He noted that the budget itself has not yet been created, and he wants to get as much input from as many people as possible to ensure the process is collaborative.

In addition to today’s forum – and Monday’s on the HSC campus – he will seek input from the faculty and staff senates, the SGA, CAO, academic leadership team and Board of Trustees, as well as use the comprehensive data culled from the recent budget survey. Out of more than 10,500 employees, 1,699 responded to the survey, which is a statistically significant sample.

The surveys also included “hundreds and hundreds” of comments, Postel said: “We feel very good about the data.”

Survey insight

Survey respondents listed their top budget priorities as having a strong revenue growth plan, a tuition increase, assigned unit budget reductions, a reduction in the number of administrators, a reduction in low-enrollment courses, and downsizing the athletics program.

A reduction in the number of administrators was the most common cost-saving solution advocated in the survey. Postel showed a graph illustrating the $1.4 million reduction in expense associated with the administrative staff, including the elimination of 34 positions.

“I agree with you. I think we were administratively heavy and we have been working on that. We’re not finished,” he said.

Personal priorities for employees, according to the survey, include position protection, performance-based compensation, unit budget restoration and salary increases. Postel said he is particularly concerned about the lack of salary increases at UofL.

“That’s not fair. The University of Kentucky has done a much better job with this. This is something that affects morale,” he said.

Another discussion that surfaced from the survey’s narratives is how to increase enrollment. Nearly 90 percent of employees believe we should grow our enrollment both at the graduate and undergraduate levels.

Strategies on how to do so include the creation of new, high-demand programs (our degree program mix has not changed much, Postel said), online programs and completer degrees.

“In my belief, improving retention also needs to be on this list,” Postel said. “Enrollment is an important conversation and it has to include the preservation of quality (not lowering admissions standards).”

Sixty percent of employees believe we should increase tuition, but Postel cautioned against accomplishing our goals on the backs of students.

Other cost-savings suggestions included creative class scheduling so buildings don’t sit idle, and energy conservation efforts. Fundraising efforts should be focused on scholarships, capital/deferred maintenance projects and research, according to the survey.

Discussion

An audience member asked Postel to explain his understanding about performance-based compensation, noting that it is a problem in Arts & Sciences.

“Don’t assume the status quo next year. We’re doing research and looking at various performance-based compensation mechanisms,” he said.

A few students asked Postel about the status of the Cultural Center and how UofL is prioritizing diversity.

Postel said a job posting is now live to recruit a dedicated fundraiser for diversity initiatives. UofL has a $6.7 million budget for diversity and community engagement programs and that is not going to take any cuts, he said.

“But it’s not enough. This is an area that needs a dedicated fundraiser and we are going to get that done,” he said.

He also noted that the Cultural Center does need to be torn down, but his preference is for the money to be in place for a replacement first.

“The building needs to be razed. This plan has been in place for 8 years. Why didn’t anybody raise money for it? I don’t know. But we’re going to do it now. We can’t change the past, but we can work on this now,” Postel said.

Professor Avery Kolers asked Postel for assurance that the $600,000 NCAA penalty won’t come out of academics and questioned whether a firewall still exists between the academic and athletics budgets.

“Nobody needs to worry about the penalty coming from the academic budget. There is not a firewall between the university and athletics; athletics is a part of the university and the budget is the budget. Now, if something bad happened with athletics, we could get hit with it,” Postel said. “So there has to be a real cooperative relationship between the leadership of athletics and the rest of the university. I’m happy to say that today there is. That has not always been the case. Everyone has to have the same objectives and that is for the university to do well.”

A student asked how recent scandals have affected enrollment numbers and what is being done to rebrand UofL.

Postel said he hasn’t seen much, if any, effect on enrollment, noting that applications are actually up 3,000 this year.

“I think it’s hurt morale more than recruitment,” he said, adding that UofL has contracted a new agency to help with a campaign to “drown out the noise.”

“This university seems to be pretty resilient.”

As the budget process continues, there remain some unanswered questions:

1. State appropriations: Governor Matt Bevin has recommended a 6.25 percent cut. The final decision will be made in mid-April. “What I can tell you is that all state universities in Kentucky are actively inserting ourselves into this conversation and we are vigorously contesting the governor’s proposals,” Postel said.
2. Raises: This, Postel said, is a decision that’s in our control.
3. “We have the ability to decide within limits how we will set our tuition,” he said.
4. Asset preservation or deferred maintenance. State universities have a staggering number of buildings in various states of disrepair. This year, the governor has proposed a $300 million fund for the bonding capacity to service the debt to use toward deferred maintenance. UofL’s share is about $51 million. But, Postel said, there’s a catch: “In order for us to be eligible to receive the bonding capacity, we have to raise or put up $63 million of our own. So we will have $114 million to address about 20 to 25 percent of deferred maintenance, which would make a real dent on this campus,” he said. “But if we don’t come up with the match, we lose it. This is both an opportunity and a challenge. We have to figure out how to do this.”

