Murray State President: "We Are Becoming Privatized"

Apr 7, 2018

Credit Matt Markgraf, WKMS

'Privatized' was the word Murray State University President Bob Davies repeated in a town hall forum on Friday addressing the budget and tuition.

The landscape of higher education is facing significant business model changes, said Murray State President Bob Davies, pointing to declining state appropriations as well as increased competition for students due to performance funding and other factors.

"We must change our perspective of being a pure public university, one that is supported mostly by the state, to a university that is privatized. Yes, we are a public university, yes we hold public university values and ideas, but we are becoming privatized."

Families and students are now the largest investors. Opportunities to grow and expand, he said, are "through the private efforts of enrollment, enrollment and enrollment."

Public resources will come to Murray State based on performance, he said, and student success will drive the performance funding model indicators: recruitment, retention and graduation of students, specifically at the undergraduate level.

Under a privatized model, the university needs to think about how to take risks, he said, in an effort to respond to the changing dynamics of the marketplace. "How do we tear down some of our internal barriers and structures and remove those so we can be more efficient and effective in serving our students in new and robust ways?"

Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS

The budget bill, now on Governor Matt Bevin's desk, contains a reduction of 6.25% across the board to higher education, which amounts to $2.8 million to Murray State. Davies said. However, the Breathitt Veterinary Center will receive full funding through the state (previously, a portion of the BVC was funded through state appropriations and Murray State paid the rest). Though Murray State comes out comparatively ahead of other higher ed institutions, "at the end of the day, the amount of funds we have from the state is decreasing by just under one million dollars."

He warned that future appropriations will continue to slim, with future cuts, and more funding going toward the performance funding model. "We cannot continue to rely on state appropriations to 'fund our balance and make us whole.'" Davies again stressed that Murray State is a "privatized university."

Murray State will compete for performance funding dollars with other public universities in Kentucky. This year, MSU is projecting they will receive this year approximately $1.5 million from that pool. For the forthcoming budget, Murray State is preparing to see an increase of $4.8 million in pension obligations (added on to previous increases).

Credit Matt Markgraf, WKMS

Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS

Vice President for Finance and Administration Jackie Dudley shared several slides that visualized the decline in state appropriation over the years, coupled with rising pension costs. Dudley explained that due to retirement increases and other factors (health insurance, FICA) for someone making $20,000 working at Murray State their benefits are costing Murray State 139% of their salary. "It's really an unheard of percent," she said.

"It's costing us 80,000 dollars a year to hire a 40,000 dollar a year person. That's dramatic. The national average for benefits: right around 30 percent." That's the impact of the KERS pension system, she said. She said KTRS rates (now around 16%) are projected to increase in 2020 by as much as 30%.  

Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS

    

Murray State is proposing a tuition increase that Dudley said would put it 'in the middle of the pack' among rates in the state.

She said the university is modeling a 3% rate increase for undergraduate students. For students admitted prior to the implementation of the new tuition model in 2016, this amounts to a $126 increase. Those admitted in the summer of 2016 and after would see a $132 increase.

Credit Matt Markgraf, WKMS

The university is also planning to expand the 'Racer Promise Tuition Program' for first-time freshmen from the 18-county region to statewide, Dudley said. This program offers tuition guarantees for certain students (see more here).

Compared to other universities in Kentucky, Murray State's proposed FY19 semester tuition and mandatory fees would be $4,542 (currently $4,410). Compared to current year rates at other state universities, this would put Murray State's tuition above Eastern Kentucky University should they choose not to raise rates. Murray State would come in below Northern Kentucky University.

The rate increase would need approval from the Board of Regents and the Council on Postsecondary Education.

Credit Matt Markgraf, WKMS

Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS

Provost Mark Arant said some programs will be closed, reduced and reorganized. "All of these are out of necessity budgetarily or strategically," he said, and added that often is the case and immediate budget savings may not be seen.

Arant said there will be a reduction in positions, primarily through not filling current vacancies. He said dependence on adjunct will be reduced and are reviewing extra compensation, academic affairs services, graduate assistantships, waivers, student workers and travel.

"I am told that this is the largest budget cut that Murray State has endured. You don't go through a budget cut like that unless you look at everything," he said. He said some decisions won't see immediate budget savings but would be strategic. He said he's optimistic, however, because of the "great people working here" that can help solve problems of this magnitude.  

"We have a commitment to our faculty," Arant said. Regarding discussions involving closing programs with tenured faculty, "Supposedly we may, and I'll stress 'may,' get rid of those faculty within 10 days notice. Our policy is to follow guidelines for accreditation." He said Murray State is committed to SACS and other accreditation bodies that say they must do a teach-out if they close a program with tenured faculty in it.

Credit Matt Markgraf, WKMS

Arant said Murray State will advance new programs including drones, the possibility of a dental hygiene program, an exercise physiology program and "a number" of programs put together from 'old ones' to reach new audiences as well as beginning new international and online programs. Other goals involve re-engaging people who have nearly-completed degrees to finish them and instituting a program with WKCTC to engage students initially turned away from Murray State.

Striking an optimistic tone, Arant said to applause he's not intimidated by the budget challenges because it affords him a chance to serve the Murray State community.

Dudley agreed it’s a difficult budget. “It’s a hard budget to develop,” she said. “It’s a hard budget to explain.” The university is projecting a $6.4 million decrease in overall revenue, outlined in the slide below. Paired with an increase in operational expenditures of $6.5 million, the total need before reallocations is more than $12.8 million.

Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS
Credit Matt Markgraf, WKMS

The budget has not yet been finalized and tuition rates have not yet been set, Dudley noted, so the process is still fluid. She said the university is estimating a reduction in force of approximately 10-15 filled positions. She said the university is also estimating eliminating 20-30 vacant positions.

Among allocations include outsourcing several services. Davies said "we are the only public university that self-operates many of the functions that other universities outsource." Outsourcing is a difficult discussion, he said. "It is not about the quality of services we offer on our campus," he stressed, but rather "a cost issue."

For dining services, Dudley said she expects an RFP to come back in final form by the end of May for a decision at the June Board of Regents meeting. An RFP for Building and Grounds is expected to go out in a couple of months. Operational rental fleet (motor pool) - “there’s many opportunities there,” she said. Health Services went through two RFP processes, but the university hasn’t yet gotten a proposal that meets their needs. “Because of that, the President is recommending that we remove the funding for health services from our budget for fiscal year 19.” The budget proposal eliminates funding for health services at this time, she said. Postal and delivery services - a proposal will be going out.

“If we were to outsource everything on this list. I can’t tell you today if that’s likely or not. That could be 175 positions that Murray State would not have on its payroll,” she said. Together, those items along with departmental organization and restructuring will come down to $10.6 million. With performance funding coming in, “We will have met our goal of reallocating $12.9 million in the Fiscal Year 19 budget.”

Davies closed the speech by calling upon the campus community to continue efforts to recruit, retain and graduate students.

Credit Matt Markgraf, WKMS