January 20, 2006 Public Comments - FY07 Budget Process
presented by: Mary Lou Herring
I thank the Chair for allowing me to address the Board members today regarding four areas of concerns with the FY07 budget process.
1. Performance Pay
Performance, or merit pay, is a nice theory that does not work very well in practice, especially in a public institution.
Too often, merit pay invites discriminatory practices. Without the proper safeguards in place, merit pay rewards "group think," those who follow the "party line" and punishes those that engage in critical thinking, those that challenge traditional practices, and the end result is an institution burdened with personnel afraid to challenge the status quo.
2. Fall 2006 Tuition Rate
With credit hour enrollment down this past fall, the board should seriously consider a very minimal, if any, tuition rate increase for next fall. Over the past several years, Washburn has tried to keep up with everyone else when setting their tuition rates, in spite of the additional third source of funds available to them, almost $21.0 million of sales tax revenues.
Unless the administration tries some creative approaches to setting tuition rates, enrollment will most likely continue to drop as the tuition rate increases, since 1/3 of the student population continues to be non-traditional and ineligible for most of the scholarships and financial aid to assist with their education costs.
3. Operating Budget
In practice, very little attention is actually given to the operating budget. The comparison of departmental operating results to budget included in the annual financial report consistently shows numerous areas that have overexpended their budgeted amount, including the administration's non-mandatory transfer line.
It is time to address the real operating costs for the various units, and to provide each unit with an appropriate, meaningful budget. For too many years, the operating budgets of too many departments have remained flat, depriving the faculty of funds necessary to provide for basic classroom supplies and their own continuing education needs. The shortfall of funds provided to these educational units is especially hard to justify when the university is building $100,000 water features and transferring over $8.0 million from operating reserves.
4. Building Construction Fund
Finally, I'd like to address the Building Construction Fund which is not a part of any budgeting process.
The explanation for excluding this Fund from the public budget process has been that this fund does not collect tax revenues. However, $3.8 million in sales tax dollars, $3.0 million in property taxes, and at least $7.5 million of operating reserves were transferred into this fund last year. Although there is very little scrutiny paid to the operating budget, there is even less attention paid to the expenditures made from the Building Construction fund.
This fund holds several underfunded projects; underfunded because of fundraising shortfalls, lack of appropriated funds, an overexpenditure of project budgets, or expenditures charged to this fund to keep them out of the operating budget. A comparison of expenditures to the project budget (if one even exists) and the source of funds for each project are not provided.
In conclusion, it is past time for this Board to address the need for an internal audit function reporting directly to the Board's audit committee to avoid the same problems experienced at Westar when the Directors did not effectively exercise oversight responsibility and too willingly accepted management's recommendations without independent critical assessment.