A Conversation With EMU's President About Budget Issues And EMU's Future
Dr. James Smith, Eastern Michigan University's President, sent an email to the campus community yesterday. In it, he detailed the current state of EMU's budget and, unfortunately, the need to reduce it by as much as $5.5 Million before the end of the current fiscal year (06/30/2018). Patrick Campion sat down with Dr. Smith and discussed the budget, cuts to come, the current campus climate, plans for the future, and the role Athletics will play in all of those topics.
Editor's Note: Transcript added 01/25/2018 at 9:25 pm EDT
Patrick Campion: I'm Patrick Campion for 89.1 WEMU News, and with me today is Dr. James Smith, the president of Eastern Michigan University, to talk about the budget. I think that's the word that's on everyone's mind right now, and certainly if you didn't know already, we have reported that a message went out to the campus community on Wednesday, and the tone of the message was essentially that credit hours were shy of expectations, which holds with it some revenue shortfalls as well, which at this point means that some budget cuts are coming on the campus of Eastern Michigan University.
So we're going to have a conversation with Dr. Smith today about that, what the present situation is, what the future holds, and on behalf of the community ask some questions that come up whenever conversations like this do in a time of uncertainty, and certainly almost, depending on how people react to that, there's frustration and there's anger and there's worry and concern across the campus, and of as well, so thank you Dr. Smith for speaking with us today.
Dr. James Smith: My pleasure Patrick, thank you for having me.
Patrick Campion: So how long have you been on campus now?
Dr. James Smith: It seems like 17 months, I think.
Patrick Campion: So it's not been an easy go with the transition, you've faced some big problems here, that have been attracting a lot of attention from outside campus as well. The incidents of racial graffiti on campus, the climate of uncertainty that followed that, and as we're reaching hopefully a resolution to that piece of that problem, which you reacted to with your Council for Diversity and Inclusion, and trying to establish a better dialogue on campus. Now we're looking at money problems.
So how are you personally doing? I know that you've got 30,000 sets of eyes on you across the campus community, and all with a lot of different feelings about the guy who's heavy head is wearing the crown at the moment.
Dr. James Smith: I think I would say normally I sleep well, I would not say that in the last ten days. It's tough decision making, it's certainly not what any of our senior cabinet wanted to do. I won't say it's not what they signed on for, because I think all of us know that it can inevitably happen, but we had to make some decisions pretty short-term. Our census date was just a few days ago, and based on that census, we came to a pretty clear reality that we were not going to be able to carry forward the way that we had hoped to.
Now, I will say, because I know you know this, I'll say it for the listener, that our indicators were always squishy. We had hoped to be able to do more with retention. We had hoped for a larger freshman class, which we did get, but we didn't always get the credit hours that went along with that. So we've been monitoring it, and we've been gaging it, and we've been analyzing around it, but certainly, loss of sleep on my part, and all the senior cabinet as well.
Patrick Campion: So we're talking about credit hours, and what you're referring to, obviously, is tuition being derived from students enrolling in classes, or other things on campus, and for most universities, that's the primary driving income, is tuition dollars. And we've talked a lot about the changing balance between state funding and allocations, and directly-derived income at a university level, and the shift over the last few decades, especially with the change in the economy.
And something you just mentioned there, too, is the decreasing number of credit hours being taken by current students, and that's a trend that's been going on for quite a while, that students are taking longer to graduate so they're taking less courses as they proceed. And even knowing all that, which of course the administration's assumed to have all those data points, we're still missing the goal. Even knowing all that, we're missing the goal for the winter semester.
Dr. James Smith: Correct.
Patrick Campion: So that leaves us where we're at today, which according to your email, is about four and a half to five and a half million dollars shy of breaking even for FY18, which in this campus ends in June 30.
Dr. James Smith: Correct.
Patrick Campion: How do we make up the difference?
