Evergreen’s Budget Crisis: What Does The Future Hold?

Published November 2011 in The Counter Point Journal

Budget cuts. Those two words have haunted members of the Evergreen community for years, from students and alumni to faculty and interested residents of Olympia. Most everyone has something to say about the issue, but no one seems to know the whole story. That’s because, as with most issues involving politics and money, there’s more than meets the eye at first glance. I attempted to clear matters up a bit in a recent interview with the Executive Director for Operational Planning and Budget at Evergreen, Steve Trotter.

I began by asking what the funds that constitute what are often referred to as the school’s “reserves” are, exactly. Trotter was quick to point out that “reserves” is a misleading term: undesignated fund balances are not equal to reserve money that the college can allocate any way it likes. “At the end of the last fiscal year, there was about 30 million dollars in this pool,” he explained, but this fund balance was largely tied up in future plans. For example, a large portion would go to support the housing and dining services on campus in the coming year. Evergreen has to keep an operating budget to pay for improvements to buildings and other expenses, both expected and unforeseen. Therefore, some money is designated for expenses like planned remodels to buildings, while some is kept as a true reserve for things like unexpected repairs to on-campus facilities, or deficits that must be made up in the school’s budget.

“Evergreen’s operating budget comes from state subsidies and students’ tuition,” said Trotter. When state budget cuts slashed funding for higher education, the school was forced to look for alternate means of generating revenue. These cuts took money out of the school’s budget faster than tuition increases could make up for the difference, so reserves were used as a quick fix to balance this discrepancy.

The logical next question is where is this money coming from? If state budgets and student tuition are not enough to cover the school’s needs, how does it generate extra revenue? Trotter explained that Evergreen does, in fact, have tools to gather funds for the reserves. Over-enrollment of students is one way the school gets money: it accepts fees from more students than the school expected in a given year, then uses that money to provide the extra faculty and facilities necessary to accommodate these students. Trotter said, “Evergreen recently enrolled 4,500 students instead of the expected 4,200, and used their tuition money to ensure that the school would be staffed and prepared to accommodate them.” Twenty-three percent of these were out-of-state students, whose higher tuition fees helped even further.

Of course, there is a limit to how much the school can over-enroll before it runs into trouble. Savings are also accumulated throughout the year through unfilled office positions. The more the school can avoid hiring secretaries, receptionists, and like staff, the more money it saves. Also, not spending the entirety of funds that have been allocated to certain purposes, such as travel budgets, translates into savings at the end of the fiscal year.

How much of the budget deficit can these efforts make up for? Not all of it, since state funding has been so drastically reduced in recent years. “Thirty years ago students paid twenty percent of the school’s costs,” said Trotter. “Now they pay sixty-five percent.” The economic recession helped to speed up an already existing pattern of decreasing state-mandated money for colleges. There is a large continuum between an organization that is funded entirely by the public and one that is privately funded, and Evergreen has been slowly moving in the direction of the latter. Its thirty-five-percent state funding is actually high compared to what other schools are getting, but Evergreen’s unique approach to education requires the school to have more financial flexibility in order to maintain things like small class sizes and hands-on opportunities for students.

Using the school’s reserves has helped to cushion the pain of budget cuts, but at some point these reserves must be rebuilt. The state has, unfortunately, implemented a three percent yearly decrease in funding for the school, so the school must continue to find other ways of making money to compensate. Over-enrollment can only help so much, and Trotter reiterated that frugalness must be maintained, now that the school is more dependent on savings from things like staff vacancies. Trotter said that “Evergreen is trying to minimize the impact of this frugalness on employees by avoiding pay cuts and layoffs,” but this reporter knows that these things will happen when there is no other easy way for the school to save money. The reserves have been useful, but they won’t last. The state has asked the college to prepare five and ten percent budget reduction plans, but there aren’t many other places to cut spending before students, faculty, and staff start bearing the brunt of the burden.

