Royce Money salvaged ACU’s finances in 1992, and he can repeat the feat in 2003.
Because of a sluggish post-Sept. 11 economy, increased insurance and utilities costs, flat enrollment and a decrease in gifts, the university finds itself in a sticky financial situation. Administrators recently re-allocated $2 million to make up for rising costs and decreasing revenue, cut physical and campus improvements by 20 percent and asked departments to cut their budgets by 8 percent.
President Money also has created 13 “strategic solution teams” to look at cost-cutting and revenue-enhancement in different areas of the university, which probably is a good idea even when a university isn’t feeling financial burdens.
Rest assured, the Money administration will fix the budget problem quickly, applying 11 years of wisdom it didn’t have in ’92. And as in 1992, Money will communicate honestly and openly.
“I’m a firm believer that when people know the full realities of a situation, they can respond in a better way,” Money said. “It’s hard to overestimate the importance of continual and honest and effective communication.”
In reality, though, the 1992 crisis and the current budget shortfall are very different. The university’s current net worth is right at $200 million, twice what it was in 1992. The endowment value stands at $137 million, compared to just $53 million in 1992. The university’s operating margin, which is the net operations profit or loss, is at +$2 million, compared to a -$3 million margin in 1992. The university’s enrollment is nearly 1,000 stronger than 11 years ago.
The data reveals that ACU’s current budget crunch, felt by many colleges and universities in the United States, is docile compared to the 1992 crisis.
But some in the ACU community are worried how they might be affected by the most recent university budget re-allocations and department cuts, and some are still making comparisons to the 1992 crisis.
Despite a burden, faculty, students and alumni need not worry-the 2003 financial problems do not threaten the state of the university.
Executive Vice President Jack Rich said the university is six months from knowing which direction to travel in a weak economy and estimated the university would correct its finances within a year.
Rich and Money said they are working to see that the students don’t feel any of the current pressures experienced by the university.
With the ’92 budget turnaround on their side, we can invest in their promise.