Dr. James Smith: Well, let's frame that a little bit, 'cause not everyone saw the email message, certainly not everybody who's listening saw the email message. If we did nothing from today going forward, we would be between four and a half to five and a half million dollars off of where we need to be to make our budget work. In order to not be in that situation, which means that you are literally drawing from the university savings account, which is not robust, we said we have to look at position eliminations, and we have to look at our spending around our supplies budget, our materials budget, and what we call SS&M here on campus.
61% of our overall campus budget is personnel-derived, so the obvious place to look for the big number ... I remember my statistics professor many, many years ago, "Where, oh where is big chi square? What number do you look at?" And it is at 61%. So right now we are looking at where can we have less personnel on campus, by looking at vacated lines first, and then filled lines second.
Patrick Campion: And what's your timeline on making that decision?
Dr. James Smith: We want to be with our faculty unions that are affected, or faculty and staff unions that are affected. Not all of those unions are affected. We want to be back with them in very short order, first few days of February, I think at the latest we're looking at February 5.
Patrick Campion: Right, because right now we're in a campus climate of uncertainty-
Dr. James Smith: Correct.
Patrick Campion: -I mean, obviously, I think everyone on campus, and possible even off campus, realizes the state of higher education on a whole, but of course locally here, saw the writing on the wall that something like this might happen. But now you've said it's happening, so now you're in that weird zone where everyone's really walking on eggshells. So we want to get past that as quickly as possible.
Dr. James Smith: Absolutely, and one of the ways to do that, and this sounds a little wonky, so bear with me. We have to eliminate the open lines first, because we have bumping scenarios in various unions. It's unfair to allow someone to bump into a line we know we're going to eliminate, because then we have to start that bumping order all over again. A, it's counter-productive. B, as you said, the tone and tenor of campus is intense, and is tense. We don't want to make it worse by saying, oh by the way, position X was really to be eliminated, you bumped into position X, we have to move you back out and start the bumping scenario all over again.
We think that's inhumane, and it's a bad way to do business, so we are getting rid of those vacated lines first, then we are talking about the filled lines, and those folks who are in the filled lines, will have rights to bump into the various positions that they might qualify for. And it's pretty technical on what qualifies for what.
Patrick Campion: So eliminating open jobs essentially, and possibly some staffing reductions across campus. That'll get us, with the SS&M reductions, that'll get Eastern Michigan University to a break-even point, is what the executive council's hoping, by the end of fiscal '18?
Dr. James Smith: Very close. I've said to the board we're going to do our level best to get within $900,000 of budget. I don't know that we'll get to zero, but we will do our very best to get as close to zero as humanly possible.
Patrick Campion: So the challenge that, perhaps becomes a little more difficult, because this is the same challenge that you faced yesterday, and the same challenge you'll face tomorrow, is what do we do to get out of this cycle as a campus community. This seems to have been going on every five to ten years for decades here, and I think of lot of it, and you'll agree with, is due to just the nature of higher education and funding and student populations, and all that, that we hear about constantly, that's affecting pier institutions as well, and even the big ones are getting impacted by this. So what does Eastern do, under your leadership, to stop that cycle?
Dr. James Smith: Well, first, again I thank you for the way you framed this. We received $10 million a year less than we received in 2003. Now, someone would say that's a 15-year horizon, it's 2018, but $10 million is significant money in anybody's budget. So take us against 2003, we're $10 million every year less-
Patrick Campion: Let me jump in one second. What's the total budget for the university?
Dr. James Smith: Oh, 300 and some odd million.
Patrick Campion: Oh, so just ballpark it.
Dr. James Smith: Yeah, 300 and some odd million.
Patrick Campion: So 10 out of 300 and some odd, okay.
Dr. James Smith: Right, and what we're saying is that we know the chance of that coming back is quite remote, so what are going to do that is a different business proposition? How do we do our daily work in different ways? I don't have a single answer today for you, Patrick, but I do know that every one of us is looking at how do we operate differently? How do we function differently?
