based on their enrollment, Gray said.

“We’re going to try to reward schools that increased their enrollment and try to hold up the schools that didn’t meet enrollment,” Gray said.

The E&G fund makes up about half of VCU’s $1.5 billion dollar budget and is supported by taxpayers and student tuition. The other half is tied up in grants and is spent on research, business services like dining and parking, financial aid and the campus in Qatar, according to Gray. 

Gray said that the other half of the budget is already designated and is not a part of the shortfall.

“The auxiliary programs are required to make enough money through fees to cover their costs,” Gray said.

Gray also mentioned that state funding to VCU has decreased in recent years. 

“Twenty years ago, the ratio between state and tuition was 70 percent state and 30 percent tuition and fees. That’s a paradigm, it’s shifted. Now we are more reliant on tuition and fees than we are on state support,” Gray said.

Currently, 61% of university revenue is tuition and fees, while 36% is from the state. The shift is not unique to VCU, she said, as state support for higher education has decreased across the board.

“This is very typical throughout the states, that as we get hit with more expenses on the federal and state level for healthcare and military, they take more state and federal revenue, and less money goes towards higher education,” Gray said.

This year, the General Assembly mandated a 5% increase in public employees’ salaries, which includes VCU faculty. Gray said that the state is responsible for 49 percent of the cost of the raises, while the university has to pay the remaining 51 percent.

David Allen, assistant vice president of the Office of Budget, Analysis and Financial Planning, said that raising tuition is a difficult decision to make. 

“We don’t want to increase tuition. We know that it puts more pressure on our students, and we already have a very vulnerable population that really requires a lot of financial aid,” Allen said.

Allen mentioned the impasse over the state budget, which was only approved two weeks ago, as a cause for concern.

“It leaves us in limbo. You’re trying to plan, you’re trying to set tuition rates, you’re trying to let schools and colleges know what their budgets are going to look like next year,” Allen said.

By September — well into the year — Allen said it’s difficult to make budget plans.

“When you’re trying to look at what you can do to live within your means, it is really late in the process to do that,” Allen said.

Jeff Kraus, the director of executive communications at the Provost’s Office, said that faculty contracts not being renewed is a separate conversation.

“Some of that simply happens from year to year. It may have nothing at all to do with the budget situation,” Kraus said.

Kraus said that the budget changes will look different in each academic unit, and that their respective leaders prioritize student needs.

“The ideas and the plans that they have pursued would always work to minimize any potential negative consequences that students may experience,” Kraus said.