Mchenry faces the challenge of balancing Cleveland State's Budget
March 24, 2011
Stephanie McHenry’s second day on the job as Vice President of the Office of Budget and Financial Analysis was Tuesday, March 15. While most of CSU was enjoying spring break, she and her team were anxiously awaiting the release of Gov. John Kasich’s executive budget.
President Berkman recently appointed McHenry to the position of VP where she succeeds long-term VP, John Boyle. She had previously worked at Urban Partnership Bank where she was the Cleveland region president and served on CSU’s board of trustees.
She first joined the board of trustees in 2007, when then Gov. Strickland appointed her. The following year she was elected treasurer of the board of trustees and chair of the financial affairs committee. In 2009, Gov. Strickland re-appointed her for a full nine-year term, but she resigned from her position in January to report to President Berkman in her new role.
“I really got to see the numbers up close,” said McHenry about her time on the board. “It inspired me to figure out what further role can I play to continue to strengthen the organization and make sure we’re able to fulfill our mission in the long-run.”
CSU, like many state funded colleges in Ohio, expected large cuts to it’s share of the State’s Share of Instruction (SSI), which makes up about 35 percent of the university’s operating budget. In fact, President Berkman commissioned the Budget Advisory Task Force in September of 2010 to prepare for an impending budget shortfall. The report released by the task force in February predicted cuts to SSI as high as 21.4 percent.
However, the cuts may not prove to be quite as drastic as once believed. The main reason for the budget shortfall was the drying up of federal funds allocated to universities under the American Recovery and Reinvestment Act (ARRP) of 2009. These funds were appropriated to cover losses incurred from lowered state revenues due to the economic downturn and made up about $300 million annually for the state’s SSI in FY2010 and FY2011. At $11.4 million, ARRP funding accounted for 14 percent of CSU’s SSI in FY2010-2011. Yet even an increase of 1.1 percent, Kasich’s proposed budget would allocate $1.74 billion in SSI for the state-just nearly above a $300 million drop.
“It needs to be pointed out that previous to FY10, the state was funding the full $2 billion total SSI,” said Tim Long, Director of The Office of Budget Affairs of Financial analysis and co-chair of the University Budget Task Force. “If the Governor's proposed FY12-13 budget passes, the reduction in the total State Share of Instruction (SSI) is approximately 13 percent.”
Under Gov. Kasich’s proposed budget, SSI will rise by 1.1 percent in 2012 and 3.7 percent in 2013. A rough estimate of these figures would put CSU’s SSI for 2012 to be about $61.5 million, or about $12.9 million less than in 2011’s share of $74.3 million. However, McHenry is quick to state that there is no final amount yet determined.
Before CSU knows for sure what next year’s SSI will be, two things need to happen: the state legislature must pass Kasich’s budget and the $1.74 billion must be allocated through the Ohio Board of Regents. The funding formula used by the Ohio Board of Regents to determine a university’s SSI allocation is generated by a variety of factors including school enrollment, course completion rates, and graduation success.
“We expect to have this estimate around April 1st,” said Long, “CSU's exact percentage reduction in SSI will be known then.” However, until that time Long’s office is running various simulations to account for whatever allocation the Ohio Board Of Regents decides.
“We have run many scenarios with that [SSI],” said McHenry. “There is no one number that we finalized to say this is what our plan looks like.” Once the office generates the proposed amount, it will need to be signed off on internally before being reviewed by CSU’s Board of Director’s.
When asked if students should expect annual tuition hikes similar to those proposed in the task force’s report of about 3 percent for undergraduates and about 5 percent for law students, McHenry was hesitant to commit to any definitive amount.
“Those are the types of numbers that we’re still considering at this point,” but reminded that, “nothing’s final until it’s final.” Still, a slight tuition hike for students does not quite compare to the cost that could be incurred by some faculty and staff at CSU. Despite the fact that the shortfall may be closer to 13 percent than 21 percent, the cuts may result in lowered salaries or even unemployment, which McHenry is very much aware of.
“It’s certainly not the time to throw a party because we know that people will be impacted an whether that’s one person or 100 it is a human issue that should never be taken lightly.” “Those are real dollars that went away and that doesn’t change depending on the degree.
McHenry credits the skills she developed through her experience in banking as the reason President Berkman selected her for the position. After earning a degree in economics from Dartmoth in 1984, she has worked in banking in the Cleveland area since 1994, first working for Shorebank Enterprise, a non-profit affiliate of Shorebank. She left in 1998 to join the Greater Cleveland Growth Association, before going back to Shorebank, now known as Urban Partnership Bank, where she was the Cleveland Region President.
“The business disciplines that I used in banking still apply,” said McHenry. “Just because it’s a university and not organized as a for profit organization doesn’t mean that you can be any less diligent with your cash flow and using your resources wisely.” To overcome the proposed budget cuts to the university, she will likely rely heavily on these disciplines.
Other proposals included in Kasich’s executive budget include a requirement that university professors teach an extra class every other year and that universities must submit a plan for a 3-year bachelor’s degree.