October 25, 2022

Good afternoon,

Earlier today, I provided information about our budget situation to campus leadership that I want to share with the entire university community.  In short, NDSU is facing significant reductions due to decreasing enrollments over the past several years.  These reductions will be difficult, particularly because we have been absorbing cuts for a number of years, forcing everyone to do more with less for quite some time.  They also will be difficult because after a number of years of cutting, it is becoming more difficult to make reductions without impacting our core academic mission.  Without question, the budget cuts we are facing will be incredibly difficult.  However, if we make these cuts strategically, together, I am confident we will transform the university to meet future workforce and research challenges facing North Dakota and beyond, positioning NDSU for future success. 

Most of our budget comes from two sources, tuition and revenue from the state funding formula. Both tuition and funding formula revenue are dependent upon NDSU’s enrollment, and our enrollment, like higher education enrollment across the country, has been declining, most significantly since 2017-2018.  The funding formula was created in 2013 and has served NDSU and the state very well, but its reliance on completed student credit hour production means we earn less revenue when our enrollment falls.   NDSU’s enrollment decline is illustrated below by the drop in Student Credit Hour (SCH) production over time.

Current Fiscal Year (July 2022-June 2023)

A decline in enrollment or SCH creates a tuition revenue challenge in the immediate fiscal year.   When our enrollment declined this Fall, the reduction in tuition income and other budget issues caused a $2.9 million budget deficit.  We are already developing strategies to address this issue.

Next Biennium (July 2023-June 2025)

A decline in enrollment or SCH also creates a revenue challenge in the funding formula which affects state formula funding in the subsequent biennium.  For example, in the July 2019- July 2021 biennium, enrollment declined, and as a result, we are facing a $7.6 million decrease from the state funding formula for the next biennium (July 2023- June 2025).  In addition, because our current enrollment is down, we anticipate further reductions in the funding formula to the following biennium (July 2025 – June 2027). 

Overall, the budget cut for the current year, plus the cuts over the next biennium, forecast an overall budget shortfall of $10.5M, summarized below.

Summary of Budget Cuts

Fiscal Years

Source

Budget Impact

Fiscal Year 23 (July 2022-June 2023)

Tuition/Misc.

-$2.9M

Fiscal Year 24-Fiscal Year 25 (July 2023-June 2025)

Funding Formula

-$7.6M

Total:

-$10.5M

While the budget challenges described above are daunting, a number of initiatives are under way to offset these difficulties. Prior to my arrival, President Bresciani and Provost Fitzgerald laid the ground work to strategically realign our resources with the academic prioritization process.  Huron Consulting helped with that project, and you can find the results of that work here.  The final report identified numerous cost-cutting opportunities for NDSU, and several committees were created to look at those opportunities and provide recommendations.  Many of those recommendations are already being implemented.

Unfortunately, these changes will not be sufficient to cover the projected deficit.  Additional adjustments will be needed as we change NDSU’s operations to reflect a decreased population of students.  We must continue to serve our students and the state by providing phenomenal education, research and outreach opportunities.   In order to succeed in this mission, we need to acknowledge our reduced size and the changing landscape of higher education.  In essence, we need to right-size and organize our institution to meet the demands of our state and region.  

I have been working with the deans on these budget issues since the summer.  In conversations with the deans specifically, I’ve asked them to propose recommendations to address budget challenges primarily through two strategies:

1. Rightsizing and reorganizing the academic enterprise
2. Launching new academic programs aligned with workforce needs

In addition, the Council on Retention has proposed 5 strategies to improve our retention efforts, outlined below.

1. Increased/Improved advising
2. Teaching quality
3. Early intervention
4. Re-enrollment campaigns
5. Curriculum review

Improving student retention is one of the best ways we have to address our budget challenges, while simultaneously building strategies to enhance student success and ultimately transform NDSU.

Starting immediately, I have charged the Interim Provost Bertolini to build on the work of the deans and the suggestions of the Council on Retention.  Embracing shared governance will be a key component of this approach, while gathering feedback from campus stakeholders this fall.  If you have a suggestion, you may submit them via emailat ndsu.transform@ndsu.edu.

I’ve asked Interim Provost Bertolini to finalize and deliver a long-term, transformative plan, to campus by January.  After the plan is distributed, we will have additional discussions with key stakeholders to finalize it along with an implementation timetable. 

Please understand that I know NDSU has been living through numerous years of budget cuts, and I appreciate how difficult it has been.  My goal is for us to transform our operations strategically so that we can set NDSU up for future success.

Sincerely,

David Cook, President