Declining enrollment and less state funding lead to a tighter budget, which Kent State President Todd Diacon called “the squeeze” at Thursday’s Talking with Todd meeting.

“I aim to be transparent about our budget. And I want to say: We’re doing fine financially,” Diacon said. “To honor our commitment to transparency, we’ll talk at some length today about our challenges.”

Diacon started off by using a poll to gauge the background knowledge of over 300 audience members who joined the virtual talk. He asked if the state of Ohio sets its budget every year or every two years.

The majority voted for the correct answer: Ohio makes a budget bi-annually. This year is one of those years, when legislators in Columbus will spend the next six months putting together the state’s budget.

“These next six months are budget time in Columbus, and that will impact both our budget, which is very important, but it will tend to draw comments, observations, assertions about higher ed out in the legislature.”

Public universities are funded through three parts: the state, donations and tuition and fees. Ohio’s 14 public universities each receive state funds, called the state share of instruction, or SSI. The SSI comprises 24% of Kent State’s budget. This is a higher share than recent years, but Diacon said it makes up about 40% less of the budget than it did in the 1970s.

The second audience poll shared a challenge that cost Kent State between $70 million and $75 million in ten years – enrollment’s decline.

Full time equivalent enrollment across Kent State’s eight campus system was at 34,482 in 2012. Ten years later, it’s at 26,717 – 7,765 fewer students.

One audience member asked how this was possible, since Kent State publicized the eighth highest freshman enrollment ever for Fall 2022.

While this is true, regional campuses lost students. Diacon also estimated that 1,500 of the 7,765 students lost since 2012 were international students, although this population is rising again.

Diacon said one of the biggest losses was first-year students unenrolling after fall semester in 2021.

“Unlike most public universities in the state of Ohio, we continued to allow faculty to decide whether to teach remotely or in-person for the fall of 2021,” Diacon said. “North of two thirds of our faculty taught fully remote. But our students voted with their feet, they didn’t like that.”

Kent State’s enrollment data supports this claim, as the full time equivalent enrollment of the freshman class dropped from 6,664 in Fall 2021 to 4,076 in Spring 2022 across the eight campus system.

Universities in Ohio follow the guaranteed cohort tuition model, which means the tuition students pay as a first-year is the rate they will pay each year until they graduate. Diacon said the state also prohibits new fees. This makes increasing tuition and fees a non-viable solution to generate revenue.

“We are historically a university of access. And we’re not going to be an access university if we keep increasing tuition and keep increasing fees. Not increasing tuition and not increasing fees generates a lot of the tensions that we’re talking about. But it’s not entirely unwelcome because it helps us remain accessible to greater numbers of students,” Diacon said.

Diacon described steps that the university took this fiscal year to save money during the “squeeze” of earning less from the state and tuition.

The biggest of these efforts is reducing the number of employees. Kent State has 515 fewer employees than in Fall of 2017.

The university will continue to pursue this solution. Human Resources offered a faculty separation plan to “eligible full-time Tenure Track faculty, Non-Tenure Track faculty and unclassified employees with faculty rank” in an email to qualifying faculty on Oct. 4.

Kent State also reduced the university’s annual debt service by $3 million a year, which is the amount the university spends on repaying loans and bonds. Kent State also saved $1.5 million on fees for investment managers this year.

The university aims to end each year with a 1% budget surplus, amounting to $6.5 million of the $650 million budget to cover any extra expenses from unforeseen circumstances, Diacon shared in an email updating university employees on the budget.

Kent State ended the fiscal year with a 1.2% surplus, or $7.9 million. This surplus will go toward construction projects, like the Ambassador Crawford College of Business and Entrepreneurship and the College of Aeronautics and Engineering buildings.

Diacon backed up his claim that the university is “fine financially” by citing Senate Bill 6 scores. The state of Ohio scores each of its 13 public universities to measure their financial health, a consideration when allocating budgets.

Kent State received a composite score of 4.7 out of 5, a high score compared to other universities.

“In the 10 years I’ve been at Kent State, I don’t think we’ve ever dropped below fourth or fifth,” Diacon said. “So when we talk about revenues being challenging, and tuition and inflation, I’m just doing that because I’m being transparent and telling you what goes into our strategic planning.”

Kent State consistently scores higher on fiscal health than its neighboring school, the University of Akron.

“We are consistently in the top third healthiest, financially healthiest institutions in the state of Ohio,” Diacon said.

The next Talking with Todd is scheduled for Dec. 12.

Sophie Young is a reporter. Contact her at [email protected].