‘A multi-year exercise’

There are a number of steps involved in the budget process and that will include the appointment of a new budgeting concept steering committee, work on refining unit-based revenue targets, decisions on salary adjustments and more.

Postel said it is important to view the budget as a multi-year exercise.

“It makes no sense to create budgets annually in a vacuum. If that’s all an institution does, it’s purely being reactive and that is no way to run a university,” he said. “A plan is how faculty, staff and students engage and making plans come to fruition make take longer than a year. One of the things that can erode morale is not feeling as though the organization has a direction. People want to come to work and say ‘we have a strategy and I’m part of that.’”

Postel will host another budget forum on Monday, Feb. 26 at 11:30 a.m. in the HSC auditorium.

Postel, who is seven weeks into the job, said he has been meeting with as many different groups around campus as possible to address concerns about the budget and other topics, such as the university’s probationary SACS accreditation status.

Before diving into the budget, Postel outlined numerous positive news stories out of UofL, including the generation of Fulbright Scholars, increase in applications compared to this time last year, and the Student Success Building currently under construction. He also noted his meetings with donors and potential donors have been promising.

“This university has folks who are extremely passionate about what we do and they want to support us. Some of them have been on the sidelines because they are concerned and want to see resolution before being comfortable about opening up their checkbook and resuming contributions,” Postel said. “That gives me a lot of momentum to continue on the path we are on and resolving issues.”

The $80 million, state-funded Student Success Building is on schedule and expected to open next summer.

“What’s exciting is it represents a new opportunity for new and improved types of teaching,” Postel said. “There will be areas that are focused on new and innovative learning and teaching techniques and our students will clearly be the winner.”

Postel also touted UofL’s commitment to community engagement, its active student government and its successful athletics programs.

“But these positives being the case, obviously we’re also faced with a lot of challenges. This is part of living, it is part of operating and it is just what we have to work through,” Postel said. Among the current challenges are:

SACS accreditation. Postel said UofL has navigated three steps toward resolving our current probationary status with SACS, including the passage of Senate Bill 107, a comprehensive response to SACS, which is available on the UofL President’s website, and the formation of governance committees to ensure internal documents are synced and accurate in accordance to state law. The next step is a SACS site visit in September, and an accreditation review in December.

“There is no reason to think the university won’t resolve this issue in December,” Postel said.

State audit and forensic audit. The state auditor finished a review in the winter, which Postel said covered governance, transparency and checks and balances. A forensic audit continues and is expected to be complete in early May. This audit is examining transactional issues.

“Between the two we’ll have a good understanding about the process and making sure history doesn’t repeat itself,” Postel said. “It’s critical we get past this as soon as we can. Our donors are out there, they’re strong, they’re still Cardinals at heart, and they’re waiting to give money. They just want to understand a resolution before their comfort level returns.”

UofL Hospital. Postel also briefly touched upon the transition of UofL Hospital from Kentucky One Health management to University Medical Center management. The hospital includes about 2,300 employees and a bed census of about 300 patients per day. He expects the transition to be completed this summer.

Budget

Postel saved the budget conversation for last, stating his objective was to “help people think about budgets in a slightly different way.”

“The budget is a guiding document. It may or may not reflect the actual experience. The actual experience becomes the result of the work of the community during the year. Our objective is to beat the budget,” he said. “What I want to impart today is the budget we present to the Board of Trustees will be nothing more than a best-guess estimate of what things will look like at this point next year.”

Central Administration has until May to present the budget to the Board of Trustees for approval and has received hundreds of ideas from faculty, staff and students across campus on ways to cut costs and boost revenue.

Postel admits he was surprised about the size of the deficit when the process began in January.

“That being said, this is a big organization. From a percentage point of view, this is manageable,” he said. “When I came into this situation in January, we had to do a quick assessment and things were not good. Cash was low, resources were significantly depleted. It was very precarious. We were on track to spend ourselves into real trouble. We had to take some quick corrective action and stop the bleeding.”

Postel said he’s confident everything is going to be OK and we’ll get to a point where “we’ll be able to have nicer conversations about how to use our resources.”

“We have to put something down on paper in May. It’s going to be wrong. We’re going to do so much better than that. I hope that’s some encouragement,” he said.

Q&A

Postel answered some questions from the crowd, including how the new budget model can benefit units, such as A&S, that generate net dollars, and how to avoid compromising the student experience during the budget shortfall.

He said they are studying models that work for net contributors and admitted one of the biggest solutions is an increase in enrollment.

“We need more students on campus and more online students. We have about 23,000 students and that is not sufficient for all of the things we want to do,” he said. “We need to be extremely aggressive with this. But we can’t ask people to do that unless there is a fair model.”

Postel also said that, despite the tight budget, many student benefits will be untouched, including the flat tuition rate for next school year. UofL is the only school in Kentucky not raising its tuition next year. He also noted the state-of-the-art Student Success Building and the $40 million renovation to the SAC as examples of UofL’s commitment to students’ experience. 

The full forum is available below: