Major budget differences between neighboring universities in Northwest Missouri
I wrote this article and created the accompanying infographic for a class in May 2020 .
Missouri Western State University is only 44.6 miles from Northwest Missouri State University, but their placement in terms of financial stability couldn’t be farther apart.

​Missouri Western has had a $10 million spending deficit while Northwest has made more than $12 million in excess revenue in the last three years, according to their respective budget reports. One factor that contributes to Northwest’s revenue is that it made over $4.5 million more in tuition and fees during the fiscal year 2019 than it did in 2018.

Northwest’s Vice President of Finance and Administration Stacy Carrick said the investment in online professional graduate programs played a large part in the increase, among many other factors.

Enrollment’s effect on the budget
“Enrollment is the primary factor as we have seen financial support from the state of Missouri continue to decline,” Carrick said. “In the last five years, we have made strategic decisions to protect our enrollment at Northwest.  We engaged in the partnership for the online professional graduate programs, and we have also experienced the highest retention in the history of Northwest.”

Northwest’s record retention rate was at 78% in fall 2018 with its enrollment up 8.2% with 6,857 students, according to a news release Sept. 28, 2018.

Missouri Western’s has seen a net decrease of 977 full-time undergraduate students since 2010, according to President Matthew J. Wilson’s report to the Board of Governors April 24.  It’s enrollment had been on a gradual incline from fall 2016 at 5,377 to 2018 at 5,684, according to the Missouri Department of Higher Education and Work Development. However, the incoming class was down 10% in fall 2019 and overall enrollment dropped 5%.

In fiscal 2019, Northwest made nearly $2.5 million more revenue from tuition and fees than budgeted. On the other side, Missouri Western made approximately $300,000 less than its budget.

“Our financial challenges are serious and wide-ranging,” Wilson said in the report. “In recent years, low-enrolled programs have required constant subsidization. Academic programming costs, fringe benefit costs, bond payments, highly discounted tuition, and auxiliary expenses, among many others have continued to outstrip the revenue needed to support them.”

One of the largest expenses in Missouri Western’s budget is the amount of scholarships it gives out. The cost of scholarships increased as the number of students who receive merit-based scholarships has gone up, according to a 2019 Griffon News article. Almost all of its expenses cost more than the amount budgeted in each category. For scholarships, it planned to give out $9 million to students in 2019, but it gave out $10.3 million. It also made less revenue than projected, which further widened the gap.

Northwest gave out approximately twice as much in scholarships than Missouri Western in fiscal 2019, which accounted for 22% of its expenses. Salaries and benefits cost $50,219,699, for it which is about $11 million more than Missouri Western spent. Still, salaries and benefits accounted for 65% of its expenses while it was 56% of Northwest’s.
 
Decline in state funding
A substantial part of each institution’s budget is the appropriations from the state. Northwest received $29,258,910 from the state, about $8.6 million more than Missouri Western, in 2019. The state appropriation accounted for 30% of Northwest’s revenue while it was 37% of Missouri Western’s.

While state funding has gradually decreased over the years, Gov. Mike Parson announced April 1 that he will withhold $61 million of funding for Missouri’s four-year colleges due to budget constraints during the COVID-19 pandemic, according to the Kansas City Star. Parson reduced around $180 million from the budget of the fiscal year that ends June 30.

A cut of $61 million would bring the budget for four-year institutions down to $705 million from the original budget of $766 million. In 2005, the budget was $718 million, which would be $949 million adjusted for inflation.

Higher education institutions can’t save much this late in the fiscal year. Missouri Western’s Vice President of Financial Planning and Administration Darrell Morrison said the reductions from the state have forced the university to implement a spending freeze on normal operations for a period of time. Missouri Western isn’t saving much money with all classes moved online, save for some utility and cleaning costs.

“Additionally, all travel has been suspended and we have reduced staff to lower levels,” Morrison said. “We are continuing to monitor the situation in case we need to take additional action.”

Northwest is in a similar situation; Carrick said its savings are limited to reduced travel and utility costs from building closures.

“As always, the leadership at Northwest is resourceful and resilient and this situation is no different,” Carrick said. “The leaders, faculty and staff at Northwest prove to be great stewards of funds and are making great decisions to control spending to help ensure we do not exceed our budget. We will also utilize savings from vacant positions throughout the year as well as savings from operations.”

When classes moved online and students moved out of the on-campus housing, Northwest refunded them roughly half the amount of room and board fees they paid for the semester. This cost the university more than $4 million, according to an Inside Higher Ed article. The reduced state funding means Northwest loses $2.5 million from the budget, which was 9% of the appropriation from the state. The university received $4.8 million from the coronavirus relief bill, but only half of it will be able to be used for the budget because at least half of it must be used as emergency grants for students.

The remaining $2.4 million barely covers the cut in state funding, much less other costs like the refunds for room and board. Carrick didn’t comment on how the excess revenue from the past three years could help with the losses Northwest is experiencing.

“As a general rule, the budget is focused on generating revenues within the fiscal year to cover the projected expenditures within the same fiscal year,” Carrick said.

Missouri Western refunded its students 40% of housing and meal plans, and it cost the university $1.5 million, according to a Kansas City Star article. If the cuts to state funding are split proportionally across universities—with each institution losing 8-9% of its appropriations— Missouri Western could lose $1.6 million to $1.9 million. It received $3.7 million from the coronavirus rescue package, but half of it will go to students.

The COVID-19 pandemic has brought on numerous financial constraints that complicate the universities’ budgets, especially because they cannot know for sure whether or not they will have in-person classes in the fall. If Missouri Western’s campus doesn’t open, Wilson estimates it would lose $4.5 million.

Universities do not know how much they will receive from state appropriations, either. The Missouri House approved a budget that would give higher education institutions 10% less funding in the next fiscal year. However, Missouri senators voted 26 to 5 to keep giving universities the same funding next year as they were originally promised this year, according to KOMU Channel 8. Because the chambers didn’t agree, they will have to negotiate and decide on a budget before May 8.

Northwest and Missouri Western are cutting back on spending in any way they can, while also preparing for the worst case scenario.

“Missouri Western State University … like many other universities across the nation, is facing tough decisions as we move into the future,” Morrison said. “However, we are focused on student success and achievement and are making plans to be able to do so for a long period of time.”
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