President Wilson sent the following message to Missouri Western employees on July 2:
Dear Griffon Nation:
As I hit my one-year mark at Missouri Western, our family has spent considerable time reflecting back on the opportunities, challenges, and realities of the last year. It has been an honor serving you and hopefully making a difference during a difficult period in the history of the institution.
As we move forward, it is important that we unite and work together for our students. Over the past several weeks, some of you have asked questions and even requested talking points concerning information circulating within our community. I have always felt transparency is critical so I thought that it might be beneficial to provide you with some facts and reflections in the form of the following “15 TRUTHS.”
As you know, my first few months here were full of unexpected developments starting with the discovery that the institution’s financial position was not as healthy as previously thought. We needed to act quickly and formulate an action plan for long-term financial stability. When the new administration started in July 2019, we discovered that:
- the University would end the month with only $6.6 million in its bank accounts.
- many expenditures on our campus had been under-budgeted or not budgeted.
- the class recruited and retained in during fall 2018 and spring 2019 would result in an impactful enrollment drop in August (10% smaller freshman class and 5% drop in overall enrollment)
The ensuing conversations and difficult financial-related decisions were unanticipated, yet wholly necessary. We have moved forward with a viable strategy approved by the Board of Governors. This strategy has started working and will continue. Any assertion that the University’s financial distress is a false narrative is simply incorrect. In an effort to move forward, we will again pause our efforts to extract Missouri Western from a difficult situation to provide the following information.
TRUTH #1. Missouri Western has taken critical steps to sustain the institution going forward.
The progress in addressing our challenges has been impressive this year. We appreciate everyone’s efforts in this regard. Thank you! Among other things, Missouri Western has been able to:
- Reverse downward trends in cash-on-hand through various actions.
- Develop a long-term financial plan that focuses our limited resources on areas of strength, aligns with our core mission, supports a sustainable growth mindset and adjusts to our financial means.
- Revamp our organizational structure in an effort to streamline costs and maximize efficiencies.
- Engage in conservative spending across the board including hiring only essential faculty and staff and/or combining multiple positions to achieve cost savings.
- Implement innovative approaches and revenue generating ideas to increase enrollment and improve retention through new initiatives.
Absent state withholdings caused by the COVID-related economic downturn, Missouri Western would be approaching next year with a positive budget. The MWSU Foundation will be assisting us this coming academic year with an obtainable target of realizing surpluses in the 2021-22 academic year.
TRUTH #2. Missouri Western does not have hidden pots of cash.
Cash flow is the blood that keeps the heart of a university pumping. Cash is one of the most critical components to keep any institution viable. Extracted directly from the Statement of Cash declarations in the Board Books provided to the Board of Governors during public sessions, our cash-on-hand has declined considerably since 2015.
As shown by the bar graph above, Missouri Western had over $28,059,064 in cash on September 30, 2015. Exactly four years later on September 30, 2019, the cash had dropped to $11,763,486. The drop in cash has created problems that Missouri Western has had to address. Fortunately, our strategic approaches have started to work.
TRUTH #3. Missouri Western has a viable plan in place for the future; its financial distress is not a “false narrative”.
The current administration gains nothing personally or professionally by talking negatively about the University’s financial condition. Senior leadership deemed our financial condition to be critical based on cash balances, enrollments, ongoing expenses, and other factors. Our Financial Advisory Council consisting of faculty leadership, staff leadership, student leadership, and administrators reviewed and confirmed the same based on objective data. The Board of Governors unanimously declared a state of financial distress. Our retrenchment policy required openness and discussion. Immediate adjustments were necessary to help sustain the University and enable it to survive.
Even before this point, however, several other entities independently flagged the problems.
- Concerns expressed by the Higher Learning Commission in 2018. On August 8, 2018, Missouri Western received a warning letter from its national accreditor stating that the University’s FY2017 finances had been flagged. The University’s financial composite score would put the institution “In the Zone” meaning that the HLC would officially refer the institution to a Financial Panel if there were similar or declining composite scores the following year. Unfortunately, neither the new administration nor the Board of Governors was made aware of this; neither was provided with a copy of the warning letter nor fully briefed about its existence.
- Staff and faculty. Within the MWSU community, staff and faculty noticed significant spending before 2019. In fact, there was talk about initiating a “no confidence” vote in 2016. Concerns were raised about spending.
- Griffon News in 2019. In April 2019, the student newspaper sounded alarm bells. It reported that MWSU had not balanced its budget since FY2013. Drawing from official university documentation, the paper detailed overspends and deficit spending totaling over $2 million per year on average.