One of the conversations I had earlier this morning was, what are we doing to give our students who are in internship opportunities, possibly that we're sending off campus, to be doing that more on campus? Many of your listeners will be familiar with Berea College model, or the Blackburn College in Illinois model, where students do significant work. Now we have to be careful that we don't have them in the labor unions' disarray of what we've agreed to with them in contract work, but we want to give our students some opportunities to help us on campus.
We also have to find an answer, and I think all of us are clear to this. Our incoming freshman numbers were good. The numbers that we saw from ACT were good. The predictive validity of a student with a 22 ACT to stay from first semester to second semester is not an intellectual one. We believe it is the cost of living on campus. How do we go out and try to find collaborators to work with us to lower that cost? Is there a way for some of our programs, who reach out to very specified groups, to have a reduction in their living costs, in their dining costs, by external support? Hard, hard to do, but something that I think we have to come to grips with.
Patrick Campion: We're fairly close to capacity, and when I say we I mean the Eastern Michigan, is fairly close to capacity in the residence halls at this moment anyhow.
Dr. James Smith: We have capacity, we have bed capacity, and what you'll see is we are far more at capacity in the fall than we are in the winter semester, so as we lost those students, we have vacant beds right now. I believe there are students, and I think we're seeing this from the exit surveys, we have students that were fully capable of staying with us through the winter semester, they just said community college is next to my home. I can go home, go to community college, and I'll come back. And they may do that, but they may not.
Patrick Campion: So two things off that then. One is, what percentage of the student base represents a resident student, in what is traditionally a regional and heavily commuter-based college? And how much does that play into the current state of higher education, where students don't put as much emphasis or value on things like being able to have the traditional college experience?
Dr. James Smith: I'll split that into two parts. One is that I think most all of your listeners would know that we've done real outreach on you are welcome here from students all over the globe. Those students do live in residential housing, they live on campus. We want to be a welcoming community for those young men and young women, at the undergraduate level, and that is somewhat atypical. Most recruiting globally goes on for graduate students. We're looking largely at undergraduate students, who live in the dorm ... Dorm is always a word that our residence hall folks don't like, so let me correct myself, they'll live in a residence hall, they'll be on a food plan, a meal plan, and they'll be with us for four years, in all anticipation.
We have another population of students who want to be on campus, because they live too far from campus to commute. They want to be here, they want to stay. They may have a very nice financial aid package, but it does not include residence hall life, and dining life, and that's where we're looking at that population. We think our commuter population is pretty solid, we've not had as much turmoil in the loss of commuter students.
But again, I want to draw us back to commuter students take less number of credit hours overall. Our commuters, in general, will take less than a residential student, and so as we lose residential students, we're losing a larger number of credit hour production than we would if we were losing only commuter students. And that being said, we don't wanna lose anyone, so we're trying to think oh how do we appeal to those populations?
Patrick Campion: In the grand scheme of Eastern, does the current state of how education is delivered on campus, the programs are delivered, the different departments, different schools are set up, does that represent the plan for the future? Does that represent a campus that can be attractive to that student population, or will there need to be significant change to ensure the next 160 years of Eastern?
Dr. James Smith: I think that's an excellent question, and I would answer that by saying most folks have read about our online initiative. It is a marketing initiative where we're looking for students around the United States. I'll just pick the BSN, RN to BSN program. You're a registered nurse, you're working in a hospital, your hospital wants you to get a bachelor's degree. Often that is for hospital accreditation purposes, but sometimes it's just because the hospital wants more bachelor's degree folks on the floor, men and women who have bachelor's degrees.
We know that the population of Michigan is not nearly as large as it would be if we can reach southern California, or we can reach huge population sources like Houston or Dallas, or pick a big city. We have seen with that online delivery, we can deliver more credit hours. We have had one decision based in arbitration, saying that we can go forward with the online delivery, marketing delivery, that we have. We think that's a powerful part of what we do. We think that international's a powerful part of what we do.