Evergreen is working on a five-year plan of ramping up efforts to secure resources, which are needed mainly for financial aid for students and for faculty development. “State and federal financial aid subsidies are holding up the current model for financial aid at the moment, but this cannot be expected to last,” said Trotter. Instead of public subsidies, tuition is becoming the only income for the school, and if students cannot pay out of pocket the school is not financially benefiting from their attendance. “The trinity of public subsidies, financial aid, and tuition is no longer balanced,” Trotter explained. “The cost of tuition has gone up, not because the cost of operating the school is higher, but because less money is coming from the state.”

As Evergreen struggles to come up with financial aid money, one of the issues faced is that of college becoming an opportunity for the wealthy only. Higher tuition has already become a barrier to some new students. With the school relying more and more on tuition fees to cover its expenses, less students can afford to apply, and those who would have once received financial aid may not now. Trotter informed me that “Over one-third of Evergreen’s students are below the poverty level, and many constitute the first generation in their family to attend college at all.” More recruitment of out-of-state students who will pay higher tuition fees is expected from the college, but while this will generate more money for the school it won’t help the plight of those students who have difficulty paying for college, whether in-state or out-of-state. Trotter also expects decreasing applications from minority students, who may have relied on financial aid that is no longer available.

One challenge Evergreen faces that many state schools don’t is its youth as a school. Evergreen receives markedly less income in the form of private donations from alumni than other schools do, as it is only forty years old and therefore has a much smaller pool of alumni to receive gifts from. This alumni group is “our largest private funder,” said Trotter. As the current school year marks Evergreen’s fortieth anniversary, Trotter expects the school to be asking for more donations from its alumni and supporters, but there is no way to tell how much these individuals will be willing and able to contribute.

Although there is now less funding coming to Evergreen from the state, this does mean that there is more accountability from the state. “Washington wants to support the college and increase its efficiency,” said Trotter, “because the state will benefit from having more people with degrees.” However, with the school growing and state funding decreasing, it is difficult to see how this can be done. Trotter stressed that public officials cannot be blamed for these problems. “No one wants to raise tuition, but it becomes the only option when the public doesn’t want to allow tax increases that would translate into more money for schools. There is a demand for more money for financial aid and improvements to the school, but little desire to pay. The legislators do not provide money; they merely manage what they are given to work with, so it is up to the public to provide them with more funds if they want the school to get more money.” Unfortunately, people seem unlikely to become more receptive to tax increases any time soon.

Evergreen’s faculty is already paid less than the faculties of the rest of the state schools, yet they often do more and harder work. The school lacks opportunity for revenue because it refuses to cut corners in academic areas, such as the way it handles its lower-division classes. While large state schools like UW and WSU cram hundreds of freshmen and sophomores into lecture halls for classes that offer little to no one-on-one help from or interaction with their professor, Evergreen is known for its small class sizes and close student-professor interaction. This uniqueness leaves less room for cost-cutting, but faculty and administrators are loath to change the qualities that make the school so remarkable. Trotter stressed that “in the future, preserving this uniqueness will remain a high priority.” Evergreen students and graduates who have benefited from the school’s alternative approach to education can only hope that Trotter speaks the truth, so that future generations can enjoy an option that contrasts drastically with traditional approaches to education.

Evergreen needs to have some financial flexibility in order to remain the unique opportunity that it has been for thousands of students, but what little money the school has is already tied up in prior obligations. Fund reserves do not mean free money, and even those reserves that are needed for the school’s operation are running out. When it comes to solving the school’s budget problems, “we have to think long-term,” Trotter said. Clearly there are no easy answers, but it seems that it will ultimately fall to the public to do what the state no longer does for Evergreen. If we continue to resist higher taxes, the school will be left with no choice but to make changes that will destroy its valuable uniqueness and take away educational opportunities for future students. The ultimate question, then, is how much does higher education mean to the people of Washington State?

If you would like to find out more, there is information on the school’s website. The Office of the President page has a link to the Budget Office page, and to the Office of Governmental Relations, which provides blog entries that may be helpful in understanding the role the state is playing in all of this.



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