TRUTH #4. “Balanced Budgets” submitted to the board don’t necessarily indicate results, they relate to plans made before the start of a fiscal year
A balanced budget passed by the Board of Governors does not guarantee successful execution. It also does not indicate the existence of sufficient budgetary controls, accountability for overspends, or the inclusion of all planned or unplanned expenditures.
Over the past decade, each year a balanced budget would be presented to the Board of Governors before the start of an academic year. However, based on publicly available information, the budgets sometimes failed to prevent overspending by the end of each year. In analyzing past budgets, it appears that the annual drops in cash on-hand were caused (at least in part) by under-budgeting, overspending, and not planning for unexpected expenditures. Realizing the need for improved budgetary processes, a revised budget had to be presented to the Board of Governors in October 2019.
TRUTH #5. Total enrollment numbers/student headcount do not equate to equal revenues
Enrollment can be measured in a variety of ways, but it is important to remember that every student brings a different level of revenue into the university. Revenue depends on enrollment status (full-time, part-time, high school, graduate student), level of scholarships received, state of residency, background (employee/dependent), and other factors. Here are some examples of who is included in the head count and the corresponding revenue for MWSU:
- Full-time international student living on campus: $12,500 per semester in tuition and fees
- Full-time undergraduate student living at home: $4,500 per semester in tuition and fees
- High school student taking a 3-credit-hour class through area high schools: $279 per semester
- Golden Griffon scholar: $0 in tuition and fees
- Lifelong learning student aged 65 taking an art class: $0 in tuition
As you can see, full-time undergraduate students typically bring in more revenue than any other student, yet students of all types are included in our headcount. Dropping approximately 1,000 full-time undergraduate students (over 22% over the past decade) hurts our bottom line especially when tuition and fee increases cannot entirely cover the loss.
It is our unwavering goal to attract and retain students. Student success and assistance on the path to graduation are key. To fully understand the financial state of any university, one should not simply rely on head count. Rather, it is critical to look at enrollment in terms of actual tuition paid, scholarship discounts awarded, and credit hours taken. Between 2008-18, the number of student credit hours (SCH) declined more than 20% from 142,768 SCH to 114,003 SCH. This represents significant loss in revenue.Many universities are experiencing these same pressures, and it is why recruitment, retention and successful completion of degrees is so important.
TRUTH #6. The growth of graduate programs has not compensated for declines in the undergraduate programs
Graduate programs are a very small percentage of the total enrollment at MWSU (less than 3% of all credit hours). And while graduate enrollments have increased somewhat since fall 2010, this growth has been primarily fueled by part-time students, which doesn’t bring in as much revenue. Full-time enrollment has fallen by nearly 30% in the past three years to only 67 full-time students in fall 2019. Even more significantly, because of the established tradition of awarding graduate assistant positions and other graduate scholarships, a large number of our full-time graduate students pay little in tuition.
TRUTH #7. Drumming up negative local and national press has never been our goal or desire
Openness, honesty, and transparency have been hallmarks of the past year at Missouri Western. These approaches can enhance trust while helping identify serious problems and formulating the measures needed to address such problems. Out of necessity, the current administration has been an open book from the start. We needed to include the campus community in important discussions about our present condition, ongoing challenges, and future direction.
To date, the administration has done its best to turn its attention to the future while answering questions and proposing solutions to our current circumstances. Many (including the press) have continued to ask questions about the past. We have worked to focus on the future. Unfortunately, at least one member of our campus community has unnecessarily drawn negative attention to our campus through letters to the editor, contacts with the local media, and direct outreach to the national press with incomplete and even incorrect information. Valuable time has been wasted in this regard. In contrast, however, the administration has done its best to avoid pointing fingers or placing blame. We have done our best to keep campus in the loop through emails and town hall meetings. When asked, we have responded to questions from the press in a forward-looking manner. Based on feedback, most of our university community have expressed appreciation about this approach.
TRUTH #8. Personnel spending at MWSU is trending downward
The University has engaged in conservative spending across the board, including filling only essential positions and/or combining multiple positions to achieve cost savings. Over 70 staff and administrative positions have been eliminated/vacated over the course of the past year, while only six new positions have been added. These staffing adjustments will yield over $5 million in savings.
TRUTH #9. “Unqualified audits” of the university books have a specific and limited purpose
A “clean” or “unqualified audit” simply means that accounting standards were followed and that the statements reflect the university’s financial position. The University’s audit reports do not make material assessments about: (i) accurate budgeting; (ii) staffing levels; (iii) alignment of expenses with revenues; (iv) financial stability; (v) the future viability of the organization; (vi) scholarship strategies; or (vii) other strategic considerations. You can review the University’s audit reports here. The audit reports themselves do not make any assessment of financial position. That is the job of the University’s finance and leadership team.