And we think that, by trying to find better solutions to residence hall debt and dining, debt, that's a third piece of what we need to be executing around.
Patrick Campion: You're talking about fighting a battle on multiple fronts, though, at this point. You're talking about becoming a little fish in a giant pond, that is online education offerings across the U.S. You're talking about being a better, appealing offering to regional students that want a traditional college experience, including living in residence halls. You're talking about cooperating with international entities to bring more international undergraduate, and then looking at international graduate students as well on to campus.
How many of these things can Eastern do effectively, given that we're talking about reducing staffing loads, we already have limited resources, at some point, how many masters can Eastern serve and still be focused on the future?
Dr. James Smith: I understand the question. What I would say to both you and the listening audience is that there is no one silver bullet. If there was, we certainly would have selected that and fired the proverbial bullet. We have to look at a multiple of fronts, and we have to do them well.
International recruiting is something we've not done historically to a large scale effort. We are scaling up to that, we're seeing good results, but we aren't seeing the fruits of all of our labor yet. I could not ask us to back off of that, because I think it is something that will be very fruitful for us long-term, as do I believe that online is going to be very good for us long-term.
You're absolutely right in saying will all of these materialize by September of '18, and I think the answer to that is no. We have to make incremental steps moving forward.
Patrick Campion: And let's add a couple other things into the mix there, one of which is, what many would say is a fairly contentious climate on campus, and we're talking about, not in the realm of students, how they view faculty and administration. Let's focus strictly on the people that work on campus, faculty and staff, and then what seems to be the giant wall, the divide in many people's eyes, between the administration and the rest.
How do you achieve those goals when that environment exists? How do get everybody rowing in the same direction when there are so many people who actively don't trust the efforts of the administration?
Dr. James Smith: All I can do is what I've done for the last 17 months, Patrick, is be out there, be visible, answer questions. I met with a faculty leader today, and I said ask me anything you wanna ask me, I'll tell you any answer I can give you. For someone that said, and I heard this at one of our budget forums, that the budget loss, the dollars that aren't there, are all contrived by the president and the CFO, they don't exist.
I don't know what to do, other than say, do you want me to bring in a forensic auditor and show you that our dollars are real, that we based the budget on 478,000 credit hours, and we now look like we're gonna come in at 470,000. To not believe there's a dollar associated with that, I don't know how to answer that other than to say that that's a foolish response. Why would we want to do that? We want to sell the best picture for Eastern, and by the way, we have some phenomenal things that we're moving forward on.
Jorge Avellan reported on this yesterday. The new Park Ridge, we are immersed in that work. Now the young men and young women that live in Park Ridge that are 10 and 11 years old, are a six or seven year time horizon to get to us, but we know it's the right thing to do for our community, we know it's the right thing to do for those students, and we do believe they'll be long-term Eastern-committed students for years to come.
Patrick Campion: I think across the board the big question that always comes up when Eastern talks budget issues, is athletics.
Dr. James Smith: Absolutely.
Patrick Campion: And we talked a lot about the changing world of higher education, and in many ways people view what we're doing, trying to be competitive in NCAA Division I athletics in the MAC conference, as a vestige of a bygone era, that 53 years ago when that was the mandate put forth, that it was much different world than exists today. Everyone knows that, in the last two years for example, football had the lowest attendance of any school in Division I.
There is the budget imbalance, which is very publicly talked about, the HBO Real Sports special that came out last year made it a nationwide story, and used Eastern as an example of money going in somewhere that not many people could talk about realistically, in terms of what that means back to the university.
So I guess on behalf of everyone that would wonder where that's going, how does this university continue to justify spending tens of millions of dollars on that portion solely, and expand staffing, and expand expenses, perpetually over a multi-decade period? And what does the university get back from that? If we spent $20 million cash as a ballpark in the last year and a half or so on athletics, out of the tuition dollars, what does that represent in return on investment to the university?
