King's to cut millions in operating costs
Last Modified: February 17. 2013 8:54AM
WILKES-BARRE – King's College will preserve matches to employee retirement savings accounts while moving forward with a plan to slash millions from college operating expenses, King's President Rev. John J. Ryan said Tuesday.
King's is facing an estimated $4.5 million operating loss for the current fiscal year brought on, in part, by an effort to keep tuition affordable for local working-class families in the midst of a national recession.
Ryan announced cuts to trim $3.75 million of that shortfall in an email to faculty and staff last Friday, but declined to further speak about them until after meeting with campus faculty and staff. The staff meeting Tuesday afternoon at the Burke Auditorium on campus was not open to students or the media.
Cuts outlined in last Friday's letter included eliminating 11 staff positions, transferring 32 King's dining services employees to the payroll of a contracted food-service company and reducing the college's match to employee retirement accounts to 5.25 percent from 10.25 percent.
The college's board of trustees approved a $57 million operating budget Saturday that retains the personnel transfers but keeps retirement savings matches at 10.25 percent. The 2013 budget projects operating losses of $1.8 million in 2013; still an increase over the $1.2 million the college lost in 2012.
Ryan said he asked the board to maintain retirement matches and the board agreed, but asked the college to identify by the end of the year alternatives to recouping the $700,000 the change would have saved annually.
"The board approved that, but they also made it clear that the college needs to continue to work towards reducing this operating budget," Ryan said.
Ryan said the eliminated staff positions are unlikely to generate significant savings this year because of severance packages and expenses like paying unused sick days, but the cuts will save $500,000 to $1 million in future years. He declined to identify which jobs were cut except to say they were not teaching positions.
The college will make up the remaining shortfall by identifying additional revenue sources and reducing variable, non-labor operating expenses, including supplies, equipment, lab chemicals, travel and utility costs, by approximately 10 percent from last year.
Ryan said tuition is likely to increase next year, as it will at most colleges around the country, but added that financial aid contributions that offset the cost of tuition are unlikely to change significantly.
In an effort to keep King's affordable during the recession, the college increased its overall average discount rate from 36 percent in 2009 to more than 50 percent in 2010 and 2011, before dropping back to an estimated 42.5 percent for 2013, Ryan said. While much of the college's current budget shortfall stems from those financial aid increases, Ryan said the college cannot revert to the pricing model it offered five years ago.
"There's no going back to 2006 prices," he said. "Students and their families' ability to pay is maxing out, and you have less pricing power in higher education now than you did in the past, so I think we're probably at the price we're going to be."
The long-term solution to the college's financial challenges involves increasing enrollment, which would spread more revenue over static operating costs, Ryan said, adding that about 85 percent of the college's revenue comes from tuition.
The college plans to increase enrollment by 10 percent in three years by identifying and marketing the programs and services that set King's apart from its competitors, the college president said.
"The key point is that there's a strong demand for our programs and our students are telling us that," Ryan said, naming the McGowan School of Business and the natural science, criminal justice and mass communication departments as successful programs the college should promote and expand.
He said the college also is exploring ways to boost its international student body, a move that would "not only add new students to King's but change the way the King's campus looks in terms of diversity."
Ryan said both the cuts and growth initiatives are targeted at "right-sizing" King's as an institution by tailoring the services it can offer to student demand, and he is "very positive going forward" that King's will achieve that balance.
"Our programs have never been of higher quality; the number of students coming to King's has never been larger and our buildings and facilities on campus have never looked better," Ryan said. "Once we work through and put ourselves on sound financial footing, the future looks very bright."