TRUTH #10. “Cash reserves” were mislabeled
The previous reporting system mislabeled operating cash as “reserves” in Board Reports causing a false sense that MWSU had funds in investment or savings accounts. In fact, no such separate reserves existed. Nothing was maintained in investments or saving accounts after 2017.
TRUTH #11. The University was promised an additional $1 million from the State of Missouri in FY20, but the money from the State of Missouri never arrived. Instead, the State sent $3 million less than originally budgeted due to COVID-19
Although Missouri Western anticipated additional funds from the State due to an across-the-board core increase for all Missouri universities (and budgeted for the expenditure of an extra $1 million), these funds were never received. Instead, the State ended up withholding $3 million from our annual appropriation meaning that we received approximately $19 million instead of the planned $22 million.
TRUTH #12. Looking to the past is not the solution.
Despite best efforts to assist Missouri Western during a very difficult period, the University is being impeded by negativity, unprofessionalism, and personal attacks. Misinformation and rumors have unfortunately been perpetuated by individuals with incomplete information. This has resulted in rancor and slowed down the University’s recovery. Open invitations to those who have raised issues and questions to sit down and review the facts with documentation in hand have been met with silence.
TRUTH #13. The current administration is only seeking to support and sustain the University
From the start, our administration’s “agenda” has been serving students, increasing efficiencies, addressing our challenges, and adapting to changes in higher education. As part of the process, we have expeditiously developed innovative, flexible, and affordable programs to facilitate student success. New initiatives are not “pet projects” involving cost centers or requiring the investment of significant tuition dollars. Rather, they are affordable approaches capable of attracting donations and generating revenue by recruiting, retaining, and serving students. Missouri Western students should benefit from these initiatives for years to come.
The program review process was designed to align expenses and revenues. It was a detailed process that took into account graduation rates, enrollments, expenses and revenue, along with many other factors. For those programs that have been phased out, program expenses were outpacing program revenues, and the University simply could not continue to sustain programs that did not have enough demand to keep them in the black. This is a process many other universities are now undergoing with the additional financial pressures caused by COVID-19. Through the program review process, we have restructured several programs and proposed new degree programs based on student demand and workforce demands.
The actions taken do not give pleasure to or benefit anyone in the administration personally or professionally in any respect. Rather, the actions focus on sustaining Missouri Western and positioning it to succeed going forward. Again, we apologize for any pain caused by the steps that we needed to take to stabilize our sustained loss of cash and deal with a drop in revenue-generating students.
TRUTH #14. MWSU’s downward trend in cash position has been reversed over the past year.
A few have publicly questioned the extent of Missouri Western’s financial challenges. This year, we have actually saved substantial sums and made considerable progress toward balancing the budget. In fact, were it not for unexpected state appropriation withholdings in the final months of the current fiscal year, we would have whittled the budget deficit enough to emerge with a balanced budget
TRUTH #15. Missouri Western’s new strategy will continue in full force
Eliminating new approaches designed to attract and retain students will only hurt the institution. Plus, with a strategic plan for the future, the start of a “cash rebound” can be seen in the above bar graph in March 2020 just as COVID-19 was taking hold. An apples-to-apples comparison of cash-on-hand as of March 31, 2019, and March 31, 2020, shows a nearly $2.5 million increase in cash as we jumped from $13,352,899 in March 2019 to a cash position of $15,797,229 in March 2020.
This appears to be the first year-on-year increase in cash position for at least five years. Until measures implemented over the past year came into play, the University’s cash balances were dropping. It has always been the current administration’s preference to focus on the future, and a strategic financial plan has now been put into place that will not only sustain the university, but will help it recover, assuming we can unite our attention and focus on student success.
United and Moving Forward
As the University moves forward strategically with its financial alignment and new initiatives, we sincerely appreciate the continued efforts, assistance, and consideration of employees and supporters of the University — especially in light of the additional challenges presented by COVID-19. If we are united in purpose and continue on an innovative pathway forward with the strategic plan that has been put together, we will be able to overcome both localized and industry-wide challenges.
Thanks again for all that you do for the university. If you have any questions or need any additional information, please do not hesitate to reach out. I hope that you have a wonderful holiday weekend.
Respectfully,
Matt
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Matthew J. Wilson
President
Missouri Western State University