Dr. James Smith: Well first, I guess I would take a little clarification line on perpetually, because honestly, if you look at what we're doing in athletics, certainly under the direction of our new Athletic Director Scott Wetherbee, we're looking very closely at their lined cuts with our lined cuts. Now, do we say that we want to disassociate with the Mid-American Conference, which some might argue is a vestige from the 1950s, but it is also a peer reference group for us. We like being identified with Central Michigan, Western Michigan, Miami of Ohio, University of Toledo, Kent State, and my apologies to all the other MAC schools that I leave out. We like that association.
We bring several hundred very fine student athletes to our campus, some of whom in swimming and diving for example, are the very best academic students in America in their disciplines, so we've seen that in volleyball, we've seen it in golf. So I don't think we can be cavalier and say there is no return on that. What we have to say is how do we look at a 21 sport portfolio and ask the question, are we the largest in the MAC? And can we continue to be largest in the MAC?
Patrick Campion: And that's a sidebar on that, you're talking about being comparable to our peers, most MAC schools have 16 sports.
Dr. James Smith: And please don't, I would say this for anyone who's listening, please don't believe those are not active discussions. Can you be at 21 for long periods of time? Can you sustain that? I think that is a fruitful discussion, a deep discussion, and one that A.D. Wetherbee is open to continuing to discuss and to debate and to look at.
Patrick Campion: Right, but at the end of the day, instead of five extra sports, I think the cost savings of what the five that would primarily eliminated pale in comparison to what should be the revenue-generating sports for the university, which aren't, compared to our peers, football and basketball. And with low attendance numbers, and low donor numbers, comparable to our peers, and lower expenses comparable to our peers, but not enough to offset it, how do you justify that as university community when you're asking people to leave their jobs at this point? How do you justify tens of millions of dollars going into that fund? What's the return for the university?
Dr. James Smith: Again, I think it's a fair question. What I'm saying is, I don't want people to have the assumption that no one's leaving their job in Athletics, no one's taking a cut in Athletics, no one's looking at our athletic budget. Those are all false assumptions. We are looking at where we are, we are looking at where we're positioned. Right now, for example, if we wanted to eliminate a sport, and let's just pick. You can't pick one that's in the middle of the season and say we're gonna eliminate that sport, you have to think about what is the future of that? What is the revenue? What is the possibility for donor response?
I agree with you. We got an email yesterday, and I thought it was a very insightful one, it came from a student. You know, and others on campus know, that there's a president@emich account, and when the memo came out, the student said, "Dr. Smith, I gotta tell you, who builds a $99 million science complex, Mark Jefferson I and Mark Jefferson II, and doesn't try to sell a naming to it?" Absolutely right, why don't we have better donors in basketball and football? Absolutely right. I can tell you in the last 17 months, Mark Jefferson was done long before the last 17 months. I can't go back and re-etch that. In some ways I wish I could, but I think what the student was saying is, in the Mark Jefferson case, why didn't you have a donor partner?
And what I believe you're asking is, if we wanna go forward in athletics, why aren't we getting more healthy donor partners? I would draw the eyes of any listener to the University of Toledo's stadium. I went there for our football game this year. There is an insurance company, a grocery, probably a taxi service, all the way around their, I think they call it the Glass Dome. We have to do that if we want to continue to be viable in the sports world. I would not disagree with you at all.
Patrick Campion: What's the value proposition for a supporter, though, that they know they're going to get their message in front of a much smaller audience?
Dr. James Smith: Well, I think that's, obviously, you gotta do both. You have to do audience enhancement. How do you enhance your audience? You win.
Patrick Campion: Okay, so let's just ... I know we're past the amount of time you've allotted for us, and I thank you for the little bit of extra time, but what's Eastern in 10 years?
