VICTOR SCHMITT-BUSH
Assistant News Editor
What was once a leaky but steady ship plugged by reserves and alternative fees has now begun to sink, according to Associate professor Dr. Peter Reinelt, who is also the chair to the Economics department. He and the administration have been ringing alarm bells about the school’s budget crisis for years. That’s right, a budget crisis, and now the campus has no choice but to buckle up and brace for the changes to come.
According to President Virginia Horvath, this has actually been happening since the early 2000s, but it wasn’t until 2009 that the school’s structural deficit began to rear its ugly head.
The great financial crisis began in 2008, according to the administration, and state support for college campuses in New York State has been dwindling ever since. It went from 45 percent in 2008 to under 30 percent in 2009. Since the campus’s main sources of income are state support and state tuition, and the student population was declining after 2009, the school began to lose more money than it was gaining. This accounted for the beginning of the structural deficit that we see today.
“A budget deficit is a planned deficit,” said Mike Metzger, the vice president of Finance and Administration. “So, when you’re in a period of a structural deficit, you’ve actually incurred it and you are incurring it on a daily basis. This means that your expenses are greater than your revenues.”
For a little while, Fredonia’s Planning and Budget Committee was able to find little loopholes against this issue, but Reinelt said that it eventually caught up with them.
“[When it started closing in], we had to fill this gap somehow. We’d take temporary money from the technology fund or places that really shouldn’t be taken from,” said Reinelt. “But now the SUNY system isn’t letting us do that anymore. We have to do things the right way now.”
The right way, according to Horvath, is to cut and reduce programs and services on campus.
She explained, “We’re looking and saying, ‘What services could be affected? What services do we have that we don’t need anymore in our circumstances?’”
With the new PEPRE (Process for Emergency Program Reduction/Elimination), Horvath assured that these questions will be answered in the near future. At the moment, PEPRE is in the process of collecting data, so no departments have been affected by it, yet.
However, with the advent of one letter, controversy has spread like wildfire. Dale Tuggy, a former philosophy professor who quit recently, wrote a scathing email on PROFTALK chastising not only the President, but the administration as a whole for its alleged deception and incompetence.
“A ‘structural deficit’ is not a debt,” Tuggy said. “It’s an imaginary shortfall relative to desired spending. These imaginary numbers, often oddly shifting, are used to communicate the idea to the faculty that the institution has run out of money and is in the red. But it is not.”
Although this is an unpopular opinion, it is important to consider that the college will be going on a hiring binge this year. It will hire 18-tenure track faculty and 20 full-time contingent faculty, both of which are more than normal. This is not how a college in a desperate financial situation acts. This has led to many questions on the part of current and previous faculty members.
“The year that I served as chair of the faculty Senate, I bought into Hefner’s scaremongering about the money running out,” said Tuggy. “There was mysterious talk about ‘reserves’ being drained and lots of complaining about how supposedly the state is practically cutting us off.”
Tuggy believes that foul play was involved. Sure, enrollment was dipping a little and so the administration had to slightly rein in on their free spending ways, but there were other factors involved that led to more questions than answers.
“Many of us started to realize that that was the one drum they knew how to bang in order to get changes made,” he said. “They somehow could afford new, expensive administrative positions and regular pay increases for administrators, all while still crying crocodile tears about the burgeoning ‘structural deficit.’”
However, Reinelt begs to differ. Although it might be the case that the ship was not sinking in the year of 2015-2016, he is convinced that as of 2018-2019, the school has completely run out of reserves. The school has no choice but to make these difficult decisions down the road.
“Since then (2015-2016), the reserves were starting to be used up,” said Reinelt. “We had around $10 million in reserves, and after 2017- 2018, we used a couple million. Last year, we started not to use all of those other things to fill the gap. We used a lot more reserves.”
According to Metzger, the alarm bells couldn’t ring loud enough. Sure, the school has many other budgets that are doing fine, but the operating budget should not be confused with them. The dining halls (FSA), facilities planning, resident housing(DIFR), etc., all use different buckets, and you can’t allocate resources from one bucket to another.
“Everybody thinks of them as being the same,” said Metzger. “They’re different corporations, different 501 (c)(3) organizations, they have different missions, different employees, but they reside within our 263 acres.”
In terms of the operating budget, Metzger assured that all of the reserves have been depleted. They will not have any more reserves at the end of the 2018-2019 fiscal year.
Opinions are many and the facts are few, and Metzger is only interested in the facts. But, there is merit in claiming that the structural deficit is not the problem, but a result of the problem. The campus administration has done its best to present its budget crisis in layman’s terms, but this has led to more questions than answers.
This is because more and more people are becoming aware that the rabbit hole goes much deeper.
What is really happening is not something that the administration itself can reveal with a few graphs and easily misunderstood terms like “structural deficit.” The economics are way too complex.
Whether or not deception is in play can be determined only by “you,” the reader. Your picking and prying is the only thing that will lead to forced transparency from the state to the administration, and then back to you.