The Metropolitan met with President Ginny Arthur on Feb. 20 for an hourlong conversation about the state of Metro State’s finances and the 2019 budget outlook. She also discussed Metro State’s understanding of adult college students and her “unconventional path” to the presidency. This is the fourth in a monthly series of interviews.
In late January, Minnesota State announced that Metro State (and eight other colleges and universities) had failed a “financial stress test” and will be subject to additional scrutiny from the system office. What is Metro State’s financial situation?
The university has actually been under financial monitoring by the board of trustees since fiscal year 2016. What happened was during the construction of the parking ramp, Student Center and Science Education Center, they started digging and found contaminated soil. Back in the 1930s and ’40s there had been a truck repair facility across the street and they used all kinds of degreasing agents. We had to dig out the soil and take it to a special landfill. It actually cost millions of dollars more than we anticipated.
So over about a two and a half year period, we drew our reserves down pretty rapidly. About 40 percent of our reserves had to be used to pay for those expenses. While the buildings were being constructed—and we put up three in very close succession—you have the expenses you are paying out, you have the liabilities on your books, but you don’t have an asset yet. This is technical accounting stuff, but you don’t have an asset until the building is finished.
The board and the Higher Learning Commission, our accrediting agency, use a measure called the Comprehensive Financial Index. That index for Metro State went negative because of reduced reserves, no assets, and a lot of debt. As a result the board put us on a monitoring plan. And we have to report to them once a year about the status of the financials.
They required us to add at least $750,000 a year to our reserves for five years. We have made two payments, for fiscal years 2017 and 2018. I have told the Chief Financial Officer (CFO) that we are budgeting that as a topline expense. It goes out before we figure out the rest of the budget.
We have recovered very well because once we got into fiscal year 2017, the buildings came onto our financial statements as assets. They balanced out what looked like a very negative situation. I would say, unlike some of the other institutions that are on monitoring plans, ours was kind of a situational thing. I wouldn’t say it’s easily recovered but with prudence and careful budgeting it can be recovered. Not like some of the others where their enrollment is down so dramatically and they have a lot of committed expenses.
That’s one thing about higher education institutions. You always build up your expenses, you hire faculty, you put up new buildings when your enrollment is growing. And then when it drops those expenses are fixed and you don’t have much flexibility.
How does the system office monitor Metro State, and will that monitoring end once the five years of payments to reserves are made?
We have to file a report once a year. In the report, we talk about different actions we’re taking, where we are cutting costs, how we are improving revenue and enrollment. The board needs to see we’re taking it seriously and making progress. We haven’t had problems making our required payments. The system office is doing their due diligence but aren’t interfering in our campus decisions.
So what is Metro State’s enrollment outlook?
For us, it is a little down in fiscal year 2018. When all was said and done with spring enrollment, I think we were down a half to three-quarters of a percent. Our headcount is down more than our FYE [full year equivalent], which tells me we have more students taking a heavier course load. Which is good for students actually. The sooner you get through your degree, the more likely it is you will get through.
This downward trend—we’ve known it was going to come. We are very dependent on transfer students and all our main feeder schools are down substantially in enrollment. MCTC is probably down almost 20 percent over the past three years. We have to think about how we get more students to choose Metro. It is possible to recover, but it is inevitable that we would be down a little bit.
What impact does flat or down enrollment have on next year’s budget?
I’ve asked the CFO [Tracy Hatch] to prepare three budget projections or scenarios. One is flat enrollment—that is our best case. One is 1 percent down. The worst case is down 2 percent in enrollment.
Summer enrollment counts in the next fiscal year so we are looking at things we can do to have strong enrollment this summer. The Office of Admissions is doing a very good job of getting new applicants. But our conversion rate of admitted to enrolled is about 35 percent. There are little things we can do to turn this from a negative into a positive situation. Can we get 10 to 15 percent more of those students?
We are looking at retention too. About one-third of students who start, stop out at some point. If they take one semester off, there’s a 70 percent chance they will re-enroll. But if they are gone two semesters, the percentage continues to go down. What kind of outreach do we need to do? Is it financial issues? Do we go to our donor base and try to raise more money for scholarships?
In your message to the Metro State community on Feb. 1, you wrote that you will “clearly be looking for expense reductions in FY19.” How will you determine where and how deep to cut the budget?
We have that range of enrollment estimates and we assume the Legislature will approve the bargaining agreement [with faculty]. We put money in a reserve to cover the 2 percent raise in the agreement. So with our costs going up in fiscal year 2019 and our enrollment flat or down, then we’ve got $1 million to $3 million we’ve got to find.
Again, as enrollment declines, we don’t need to offer as many classes. We can trim some there, but that wouldn’t be enough. We’ll have to look at a variety of strategies. Anything like laying off people would be the absolute last resort.
FYE = Full-time equivalent students
|Estimated budgetary impact|
|Flat(6,073 FYE)||($ .8 M – 1.0 M)|
|-1 percent (6,012 FYE)||($ 1.3 M – 1.5 M)|
|-2 percent (5,951 FYE)||($ 1.8 M – 2.0 M)|
Are there areas that need to be shielded from cuts?
We have established as a principle to not have an impact on students. We will make sure that we are offering the array of courses that students need to continue to progress. Maybe you have fewer elective choices, but the core classes are there.