Dr. James Smith: I think Eastern is a strong place, possibly not the 25,000 that John Porter spoke about, and some who are listening will remember that John Porter line, "Eastern's never been stronger than with 25,000 students taking 14 to 15 credit hours each." John was right. He was also right in his line that we are the great university of opportunity. We'll continue to be the great university of opportunity. We will look with a different set of eyes, we'll have an online portion that I think will be strong. I think we'll have the power of diversity that we have today, even maybe more diverse, with the work that we've done with You Are Welcome Here.
I think that you will see that we have a larger donor base, and whether that be a donor base in athletics, or whether that be a donor base our fine music programs, our fine theater programs, we have to get out and get active. I hope that you'll see some naming on university buildings. The question about Mark Jefferson, actually, I've said I've lost sleep in the last few days, as I read that I lost sleep last night thinking about that, because if we're gonna remodel Sill and put $40 million, hopefully part of that will come from the state, don't we wanna rename Sill, and have the name of a corporate sponsor, or a large donor, or a recent grad, or Patrick Campion, or whatever it might be?
Patrick Campion: Right, at the end of the day, you're talking about stopgap measures, and those are all worthy, but how do you craft an Eastern that meets students where they'll be a decade from now? And is that a different set of schools and departments? Is that different educational offerings? Is that the very good prospect that athletics just won't be a part of the mix as it is now 10 years from now?
Dr. James Smith: I don't know that I would jump on that last one. To say it won't be like it is now, I think I would say yes to that. It won't be exactly as it is now. But the departments won't be the same either. The colleges won't be the same either. You've seen us walk into Health and Human Services with a PA program that eight years prior to its existence, people would have said you never would have done. You look at us now with an RN to BSN program that's very large, what is our next step? A master's in nursing. Why, 'cause those students that are finishing the online RN to BSN want the Master of Science in Nursing.
Will we look different? Absolutely. Will our campus have some different namings around it? Absolutely. Do we want to have a hard stamp on the fact that we are the place of opportunity, we are the place for diversity, we are a place that embraces students from all domains? Yes, we want to do that.
Patrick Campion: Okay, last question. Can Eastern evolve with this current structure for represented labor on campus as it is now? Can Eastern meet those goals with the contracts in place, with the different labor unions, which there are numerous across campus, with the structure of faculty, with non-faculty instruction staff, with the various other staff on campus? Can Eastern evolve in that environment?
Dr. James Smith: Absolutely. We have to come to the table. We have to be all-in. We have to be intellectually all-in. And we have to be willing to say this may be best for my unit, but what's best for the future of the university? I think we all have to give to be able to have that next 160 years of greatness that you've asked about. And I'm certainly committed to that. I've said repeatedly, I'm here to lean in my career. I have a five year contract, so I can't speak beyond the next three, but I'm here to do that hard work. I'm here to work with our labor groups, and not have an adversarial environment, but to have a discussion that says what's best for the future, what's best for our students, what's best for southeast Michigan. And I think if we come with that point of view, we will have a strong and very vibrant 160 years ahead of us.
Patrick Campion: Sorry, I do have one last thing, that's outside the campus community, people who are looking at Eastern based on the news they're hearing over the last couple of days, over the last couple years, how do you convince them that Eastern is still worth investment?
Dr. James Smith: Well, I think you look at the quality of our graduates. I think day in and day out I would be happy, at any public forum ... Detroit Athletic Club, I'd be happy to stand up and show you 50 recent graduates that anyone would love their son or daughter to aspire to be identical to, or very much alike. We have absolutely high-end graduates at the bachelor's level, at the master's level, at the doctoral level, that we can say this is what we do in working with these young men and young women to produce greatness.
Patrick Campion: Best of luck to you sir, in probably the most challenging thing for any leader or manager, which is managing change.
Dr. James Smith: Absolutely, and not something that any of us get up in the morning and say that we want to do, but it has to be done.
Patrick Campion: Thank you.
Dr. James Smith: Thank you Patrick.
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