I’m not a big fan of across-the-board budget cuts. Some areas of our curriculum are growing, so I want them to have the resources they need to be able to support growing enrollment.
It’s my goal to have a really open process. During spring break we expect to finalize the scenarios and identify the amount of cuts that needs to be taken. We want to present that at open forums on campus after spring break. We want students and faculty and staff to share their ideas.
How can students contribute to the conversation?
One idea that’s been floated by students themselves is about printing costs. We allow unlimited printing to students and I think we’re probably the only college or university in the system who does that. At many of them, you load your ID card with a certain number of pages or certain dollar value. The Student Senate has brought this up to me because they’re also concerned about the environment. It’s a lot of wasted paper when people print stuff they don’t necessarily end up using. That idea could save a couple hundred thousand dollars. That’s not spare change, that’s real money.
We are looking for suggestions from everyone. We have the Resource Planning Council along with the CFO who will gather and share all the information and ideas about how we would bring this into line. We’ll probably have a proposal for how we balance the budget by mid-April.
Adult College Students
Since its founding, Metro State has attracted and served adult students. What does Metro State know about meeting the needs of adult students, and where do you think we can improve and expand our support?
We’ve learned that certain things like credit for prior learning is really important. When an adult has been away from college for awhile, they’re a little worried about coming back to school and doing academic work. But we tell them, you’ve always been learning and you have certain knowledge and it’s worthy of college credit. Research shows that if you grant credit for prior learning, that person is much more likely to complete their degree.
I think adult students are grateful for the fact that they can come to class once a week. And online courses give them other ways to interact and spread out some of the workload. That is really appealing. And part of our history to be out not just in one single fixed location. Shortening the distance that they travel to get to class is really important to adults.
I’m hearing from a couple of deans and faculty who are willing to experiment with offering more accelerated course work. So instead of having a class spread over a 15-week semester, you could have two 7-week classes with a week in between for testing. That is a very appealing model for adults.
|Average age of students = 31|
|Percent of undergraduates age 25 or older = 71%|
What is your academic background, and why were you drawn to higher education administration as a career?
I have had somewhat of an unconventional path. I started out thinking I wanted to be a lawyer and practice law. I grew up in a small town and I’m a first generation college student myself. I had a good friend whose dad was a lawyer in town. I thought that was really great. He helps people. That’s what I want to do.
I went off to college. I was set on getting a law degree. I started practicing law and it was not really as much fun as I thought it was going to be. So I went to a career counselor and at our second meeting, she said “I think you’re an educator. How about teaching at the college level?”
I never had the sense of how people became professors. It opened up my eyes. I did some adjunct teaching and then a one-year position came open at the College of St. Benedict and St. John’s University. I applied, I got the job and then I stayed for 24 years as a faculty member.
Eventually I had to take my turn at being department chair. At a private college, it means managing the department budget, hiring, doing performance evaluations. I kind of liked that and I found that I was pretty good at it. I was very active in our faculty governance structure and I was elected as chair of the faculty. That meant I was on the board of trustees of St. Ben’s and St. John’s.
Those happened to be years when we had really difficult budget issues to deal with. The administration wanted to close some programs and there were controversial benefit changes. At the end of my time on the board, the chairs took me out to lunch and said I did a great job of navigating the faculty and administration concerns, and made the board feel really informed about what was going on. They actually contributed money so that I could participate in something called HERS, a leadership development opportunity for women in higher education.
After that program, my mentor said I think you’re ready. She said pick out one job, apply, see what happens. So I applied for a job as an associate provost and I got it. And that was it. It launched my administrative career.
I was at the University of Northern Iowa for four years when a faculty member who had grown up in St. Paul told me Metropolitan State was hiring. I applied here and I got the job as provost. When I was interviewed by the board for the presidency I said, you will see a trend here. I apply for a job and I get it. And I did.
So as a first-generation college student yourself, what’s your advice to Metro State’s first-generation college students?
Take advantage of all of the resources that your university offers. So you need to sit down with your advisor, you need to go to career resources. Go join a club or an activity even when you’re stretched for time. That gives you an important network. Getting connected is so important because you don’t know the things that come so naturally to people who have family members who have gone to college.
I’m hearing a recurring theme about the importance of mentors.
Yes, right. I never saw my advisor as an undergraduate. I would go to his office just to have a course signed off. I sat for hours trying to figure out what classes I should be taking. It was very hit or miss. I never once got to really talk to my advisor.
Someone asked me what would I do different if I had known more about myself and academic life. It would’ve been great if I’d had an advisor along the way who would have said to me, if you’re interested in this kind of career then the route is through a PhD program. I’ve been successful in my career but I’m not a PhD. Even though a law degree is a doctoral degree and a terminal degree, some people still don’t think you have the scholarly ability.
But has your legal background been helpful to you?
Oh, definitely. You know, a PhD in some fields would not be at all helpful in this job or the provost role with sticky personnel issues. Having a legal and management background helps with financial matters and contract issues. I was in the management department at a small liberal arts college. I taught business law courses, strategy, human resource management. My law degree and business background could be looked on suspiciously by academics. I understand that, but it brings tremendous advantages in being able to do this job.